If we’re being completely honest, participating in the equities market doesn’t seem so inviting at the present juncture. With the dual threat of rising consumer inflation and the escalation of tensions in eastern Europe, throwing money into the cauldron of mass human emotions doesn’t seem smart. That goes tenfold for participating in penny stocks.
Even in the best of circumstances, penny stocks are speculative ventures. Though not always priced below a buck, this class of equities is known for its extreme volatility. True, it’s possible that with the right name at the right time — provided you also have the wherewithal to not succumb to greed — you can make serious money. However, the opposite is also true.
Indeed, while social media promotes the idea of people making it big through massive risks, the reality is that by and large, people are not great investors. And as some analysts bluntly point out, they’re even worse traders. So, what about penny stocks? Let’s face some harsh facts. In the vast majority of cases, you’re not investing nor trading — you’re gambling.
As long as you understand the horrifying risks you are taking when acquiring penny stocks to buy, there may be some valid reasons to consider this sector with loose change you can afford to lose. Primarily, these wagers keep a low profile. With all the rumblings in the geopolitical and economic realm affecting the blue chips, penny stocks could conceivably fly under the radar.
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Because of that, this market subsegment could march to its own drumbeat, independent of other factors. In some cases, certain speculative ideas might benefit from the drama. Therefore, if you want to live dangerously, you may consider these penny stocks to buy:
- Yamana Gold (NYSE:AUY)
- U.S. Energy Corp. (NASDAQ:USEG)
- Marin Software (NASDAQ:MRIN)
- Akebia Therapeutics (NASDAQ:AKBA)
- RISE Education Cayman (NASDAQ:REDU)
- Envirotech Vehicles (OTCMKTS:EVTV)
- Clean Vision Corp (OTCMKTS:CLNV)
Fundamentally, if we do suffer a substantive drop off in the equities sector, you might be better served buying blue chips on discount rather than penny stocks. Since no one knows the day or hour that these gambles will pay off (if ever), it’s wiser to acquire viable businesses with a strong track record.
Penny Stocks to Watch: Yamana Gold (AUY)
Source: allstars / Shutterstock.com
If you take a look at the performance of specific equities this year, chances are, you’re going to see a whole lot of red ink. But that’s not the case with Yamana Gold — far from it. Since its first session’s close of 2022, AUY is up 17%, making it one of the better-performing penny stocks thus far.
Now, at a little under five bucks at time of writing (and over that threshold a couple times this year), I will freely admit that Yamana might stretch the definition of what a penny stock is for some folks. However, I’m including it tops on this list because shares could easily swing higher due to the fear trade.
As you might imagine from its corporate brand, Yamana Gold owns and operates gold, silver and copper mines. Based in Canada, its footprint extends to Brazil, Argentina and Chile, along with its home market. Primarily, the underlying precious metals should rise in demand due to inflationary concerns and worsening tensions in eastern Europe. Additionally, Yamana’s exposure to copper is intriguing because of its rising importance in emerging technologies such as electric vehicles.
U.S. Energy Corp. (USEG)
Another name that hasn’t performed that well over the long run but has recently come alive, U.S. Energy Corp. will be hoping that this current run will be sustainable. On a year-to-date basis, USEG is up nearly 19%, again making it one of the better-performing penny stocks of 2022, at least as of now.
If you’ve been following the news, you’ll know right away why U.S. Energy Corp. is swinging higher. A growth-focused energy firm, USEG operates “a portfolio of mature, low decline assets that will allow the Company to execute on a peer-leading capital returns program to shareholders.” And those assets are oil and natural gas — two commodities that are on the front line of recent geopolitical flashpoints.
With Russia’s invasion of Ukraine, the global economy will suffer a reduction in supply outflows of fossil fuels. Most notably, Germany, which has been walking a diplomatic tightrope, dropped one of the biggest bombs by suspending the Nord Stream 2 pipeline that runs between it and Russia.
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Cynically, this is a positive for penny stocks like USEG which are tied to the energy market.
Penny Stocks to Watch: Marin Software (MRIN)
Source: weedezign via Shutterstock
One of the penny stocks that absolutely soared last year, this year, digital marketing firm Marin Software is off to a comparatively rough start, shedding about 18% from the January opener. Therefore, those who are considering MRIN will be looking for lightning to strike twice.
Let’s back up a bit and consider why so many people piled into Marin in the first place. As InvestorPlace contributor Robert Lakin mentioned on June 24, 2021, MRIN shot higher due to the underlying company announcing a new integration with Instacart. Per Lakin, the ad management platform now let users manage Instacart ads, “something that allows brands to connect with customers more directly at the point of sale.”
While an intriguing concept, Muslim Farooque warned that long-term investors should steer clear of MRIN stock because of its underlying “crumbling business model.” What’s perplexing traders right now is that, given an appropriate cutoff point, both my colleagues were correct.
Admittedly, for MRIN to become one of the top penny stocks again will probably require some of that social media magic. It’s possible that could happen based on recent upside momentum though I’d be careful about over-speculation.
Akebia Therapeutics (AKBA)
Source: Mongkolchon Akesin / Shutterstock.com
Based on performances against the start of the year, Akebia Therapeutics is not going to win any awards, with its shares tumbling 4% so far. However, over the trailing five days since the morning hours of the Feb. 22 session, AKBA is up almost 20%. Is this a sign of a coming reversal?
Well, with penny stocks tied to the biotechnology space, anything is possible. Akebia is involved in research and development for therapeutics targeting complications of kidney disease. Per its website, nearly 37 million Americans are currently affected by the disease. As well, the condition is permanent and thus far, irreversible, necessitating the search for a viable solution for patients.
Akebia is one of the penny stocks that on a human level, you root for — who wouldn’t? Whether it’s worth putting your money at risk is another matter. This high-risk sector is fraught with danger, with the biotech cemetery filled with names of organizations that couldn’t quite hack it.
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Still, the company has a history of encouraging developments so it might be worth a look.
Penny Stocks to Watch: RISE Education Cayman (REDU)
As I’m writing this, shares of RISE Education Cayman are trading hands at 85 cents apiece. On a YTD basis, REDU is absolutely killing it, soaring 72%. But on the other hand, over the trailing-year basis, shares have plummeted nearly 86%.
Welcome to the world of penny stocks. Like the roach motel, if you stay too long, you might be stuck with some hefty losses.
Even moving over to the fundamental aspects of REDU stock, the narrative doesn’t get any less tricky. On paper, the company’s core business — an afterschool English teaching and tutoring service — is exceptionally compelling. With English being the closest thing to an international language, demand should be strong, irrespective of global demographic shifts.
However, RISE being headquartered in China doesn’t exactly do investors any favors. China isn’t exactly making friends, and many have questioned the safety of Chinese stocks. Nevertheless, the opportunity to make money is there, if you’re willing to sidestep the geopolitical angle.
Envirotech Vehicles (EVTV)
If you haven’t been turned off with the speculative nature of the above penny stocks, we’re going to dive into the truly risky stuff with Envirotech Vehicles. If you merely took a YTD snapshot of the company’s stock price, you’d think it was one of the top players in the electric vehicle space, swinging up nearly 22%.
However, from a trailing-year framework, EVTV is down about 57%, implying huge dangers. If you don’t have the stomach for absorbing potentially sickening losses within a short time window, do look elsewhere.
Of course, the appeal of Envirotech is its all-electric transportation solutions. According to its website, the company is “North America’s first and only manufacturer of purpose-built all-electric zero-emission Class 3, 4, 5, and 6 vehicles.” It’s possible that the deteriorating situation in eastern Europe may help accelerate EVTV given the broader incentive to move away from fossil-fuel dependency.
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Still, I would only wager a small amount in EVTV, if at all. At around 30 cents a share, Envirotech could easily crumble in the face of mounting competition.
Penny Stocks to Watch: Clean Vision Corp (CLNV)
Source: Khanthachai C / Shutterstock.com
At a hair above 3 cents, I’m not going to sugarcoat Clean Vision Corp. It’s a highly risky venture that is a gamble on trader sentiment. However, that sentiment could be swayed due to the underlying relevant business of clean energy infrastructure.
Now, according to the company’s public profile, Clean Vision is not a clean energy operator. Instead, it’s a holding company that engages in “identifying and developing a business model around the clean energy and waste to energy sectors.” Clean Vision’s website adds some more information, although it’s a bit opaque: “we are launching domestic and international pilot programs and are expanding our portfolio through strategic mergers and acquisitions.”
Cool. So, should you buy CLNV?
Honestly, it’s only for those accustomed to gambling in the market. On the positive side, you could make it big through the law of small numbers. But on the other hand, a lot will depend on CLNV’s bid-ask spread. You got to get your timing right (no guarantee obviously), though its average trading volume (almost 1 million shares) is much higher than typical penny stocks.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
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On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
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