When it comes to finding the right penny stocks to buy, traders look at many factors. One of these is obviously the price of certain stocks. Whether you’re looking at stocks under 10 cents or ones that are a bit higher in price, risk/reward is weighed heavily. Leaving all things constant, price alone can create a volatile scenario the lower the price is.
I won’t go into a history lesson of penny stocks, but simple math tells us that any of the penny stocks under $0.10 only need to move a penny to return a significant windfall. Then again, a move of a penny in the wrong direction could present a situation where a big loss is a result. Most of those stocks (if not all) usually trade on the OTC. Volume liquidity is typically much lower on a broad scale than NYSE or NASDAQ listed names because many funds won’t actually allow their traders to buy them.
In this case, we’re going to be looking at stocks trading on major exchanges. This is where the bulk of the Robinhood, Webull, and general group of Reddit traders will likely focus more attention.
Something you have to keep in mind here is that even though we’re talking about higher-priced penny stocks, those which trade for less than $1 still pose a large risk to traders. The biggest risk of all is the penny stocks being delisted from the major exchanges.Penny Stocks To Buy Under $1
The Nasdaq and NYSE have minimum price requirements that listed stocks need to maintain. This usually starts at $1. The longer these penny stocks remain under that threshold, the higher the chances that the exchanges will delist them, sending them to the OTC. In situations like that, traders using Robinhood, Webull, and the like risk further restrictions to trading these stocks.
This doesn’t change the fact that many still look for cheap stocks to buy. While there is still plenty of risk, here’s a quick list of penny stocks to buy for under $1. Just because they’re cheap, are they worth the risk? I’ll leave that up to you to answer.
- Assertio Holdings Inc. (NASDAQ: ASRT)
- Acasti Pharma Inc. (NASDAQ: ACST)
- Genesis Healthcare Inc. (NYSE: GEN)
Something that I’ll be covering in this article is penny stocks with a technical set-up known as a “Golden Cross.” What is this set-up? A Golden Cross is where the 50-Day Moving Average crosses over the 200-Day Moving Average. It’s considered a bullish indicator but also entails looking at other things like volume to validate the indicator’s accuracy. Since it’s based on lagging indicators, it doesn’t necessarily predict bullish moves but could suggest that a stock with a Golden Cross could be experiencing more bullish than bearish momentum
In this case, Assertio’s chart formed a Golden Cross earlier this month. As you’ll see, the move since that formed has been more sideways than anything else. However, Friday’s session saw a bit more upward momentum. This was thanks, in part to the previous day’s aftermarket news, that Assertio’s Q4 and 2020 results came in stronger than analysts expected. While the company reported lower EPS than last year’s period, it beat on sales estimates.
“As we close the chapter on 2020, we reflect on several strategic shifts, including a move toward digital marketing, enhanced patient services, an increasing shift to our hub model, and a leaner operational profile with increased cash. These changes position us to be at the forefront of reinventing specialty pharma through engagement that physicians and patients find convenient and can access during their own time,” said Dan Peisert, President and Chief Executive Officer of Assertio. For some context, the company’s model is based on selling branded prescription products. Given the late week momentum, will ASRT be one of the top names to watch heading into the second half of March?Acasti Pharma Inc.
Another one of the penny stocks under $1 trading higher recently is Acasti Pharma. Shares reached aftermarket highs of $0.7399 after closing its Friday session at $0.724. Believe it or not, this level has been a long time coming.
Back in August, shares of ASRT stock plummeted to lows under $0.20 after less than stellar results from its Phase 3 TRILOGY 2 study. This was for its CaPre treatment in patients with severe hypertriglyceridemia. There wasn’t a statistically significant result, and therefore the TRILOGY 2 study did not meet its primary endpoint. As a result, the company decided not to file a New Drug Application with the FDA. Since then, Acasti has focused on strategic alternatives.
Fast-forward a few months, and Acasti has been building upon its cash position. It also engaged Oppenheimer & Co. Inc. to assist in the strategic review process. Acasti said that it expects to devote significant time and resources to identifying and evaluating strategic alternatives. To this end, the potential outcome of this process is unknown. However, it has been a significant source of speculation among traders.
With an open-ended resolution to the company’s strategic exploration and a stronger cash position thanks to recent financing rounds, it will be interesting to see what unfolds next. Not to mention, what “strategic alternative” will be decided upon through this process?Genesis Healthcare Inc.
Where Acasti’s breakdown was last year, Genesis went through its own this year. At the beginning of March, GEN stock was crushed after the company revealed its restructuring plan. This plan included Genesis intending to voluntarily delist from the New York Stock Exchange by March 25. This is where the stock could end up trading on the OTC Pink exchange.
“The severity of the pandemic dramatically impacted patient admissions, revenues, and costs, compounding the pressures of our long-term, lease-related debt obligations,” said Chief Executive Officer Robert Fish in a March press release. “These restructuring transactions improve the financial and operational stability of the Company significantly and build on the encouraging signs we are seeing as COVID-19 case rates continue to materially decline and residents, patients, and staff are vaccinated.”
Despite this as the case, it hasn’t stopped traders from actually rallying behind the stock recently. In fact, since falling to lows of $0.43 earlier this month, GEN stock has bounced back more than 30%. Furthermore, it will be interesting to see how GEN stock kicks off the week as late aftermarket momentum triggered a move to highs of $0.62 on Friday. Some detailed filings show Genesis entered into a Tax Benefits Preservation Plan with Equiniti Trust Company as rights agent, and the Board of Directors declared a dividend distribution of one right for each outstanding share of common stock to stockholders of record at the close of business on March 11, 2021 (details on this here).
However, considering the delisting plan, will GEN stock actually be worth it?