What is the stock market?
A stock market is a place where publicly held companies sell, buy or issue their shares. In short, it is also a place of exchange or a market in itself. Several institutions in a country control these activities through proper regulations. Anyone can bid through institutionalized formal exchanges or over-the-counter marketplaces. Most of the OTCs operate under a defined set of rules. Generally, there are multiple sets of stock trading venues in a country or a region. These venues allow transactions in stocks and other forms of securities penny stocks to watch.
Economy specialists use both the term stock market and stock exchange interchangeably. But the term stock exchange is more formal. If someone says they trade in the stock exchange, it means they buy and sell one or more equities on or more publicly held companies that are part of the whole stock market. Global markets are New York Stock Exchange, NASDAQ, Japan Exchange Group, and London Stock Exchange. It is a multibillion-dollar market starting from pennies to millions of dollars of shares. So you want the million-dollar stocks to watch or the penny stocks to watch.
What is Penny Stock?
A penny stock is commonly the stock of a small company that trades for less or equal to 5$ per share. But some stocks exchange, like New York Stock Exchange, trades penny stocks on large exchanges. They make most of the trade via over-the-counter. Most of the trade includes electronic OTC bulletin boards or private OTC market groups. Because there is no trading floor for OTC transactions. Therefore, almost all the quotations are electronic.
Not a long time ago, penny stocks were any stocks that were under 1$ or less. But the United States securities and exchange commission modified the definition and made it 5$ or less. The security and exchange commission is an independent federal government agency. They are responsible for protecting investors. Therefore they maintain fair and orderly functioning of the securities market.
Small companies have lack liquidity. That means they don’t have many ready buyers in the marketplace. So they open up penny stocks. After that, investors find it difficult to sell stocks. These stocks don’t have buyers often. And because of low liquidity, investors can not even price them accurately. Investors generally consider penny stocks highly speculative. They have wide bid-ask spreads. As a result, an investor can lose a big amount or all of their investment.
Generally, start-up companies that have limited cash offer penny stocks. Because they are small companies, they are most suitable for investors who can take risks. Most of the time, penny stocks have high volatility. After that, there is a higher potential reward. But a higher level of risk awaits too. There is a high chance the investor will lose all of their money or more than they invested.
An investor should take particular precautions before investing in a penny stock. They need to consider the heightened risk levels associated with investing in penny stocks. For example, the investor who is investing should order a stop-loss order. Stop-loss order is placed directly to a broker to buy or sell equity when it reaches a certain price. An investor should determine the price before entering a trade when to quit because the market can move in the intended direction. Stop-loss order sets an automatic trigger to sell when they reach a certain price.
What makes it Risky?
Small businesses get a way to access funding from the public with penny stocks. So, it is a great platform for them to grow bigger. But because they sell at such a low price, there is a certain upside. And it is these factors that exacerbate the risk for investing in penny stocks. Investments are riskier than big companies. Big companies are blue chips in the stock exchange.
A blue-chip is a well-known brand. People recognize these companies nationally. Moreover, they are financially sound. Blues chips generally sell the highest quality product. People accept their products widely. Bluechips are the ones who weather downturns. They always operate profitably in the face of adverse economic conditions. As a result, they hold their record of stable and reliable growth. They don’t let people penny stocks to watch.
Penny stocks in Pop-culture
The wolf of wall street is a well-known movie. This film features the story of Jordan Belford. A stockbroker who became a millionaire by selling penny stocks. This movie is the best reference for what can a penny stock do. It turned him into a big fish but let others die.
This is a movie, but it teaches a lesson. It teaches that Stock Exchange is a wild west. Where everyone is a hunter, some peoples do fraud with penny stocks like Jordan Belford. Because penny stocks are so small, they don’t hit the bill-board regularly. When it hits the board on Stock Exchange, it may be too late. In the worst-case scenario, the investor may have lost all his money.
It won’t affect the company or the broker. The broker lives on the commission. As soon as an investor buys equity, the broker gets his commission. So it doesn’t matter if the investor loses any money. So, it is recommended to the investors to look at the chart before investing. Though some companies pop-upped. But it is an exception. And an exception can’t be an example.
It is always a high risk, but it is fruitful too. For example, amazon and google were a penny stock once. People who knew which penny stocks to watch bought shares back then. They got their money back million folded. In 2001 when Tesla started, they were worth 3$ per share. But the wolves of wall street who knew penny stocks to watch bought them beforehand. They are swimming in billions of dollars. Pop culture references let us know the successes. But remember, there are risks too.
Why do penny stocks fail
Generally, in the case of penny stocks, there isn’t any information open for the public. When investors consider any investments, they always depend on the information available to them. Because penny stocks are small companies, corporate information on them is difficult to find. As a result, information about them doesn’t come from any credible sources.
OTCBB suffix “OB” to company symbols which they trade. The companies with OB mark file financial statements with the SEC. But the companies in the pink sheets do not need to file any statements. As a result, these businesses do not receive the same public regulations. They don’t have any standards to fulfill. Moreover, blue-chip companies have to fulfill minimum standard requirements to remain available for sale. But the penny stocks don’t go by these rules.
When a company fails to hold its position on major exchanges, it can move to a smaller OTC exchange. These rules and regulations act as a safety cushion for the investors. When a company is not in a major Exchange, it is safer to avoid that company because it becomes riskier to invest in that company.
Lack of history
Stock forensics report that most of the penny stock companies are newly formed and the rest are approaching bankruptcy. These companies generally suffer from poor management. As a result, they have poor track records, sometimes none at all. They can not afford a proper chartered accountant. Therefore their paperwork is a mess. They can not provide any information on SEC. Their account records are valued at zero. Moreover, they don’t recollect data for historical pieces of information. This lack of historical info creates it tough to determine their potential.
People who know penny stocks to watch also suffer from this lack of information. They often get confused on which penny stock to buy. As a result, sometimes potential companies die due to a lack of investments. It is not uncommon on Stock Exchange.
Scams of Exchange
Sometimes penny stocks become a thorn in the side of the SEC. Fraudsters target microcap stocks because of their disadvantages. They used many scams in the past to separate money from their investors. The most common include a biased recommendation. Some microcap companies pay individuals to recommend their stock to novice investors. They can use different media like newsletters, financial news outlets, or social media. These agencies will spam mail targeted customers. They will persuade clients to purchase a particular stock. They don’t want the penny stocks to watch.
Investors should take all these advertisements with a grain of salt. If someone is paid to advertise this kind of exchange, it generally means it’s a bad investment. Investors should make sure that any false press releases should not be in the market. It can affect both penny stocks and blue chips perpendicularly. There is a group of dishonest brokers. They use high-pressure boiler room sales tactics to persuade investors. On the contrary, the investor loses money, and they get to enjoy the game.
Penny stocks to watch 2021
While the statements above prove penny stocks are risky, a quick look around will tell they are fruitful too. Just take Josh Season as an example; he made millions out of penny stocks. If you want to know more, look at Tim Grittonis’s portfolio. He started with 1500$ and now has a portfolio of 1 million $. But to become like them, you need to follow proper strategy, good information and need to have a bit of luck.
So you want to know which penny stocks to watch in 2021. The first name that comes in front is Superconductor Technologies Inc. They started at 0.25$ per share. But they are now 0.40$ per share and watching for continuation. They are a new company indeed but have grossed sales like a beast.
The second honorable mention in this list is Vislink Technologies Inc. Thye are drone company. After the pandemic, drone stocks are going nuts. In just a mere week, they have gone up by 14.5%. This company portfolio is well established, and they can secure more money in their stocks.
The third on the list is Stein Mart Inc. This particular company is special. NASDAQ has extended their compliance by 4/20. Suppose they can break the .3650$ mark. Thye can hit hard on the NASDAQ list. The investors who invested in this stock are gonna be rich.
The fourth one is risky, but experts are liking how the chart is setting up. The name of the company is Apex Global Brands Inc. They are currently stable at 0.65$, but if they break 0.70$, there is a chance of seeing 1$.
The fifth one is a shipping company. The name is Hermitage Offshore Services Ltd. they have been running lately. They increased by 0.52% and hit the mark of 0.66$. Brokers are keeping it on the watch for 1$,
The sixth one is another shipping company named Castor Maritime Inc. They got the name on AH 4/27. They hit hard with .84$ on the go and increasing. NASDAQ reports that it has the potential to grow to more than 5$.
The seventh and the lucky one on the list is BIO-key International Inc. They have held a position of 0.92$. Experts think they can run for 1.5$ next week. As we speak, they are growing by +9.54%.
The eighth is a low float company. The name is Sonim Technologies Inc. They have been stuck at 0.9256$ for quite a long time. But it can see over 1$, and when it crosses that mark, it can go bigger than 1.5$.
The ninth one is a peculiar one. Experts have two different sides. One side is waiting for its drop, and the other side is waiting for its rise. The name is Electra Meccanica Vehicles Corp. But it is a longer swing. Their current position is 1.02$.
The tenth and the last one is the riskiest penny stock we have mentioned. The name is Verastem Inc. They are currently jumping up and down at 2.11$. But once it settles at 1.50$, it will pump big and quick.
So, These are the penny stocks to watch at the moment. If you have a high-risk tolerance, you can invest in any of the above. But before investing, make sure to take precautions and know when to quit. However, this can be a risk or highly profitable but keep penny stocks to watch.