The US penny stock market is in correction mode, as inflation fears are putting pressure on equities. Many OTC stocks are declining right now; however, the main OTC indexes, including OTCQX Composite, are still performing better than Nasdaq. The Dow saw its worst trading day in six months on Wednesday.
Consumer prices surged more than expected in April, both in monthly and annual terms. The core consumer prices index (Core CPI) rose 0.9% compared to March, while analysts expected modest growth of 0.3%.
Investors fear that rising inflation might prompt the Federal Reserve to increase the interest rates sooner than expected.
Jonathan Golub, US equity strategist at Credit Suisse, told Reuters:
“There is a real debate on whether this increase in inflation is transitory, and how it’s going to play through. There is a certain level of inflation that will make (markets) uncomfortable, even if the Fed doesn’t respond.”
Still, there are many penny stocks that are driven by their own fundamentals and defy the general bearishness.
Generally speaking, trading OTC stocks is much easier than getting exposure to blue chips. You don’t need a big account, and it’s technically extremely easy to make the first steps. All you need is a laptop and a brokerage account.
Nevertheless, you should keep in mind that small-cap stocks are subject to enormous volatility like what we have witnessed in the February-April period.
Also, remember these two important points when it comes to investing in small caps.
- Buy low and sell high.
- Don’t be afraid to book profits.
However, don’t rush to book profits too early.
Finding the right balance is not that difficult if you’re not getting too greedy and stay disciplined.
If you watch the Insider Financial YouTube channel, you can get a sense of the ideal time to book profits. We warned our subscribers not to get greedy or get caught up in the diamond hands/paper hands BS.
The key to trading small caps is finding momentum BEFORE it happens and then be patient. Now, when we say that we find momentum BEFORE it happens, we are investors looking to position our subscribers BEFORE the move happens.
It’s also best to own a portfolio of small-cap stocks. For some that can be as many as 10 to 20 or more OTC stocks. Obviously, our recommendation to build a portfolio means that day trading is not an option for us. Day trading doesn’t suit our personality, and we don’t like the intraday moves markets make. We have found we made more money being patient and ignoring the day-to-day noise of the markets.
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Today, we discuss four penny stocks that have great potential in the following weeks and months, including Bitfarms (TSXV:BITF / OTC:BFARF), Organicell Regenerative Medicine (OTCMKTS: BPSR), Fernhill Corp (OTCPK: FERN) and Kinerjapay Corp (OTCPK: KPAY).
Penny Stock to Watch BFARF
Canadian crypto miner Bitfarms (TSXV: BITF/OTC: BFARF) has been trading sideways since the beginning of May, but the general trend has been bullish since December last year, with the penny stock increasing from 50 cents to the current level at $5.45, peaking last Monday above $7.0.
Bitfarms operates one of the largest cryptocurrency mining operations in North America, and we think this company has a bright future, at least for the next few months or a couple of years. The cryptocurrency market is doing great these days, with Bitcoin and many altcoins trading at their all-time highs in mid-April.
Thanks to the price surge, Bitcoin miners generated the highest revenue on record in March and April, in spite of the fact that the mining difficulty surged to a record high as well. Last month, miners secured $1.7 billion in revenue on aggregate, slightly down from $1.75 billion in March.
While, Ethereum mining is also very profitable, as the second-largest cryptocurrency has been surging against Bitcoin to the highest level in three years, Bitfarms is focused entirely on Bitcoin, with Ethereum upgrading to adopt a Proof of Stake (PoS) algorithm where mining is not needed at all.
Bitfarms currently operates five facilities in Québec, Canada, and they are powered by clean and competitively priced hydroelectricity.
The company is expanding really fast. At the end of April, it announced its plan to more than double its capacity in Québec this year. Last week, BFARF ordered 6,600 S19j Pro Antminers from Bitmain to boost the hashrate to 2.5 EH/s in the fall. This is the most powerful ASIC machine produced by Bitmain.
Bitfarms CEO, Emiliano Grodzki, said:
“We are excited to continue to strengthen our relationship with Bitmain. The purchase of 6,600 miners represents one of the largest orders in our history. Bitfarms is committed to achieving its corporate goals of 3.0 EH/s by the end of this year and 8.0 EH/s by the end of 2022.”
Besides the Bitmain equipment, Bitfarms also has thousands of MicroBT miners. In fact, on Wednesday, Bitfarms became the first authorized MicroBT service center in Canada, adding a new stream of revenue.
Meanwhile, earlier this week, Nasdaq approved Bitfarms’ application to list its common stock on the Nasdaq Global Market under the ticker BITF, becoming the first Bitcoin miner publicly traded on this Nasdaq tier.
We think this penny stock has more room for growth, and the fact that it goes on Nasdaq suggests it’s financially transparent and sound. The fact that Elon Musk halted the use of BTC for Tesla cars, citing environmental concerns, won’t affect Bitfarms in the long-term, as the company is 100% hydroelectric (actually, why Musk introduced BTC payments in the first place though?).
Penny Stock to Watch BPSR
Biotech firm Organicell Regenerative Medicine has been trading sideways since the beginning of the month. It currently trades at $0.26, after peaking at 60 cents at the end of April, generating a three-day return of 1,100%. We first reported on the surge here.
Despite the correction, the penny stock can return to growth. Its main product, known as Zofin™, is now trialed for the treatment of COVID-19, and if it succeeds, the company’s valuation will likely expand rapidly.
Zofin is now tested in a phase I/II randomized, double-blinded, placebo-controlled study to analyze its safety and efficiency for treating COVID-19 as well as SARS. While the global vaccination may contribute to a rapid return to normalization, the world still needs efficient COVID treatments for existing and upcoming cases, especially amid the emergence of new variants that might potentially be vaccine-resistant.
On Tuesday, BPSR announced that its Zofin therapy had been approved by the Drug Regulatory Authority of Pakistan to be used for a COVID-19 patient on compassionate grounds. The treatment will take place at the Pakistan Institute of Medical Sciences (PIMS). Besides this, the company received approval to treat up to 60 COVID-19 patients on compassionate grounds.
Meanwhile, BPSR is seeking to up-list its stock on NASDAQ Capital Market, and it targets a minimum price per stock of $4.00.
Some BPSR holders were concerned about the latest stock sales conducted by the company executives, including the President, CFO, and CMO, though they sold less than 1% of their shares.
In a couple of weeks, the FDA can provide emergency use authorization for Zofin to treat COVID, and BPSR can get similar approval in India. If that happens, the penny stock will be a huge runner.
Penny Stock to Watch FERN
Fernhill Corp is a riskier bet compared to the previous two penny stocks, but the fact that it’s so cheap means that it can easily grow in price by several times. FERN now trades at $0.013, down from the year-to-date peak at 2 cents, but several times higher than last month.
In 2017, the penny stock had a similar spike to one cent, but it crashed after a month or so. It remains to be seen whether FERN can consolidate and potentially expand its business.
The company is promoting itself as a diversified technology holding company that has interests in businesses in multiple sectors, including mobile applications, blockchain, and cryptocurrencies, FinTech, Next Generation technologies (like artificial intelligence), alternative energy including solar and battery storage, as well as other technologies that address the world’s leading environmental concerns.
So far, the website is quite empty, there are no fundamentals to look at, and the activity on social media is in sleep mode. Still, FERN is betting on industries with a bright future, including blockchain and AI. Also, the focus on alternative energy is in line with governments’ ambition to fight climate change.
The $27 million company is only getting traction, and for this bargain price, it may find someplace in your portfolio.
Penny Stock to Watch KPAY
This is an exotic penny stock that is surging these days. Kinerjapay Corp is now trading at $0.007 after touching one cent on Tuesday.
If you find it difficult to spell it, that’s understandable because KinerjaPay is an e-commerce platform based in Indonesia. The company operates KinerjaPay IP, an e-wallet service for bill transfers and online shopping. It also enables top-up phone credit for users.
KPAY also operates KMALL, a virtual marketplace for B2B and B2C online transactions, as well as KGAMES, a division that develops games.
Formerly known as Solarflex Corp, the company rebranded to KinerjaPay Corp in 2016. It used to trade above $2.00 four years ago.
We think that KPAY is a big bet with a long-term target. Recently, the company made the needed regulatory changes to its subsidiary, P.T. KinerjaPay Indonesia, to include mineral and commodity trading, including coal and other general commodities. On Tuesday, the company announced the completion of its first shipment of Steam Coal to China. Now KPAY is preparing for the next shipment coming within one month for another cargo load of 45,000 megatons (MT).
The first shipment had a total load of 53,400 MT and brought a minimum profit of $170,000 after taxes and fees.
Edwin Ng, CEO of KinerjaPay Corp, commented:
“Despite the recent inclement weather we delivered our first shipment of coal. The demand for Indonesian coal in China is rising rapidly. We have signed on several other orders. We continue to expect revenues well in excess of $100 million and profits of over $12 million over the next twelve months now that the shipments have started.”
$12 million in net profits per year is a lot for a $24 million company. Investors should closely watch this penny stock as the company conducts more coal trades.
The Final Note
Today, investors can benefit from the stock market’s bullishness and find great opportunities as the economy is reviving. Our job is to identify the best OTC stock options with evident growth potential and let our subscribers pick the ones they like to build a well-diversified portfolio oriented at penny stocks.
If you like any of these 4 OTC stocks, our best advice is to be patient and enter the market during corrections. Buying dips and selling rips as swing trades remains the best strategy in the penny stock market. Still, whenever an OTC stock is in the middle of a bull run, we recommend our subscribers benefit from the growing momentum.
It’s very important to consider OTC stocks that have room for growth and don’t seem to be at their culmination. There are plenty of opportunities, and we take our time to monitor hundreds of penny stocks to buy each week, trying to find the best alerts for our subscribers.
Remember, all you need is one or two OTC stocks to succeed in order to have a lucrative portfolio.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.