Major U.S. stock indices took a step backward last week coming off record levels set the previous week.
At Wednesday’s closely watched FOMC update, the Federal Reserve bumped up its projection for the next interest rate hike into 2023. Seven of 18 policymakers see a rate increase ahead in 2022.
We have a situation where the domestic economy is recovering nicely. This is generally a positive thing for corporate profits and therefore stocks. But when it is connected to rising inflation and the potential for rate hikes in the near future, this is perceived by the market to be a negative.
As we’ve seen time and time again, market corrections often create attractive entry opportunities for the long-term investor.
Plus, while the broader indices may have had a tough week, as always, there were some compelling developments in the exciting world of penny stocks.
Here at Insider Financial, we have our finger on the pulse of the social media chatter to uncover momentum stocks before the big runs occur.
Today we provide an update on IDEX and LWLG which we’ve covered before. We also highlight two new potential runners in NECA and TRCH.
May this Father’s Day weekend brings you fond family memories—and some interesting penny stocks for your watch list ahead of the new trading week…
PENNY STOCKS TO WATCH #1 IDEX
Ideanomics (IDEX) has been a frequent Nasdaq penny stock runner dating back to 2014. Since then, the electric vehicle (EV) play has staged several big rallies and has trended upward after dipping as low as $0.28 in March 2020.
The company is focused on technologies that help customers manage the shift from gas-powered vehicles to electric vehicles. It is considered an emerging player in the so-called grid-edge technology space that advances the transition to the next-gen electric grid.
One of its most exciting technologies is Wireless Advanced Vehicle Electrification (WAVE) which supports cordless commercial EV charging. Like cord-cutting in the television industry, the implications for long-term growth are substantial. Earlier this month, IDEX announced that the Twin Transit Authority in Chehalis, Washington will use WAVE inductive chargers to power its electric bus fleet. Similar deals could be forthcoming.
Last Friday IDEX completed its acquisition of privately-held U.S. Hybrid, a maker of electric powertrain components and fuel cell engines for commercial fleets.
This week it was back at the deal-making table. On Monday, it announced a plan to acquire Soletrac, an EV tractor manufacturer based in California. Soletrac sells three ‘e-tractor’ and utility vehicle models to the agriculture and utility sectors. The agricultural tractor market alone is said to be a $75 billion global opportunity.
Message board activity picked up again Friday after IDEX CEO Alf Poor was quoted in a Barron’s article. The article was about Ford’s takeover of Eletriphi which develops charging management and fleet-monitoring software for electric vehicles. Mr. Poor validated the need for EV charging software as the electricity grid balances energy going to the home with the expected surge in EV usage this decade.
Another potential catalyst is IDEX’s upcoming inclusion in the Russell 3000 index on June 28th. This is an important milestone because it places the company in a widely followed benchmark that is tracked by some of the largest institutional investors. Index funds that mimic the Russell 3000 may be looking to add IDEX to their holdings which could put upward pressure on the stock.
There is only one sell-side opinion out there but it’s a favorable one. The analyst at Roth Capital has a buy rating and $7 target which suggests IDEX can more than double from here.
IDEX is now full speed ahead in gathering new software assets and EV manufacturers themselves to expand its diverse EV technology portfolio. Momentum is building fast, so look for the stock to charge higher.
PENNY STOCKS TO WATCH #2 NECA
New America Energy Corp. (NECA) is a tiny OTC stock trading that’s under a penny. It may not be for much longer after it nearly doubled to $0.0027 on Friday in more than 7-times the 90-day average volume.
The company was among the most talked-about names on iHub and other social media platforms during the week—and the chatter has spilled over into the weekend.
Some investors are speculating that the rally will last well into next week after NECA’s Twitter account was active with a major development.
It announced that it signed an Arrangement Letter with auditing company B.F. Borgers CPA PC which it has worked with in the past. The purpose of the agreement is to get the company to ‘fully reporting’ status by getting it caught up on its historical financial statements.
Upon completion of the fiscal 2019 and 2020 financials, NECA will file to become a fully reporting company that files periodic reports. This will give it greater visibility and credibility in the market. It may also create an opportunity for larger merger and acquisition activity as the company tweeted out on Friday.
On the M&A front, NECA told investors to stay tuned for a follow-up this coming week in which it will show why achieving fully reporting status will open new doors.
NECA is a holding company that seeks to acquire cash-flow positive companies. It’s undoubtedly a vague objective although NECA has been said to have an interest in the rapidly growing fintech industry.
This would appear to fit with its sole holding thus far. It owns Title King, a company that developed a free app called Best Title Deal. According to the company’s Twitter feed, Title King offers title loans and title pawns as an alternative to traditional financing. Best Title Deal has a limited presence on Apple’s App Store with four reviews and a three-star rating.
NECA has surged above the $0.01 mark twice over the last six months. The float is low relative to the shares outstanding, so if social media gets behind this thing it could take off in a hurry.
Although we may hear more detail about potential M&A opportunities this week, there’s not a ton of (reliable) information out there on NECA. This combined with its sub-penny share price makes it very speculative.
But with the chatter heating up, the stock may be gearing up for a bigger run.
PENNY STOCKS TO WATCH #3 TRCH
Torchlight Energy (TRCH) lit up Redditt’s Wall Street Bets and Stocktwits this week.
The Texas-based company is an oil and gas explorer and producer focused on acquiring and developing highly profitable U.S. oil fields. It has interests in the Permian Basin located in western Texas and southeastern New Mexico which is known for its rich deposits of petroleum and natural gas.
On Monday, TRCH was the third most discussed stock on Stocktwits. Interest in the stock took off soon thereafter once Robinhood traders got wind of it.
The early week buzz around TRCH was based on the stock becoming another meme stock targeted by social media investors. Much of the interest was based on Torchlight’s reverse merger with Canada-based Metamaterial, a maker of advanced materials that improve our use of light and other energy forms.
Last Friday the merger was approved by TRCH shareholders who will own three-fourths of the combined company. It’s an unusual deal for a couple of reasons. One, TRCH is planning to exit the oil & gas business. And two, it’s a backdoor way for Metamaterial to gain access to the Nasdaq.
Once finalized, Metamaterial management will run the company which will transition to a focus on the development of nanomaterials. The advanced materials are said to have a wide range of product applications in the automotive, consumer electronics, communications, medical, energy, aerospace, and defense sectors.
The momentum in TRCH went to another level on Tuesday after the company declared a special preferred dividend. This suggested the merger was moving along.
Then TRCH announced the sale of $100 million worth of its stock. Although the resulting dilution is bad news for shareholders, it brought TRCH another step closer to wrapping up the Metamaterial merger. After a series of delays, the deal is expected to finalized soon.
Challenges still remain for TRCH. It has to successfully divest its oil & gas business. Better yet, it must prove that the pivot to a significantly different line of business can be successful.
About 12% of the float is still held short. So, with more positive news and social media buzz, TRCH may be firing again this week.
PENNY STOCKS TO WATCH #4 LWLG
We’ve written about Lightwave Logic (LWLG) on several occasions. Our most recent article of June 4th preceded the stock’s biggest run yet. You can read about that here.
Insider Financial subscribers that stayed with this momentum play are reaping the benefits of a major payoff. Last week LWLG continued its impressive June rally with a run to $7.00. The stock is up 307% month-to-date.
The developer of photonic devices and non-linear optical polymers for the communications and computing markets is aiming to power faster networks, reduce energy costs, and support flexible technologies. Although it has been in business for 30 years, its core products are still in the early stages of commercialization.
In last month’s corporate update, LWLG announced a plan to up list from the OTC market to the Nasdaq. This has been the main driver of the recent upswing—but there’s more.
Earlier this month, Lightwave announced that is being added to the Solactive EPIC Core Photonics EUR Index NTR. The index tracks the performance of a portfolio of 60 publicly listed companies that get at least 66% of their revenue from photonics manufacturing activities. It is expected to shed more light on Lightwave’s business within the global investment community.
This week LWLG announced “breakthrough test results” from its new super-fast optical modulator. With speeds above 100GHz, the modulator is said to be three times faster than existing products on the market. It has the potential to support significantly higher internet traffic and the rising popularity of online video platforms.
This news generated a lot of traffic across social media and kept the party going. LWLG finished the week on a seven-session winning streak.
Lightwave Logic’s business is all about transmitting data faster while using less power. Its stock, on the other hand, is consuming a lot of social media’s energy.
As we keep saying, there are always opportunities in the markets and it’s our job to find winning penny stocks for our subscribers. Huge gains can be made in such a short amount of time.
If you like any of these 4 penny stocks to watch, our best advice is to be patient and throw bids in below the market. Buying dips and selling rips as swing trades remains the best strategy.
It’s also important to look for penny stocks that have yet to run. There are plenty of opportunities out there and we screen hundreds of penny stocks each week looking for the best alerts for our subscribers.
Remember, all it takes is one or two to become a winner and you’ve crushed the market indices for the year.
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.