OTC stocks are recovering at the end of this week after a temporary slump followed by inflation data. Earlier this week, both major and OTC stock indexes turned red as investors worried that surging US consumer prices would force the Federal Reserve to ponder a rate hike sooner than expected, which would put pressure on equities that have been benefiting from the cash pile fueled by the central bank.
Nevertheless, now OTC stocks are back on track. The Fed said that the inflation surge was temporary and assured economists that it would keep the rate near zero.
Oliver Pursche, SVP at Wealthspire Advisors, was cited by Reuters as saying:
“The Fed is correct and those (inflation) fears are exaggerated. A lot of prices came down at the height of the pandemic due to dropping demand and now they’re back to pre-pandemic levels. I would very much call that transitory.”
U.S. stocks jumped on Friday, rebounding for a second day led by technology shares and reopening trades after Wall Street started the week with big losses.
The Dow was up 1.06%.
The S&P 500 rose 1.49%.
The Nasdaq surged 2.32%. https://t.co/Hli2FHN51r pic.twitter.com/95SXBjATLx
— CNBC (@CNBC) May 14, 2021
Meanwhile, some OTC stocks with robust fundamentals are trading at bargain prices, and we’re here to bring them to light.
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.
We always alert our subscribers first before we publish for our regular readers. This is the value of having a subscription to Insider Financial, which you can sign up for here. We alert our subscribers with our best ideas before our regular readers.
For example, we encouraged our subscribers to take a look at Social Life Network, Inc (OTC: WDLF) well before the OTC stock surged about 2,000% until peaking in mid-February.
In the present report, we’re about to discuss WDLF along with three other trending OTC stocks, including Galaxy Next Generation (OTCQB: GAXY), Greater Cannabis Company, Inc. (OTCQB: GCAN), and Relief Therapeutics Holding AG (SIX: RLF, OTCQB: RLFTF).
Undervalued OTC Stocks #1 GAXY
Galaxy Next Generation, which provides interactive learning technology solutions mainly for schools, has experienced two price spikes since last summer. The OTC stock has been trading sideways during the last few days, but the upbeat financial data could propel the price higher.
On Friday, May 14, GAXY released its financial report for the first quarter of the year, which ended March 31. The company said that its revenue had increased by 123% compared to the previous quarter, to $777,000. Cash rose 280% to $742,000. Total assets increased to $6.6 million while liabilities fell by $0.6 million.
During the nine months to March, GAXY’s revenue rose to $2.8 million, from $1 million for the nine months to the end of March 2020. During the same period, the gross profit figure rose to over $1 million.
Besides financials, Galaxy Next Generation presented its key business highlights for the first quarter:
- Announced partnership with ROYBI, Inc to bring AI technology into the learning environments of schools.
- Launched G2 Visual Alerts, a safety and security alert system for Schools and other verticals.
- Partnered with CB&A, a marketing firm to assist in messaging and building the G2 brands.
- Received additional order under a supply agreement with OEM customer. It will be shipping the order in current quarter.
- Australian Partner awarded major contract with New South Wales.
- Continued to expand the presence in Thompson County Schools, CO with additional orders.
- Achieved record day for purchase orders with $1 million in single day.
- Awarded 5-year contract with Allen Independent School District in Texas
- Hired a new COO with years of experience in the education technology sector, and a new Regional Sales Manager for the West Coast region.
- Announced the elimination of all Convertible Debt instruments.
Investors should keep an eye on GAXY especially considering that the US is gradually going back to school, with more states ordering to reopen schools in the new season. The OTC stock can potentially increase closer to the school season in the fall.
Last year, we had a bullish feeling about GAXY that we shared with our subscribers well before the two price spikes that came in September 2020 and January 2021.
We think something similar may happen as more schools reopen during the vaccination program, especially considering the upbeat financials of GAXY.
Undervalued OTC Stocks #2 GCAN
Greater Cannabis Company, Inc., a biopharmaceutical company that produces and sells technology for transmucosal delivery of legal medical or recreational cannabis, has been bullish in the first months of the year, although the price has corrected from the year-to-date high at 2 cents, touched in mid-February. Currently, GCAN is trading at $0.007.
Still, the OTC stock might have another bullish attempt, as the company recently announced that its shares had been relisted on the OTCQB(R) Venture Market after an OTC Markets compliance review.
Greater Cannabis stressed that in order to qualify for this market, companies have to meet high financial standards, follow best practice corporate governance, demonstrate compliance with US securities laws and be current in their disclosures.
The $3 million dollar company’s initial product is an oral transmucosal patch platform, which provides loaded actives to be absorbed by the buccal mucosa into the body. It plans to commercialize the technology by sublicensing or partnering with licensed producers, distributors, and other players.
A big plus for GCAN is that it had retired its remaining convertible debt, which usually leads to huge moves of OTC stocks. Also, the company reported an almost 600% revenue increase in 2020.
The cannabis market is only getting traction, and GCAN can benefit from the general trend. It’s a cheap OTC stock that can easily grow by several times.
Undervalued OTC Stocks #3 RLFTF
Relief Therapeutics Holding AG is the largest company from today’s picks ($600+ million market cap), and we still think it’s the most undervalued from this list.
We first discussed RLFTF in August last year, sharing our bullish stance on the OTC stock. The company did really well in the following months, but its share price eventually started to correct, and RLFTF is currently trading at 20 cents. Nevertheless, we treat his as a consolidation period and think that Relief Therapeutics has strong fundamentals.
RLFTF’s main product is a compound that it promotes as RLF-100TM (aviptadil), which the company proposes in the treatment of COVID-19-related lung injury. At the end of April, Relief Therapeutics and German-based AdVita Lifescience GmbH announced the start of the phase 2 trial to assess the efficiency of RFL-100TM for the prevention of COVID-19-induced acute respiratory distress syndrome (ARDS).
The trial (NCT 04536350) is a randomized, double-blind, placebo-controlled phase 2 trial that is carried out at several clinical sites in Switzerland. The study will enroll 80 patients, who will receive either RLF-100 together with standard of care or placebo plus standard of care.
Prof. Dr. Joerg D. Leuppi, M.D., Ph.D., lead investigator of the study, explained:
“RLF-100 is a synthetic form of human Vasoactive Intestinal Polypeptide (VIP), which is highly concentrated in the lungs and has been shown in clinical studies to reduce inflammation. We believe that RLF-100 has the potential to prevent COVID-19 patients from developing serious lung disease which end in the ICU needing mechanical ventilation and look forward to seeing the results from this phase 2 trial.”
If the company succeeds with its trials, we think its share price can no longer stay cheap. Relief’s US partner, NeuroRx, is filing in the US for the emergency use authorization of RFL-100 for the treatment of critically ill patients with COVID-19. The Swiss company is also preparing for potential commercialization in Europe and other territories. NeuroRx is currently conducting the phase 2b/3 trial in the US, and the results will be available in the second half of this year.
On a side note, Geneva-based Relief Therapeutics is listed on the SIX Swiss Exchange (RLF), which is Switzerland’s main stock exchange. In the US, you can find it on the OTC Markets under the symbol RLFTF.
The company’s earnings have increased by over 30% per year on average over the past 5 years, and it has a robust financial situation. We think RLFTF is a good investment with a long-term target.
Undervalued OTC Stocks #4 WDLF
Denver-based Social Life Network, Inc., has been doing well this year. The company peaked in February at 4 cents after announcing that it had retired of its convertible debt. We first paid attention to WDLF at the end of last year, providing our subscribers with the chance to leverage the February rally.
Now it can potentially update the YTD high. Currently, you can buy this OTC stock for $0.013. So far, the 1 cent level acts as strong support.
Social Life Network is a technology company that runs a Software as a Service (SaaS) platform aimed at the real estate market and various sports verticals. The platform represents a cloud-based social network and e-commerce system that could be accessed by a web browser or mobile app, enabling businesses to socially interact with one another and their clients to market and advertise their products and services.
The company’s platform can be customized depending on the industry or subculture. Think about real estate, hunting, fishing, tennis, health and fitness, and so on. Besides this, Social Life Network operates cannabis and hemp industry platforms to offer a social network for communicating between businesses and consumers.
We like to see that WDLF is seeking $45 million in total damages with its two ongoing lawsuits that go after toxic funders, who allegedly violated federal securities laws.
WDLF CEO Ken Tapp is doing everything to protect shareholders, and this reflects the company’s long-term ambitions.
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.