The classic investment adage “sell in May and go away” refers to the notion that stocks perform best from November through April.
The phrase seems to be gaining credibility after the market pulled further back from its record highs this week amid mounting inflation concerns.
Of course, the strategy of exiting the market in May is far from an exact science. After all, there have been plenty of periods of outstanding May through October performance. In hindsight, May 2020 was a great time to “buy-in May and not go away”.
Whether the current market correction deepens into bear market territory or amounts to another ‘buy the dip’ opportunity remains to be seen. Trading activity late in the week was reminiscent of the bottom-feeding we’ve grown accustomed to seeing over the past year.
Regardless of where the market goes from here, there are always good buy opportunities out there. It’s important to remember that market corrections are healthy events. They re-calibrate the market and set the stage for the next leg of the rally.
When the market is in risk-off mode as it currently is, OTC stocks often bear the brunt of the downturns due to their higher risk nature. Yet the OTC markets have held up relatively well this week.
In fact, some have performed quite well. Let’s take a look at four OTC penny stocks that made some big moves this week—and may just be getting started.
OTC PENNY STOCKS TO WATCH #1 AZFL
AZFL has been the subject of a lot of chatter this year.
The Miami-based company is one of the cheapest ways to play the cannabis theme with a share price that starts three spots after the decimal point. In its previous life it was a natural resources company that developed land in the Amazon rainforests of Brazil before pivoting to hemp extraction.
In February 2021 it announced that it is reorganizing and heading in a new direction. As part of the strategic shift, its charter with the state of Nevada was reinstated. As widely speculated, it announced it has entered a new space—hemp-derived cannabinoid concentrates. Say that three times fast!
On May 12th, AZFL regained market compliance as a Pink Sheets Information Tier company. This sparked a relief rally that sent the stock to its highest level in weeks.
This summer AZFL is expected to open a new cannabis extraction lab. Its fully owned Green America Labs subsidiary is on the verge on producing a range of CBD oils, distillates, and powders there to sell to cannabis product companies on a global scale. This week it announced that only the permit process for equipment installation and hiring workers stand in the way of launching production.
Miami’s multicultural vibe gives AZFL a unique edge. Since its residents come from many parts of the world, emerging market governments could turn to Miami to advance their cannabis ambitions. This along with the area’s importance in international cargo transportation gives AZFL an ideal setting to blossom into a leading hemp extract exporter.
Momentum in hemp and CBD legalization is building in the U.S. and overseas. In the process, look for AZFL to gather momentum of its own.
OTC PENNY STOCKS TO WATCH #2 BRGO
We first wrote about BRGO in October 2020 shortly before the stock went on a nice run. That article can be found here.
We also wrote about the company in February 2021 around the time it went on an even bigger run, which can be found here.
This week BRGO completed the trifecta with a nice spike on massive volume.
On May 12th, the jewelry maker announced that it is acquiring a 51% stake in e-commerce fulfillment company GearBubble. BRGO agreed to pay $2 million at the time the deal closes and another $1.16 million over the course of 15 months for a total cost of $3.16 million. Last year GearBubble raked in $27 million for its role in processing a wide range of consumer goods. More recently the company entered the jewelry space, a fast-growing segment of e-commerce. The deal is expected to be finalized by July 1st.
BRGO CEO Berge Abajian commented, “GearBubble delivers forward-thinking technology innovation to millions of B2B e-commerce customers and a robust assortment of gifting products. We are thrilled to welcome them into the Bergio family, allowing us to expand our footprint in new categories further while assisting GearBubble to develop their growing jewelry division.”
It wouldn’t be surprising to see BRGO increase its position in GearBubble over time if not make an outright purchase of the company. Often when companies acquire a majority but not full ownership in a target they want to test the waters to see if there are synergistic benefits. Sometimes a successful combination leads to a complete marriage down the road.
The news immediately got social media outlets going and the pace of the chatter hasn’t slowed much since. Stocktwits, Reddit, and iHub were overwhelmingly bullish on BRGO. This helped propel the stock 130% on the day of the news. At its peak, BRGO had more than quintupled.
BRGO made a splash earlier this year when it announced the acquisition of Aphrodite’s, an up-and-coming online jewelry distributor. Aphrodite’s is forecasting $32.4 million in revenue this year. The move will instantly make BRGO a force to be reckoned with in the global online jewelry market.
As the pandemic has highlighted, traditional brick-and-mortar companies need to have a strong online storefront to stay relevant in the evolving world of luxury shopping. Being able to sell directly to consumers on a global scale should be a major boost to BRGO’s financial performance. Since BRGO acquired Aphrodite’s, it has already increased production by more than 100,000 units.
With a pair of significant acquisitions under its belt this year, BRGO has signaled to the online jewelry market that it means business. In a matter of a few months, it has added roughly $60 million to its top line.
After Wednesday’s surge, profit-taking set in and dragged the stock lower. But this is not the end of the BRGO story. It looks to be in the early stages of a sparkling long-term run.
OTC PENNY STOCKS TO WATCH #3 OPTI
OPTI has been a regular feature here at Insider Financial dating back to when we first highlighted the stock as a smart COVID play in September 2020. That story can be found here.
Last month, we provided an update on OPTI discussing the med-tech company’s rapid Antigen test kit that has been approved for home use by the FDA. Soon thereafter, OPTI announced that it had received the first shipment of the test kits which consumers and businesses will be able to buy online and over the counter. We also covered OPTI’s recent acquisition of WeShield to strengthen its AI-based PPE platform. That article can be found here.
As usual, the news flow has remained strong for OPTI. This has helped keep the stock on penny stock investors’ minds—never a bad PR strategy.
On May 4th, OPTI reported fiscal 2021 third-quarter results which were excellent as anticipated. Revenue of $11.58 million was astronomically higher than the prior-year quarter and grew 4.5% sequentially. The company swung to a $1.85 million net profit. Both figures reflected the huge demand environment for PPE. This was indeed good news but since it was widely expected, it did little to move the stock.
But this past week, a possible inflection point was reached as investor sentiment turned bullish. OPTI nearly returned to the $0.10 level after dipping below $0.06 earlier in the week.
Although much of the attention around OPTI has been focused on its PPE products, there is much more to the business. At its core, it is a green technology company that pivoted to PPE to capitalize on the pandemic opportunity. Its Fuel Maximizer products are designed to reduce carbon emissions and increase engine performance. They have a widespread application in the clean energy and transportation industries.
Like many February 2021 OTC winners, OPTI gave up most of its gains since then. It’s worth noting though, that the volume on the way down has been remarkably low. This suggests that most investors are in it for the long haul and appreciate OPTI as both COVID-19 and clean energy play.
As one catalyst fades, the other has the potential to take over and keep the OPTI run alive.
OTC PENNY STOCKS TO WATCH #4 QNTA
This is our second time this month discussing QNTA. This tells you how much we, and the investment community, like it. Our article from a couple of weeks ago can be found here.
QNTA more than tripled on April 30th. It then gave up the gains and appears to be recharging for another run.
The California-based biotech company is best known for its Escozine drug candidate for the treatment of COVID-19. Escozine consists of peptides that are derived from Rhopalurus Princeps scorpions that are commonly found in the Dominican Republic and Haiti. The scorpion peptides are owned by Medolife with whom QNTA is merging.
QNTA is hoping to receive the investigational new drug (IND) designation from the FDA. Escozine is also being evaluated as a potential treatment for multiple forms of cancer.
The company recently announced that Escozine has been approved for sale in the Dominican Republic as both a COVID-19 treatment and an alternative cancer treatment.
Then, on May 11th, QNTA announced a shakeup in its management team. Philip Sands is stepping down from the role of President. He is being replaced on an interim basis by Medolife CEO Dr. Arthur Mikaelian who will also serve as Chairman of the Board. Even though it was a planned step in the merger process, the headline also shook up the investment community because it was perceived as a step in the right direction. It sparked a strong volume run above $0.15 that could mean the previous peak of $0.20 is not far away.
So, while QNTA is widely perceived as a COVID-19 play, investors also get exposure to the oncology space. In pre-clinical studies, Escozine in combination with chemotherapy was found to be effective in killing leukemia and lymphoma cancer cells.
In the near term, investors are hoping for good news from the FDA regarding the advancement of Escozine for COVID-19. If the new leadership structure can deliver on this potential catalyst, QNTA is likely to explode. In the meantime, momentum is in this stock’s favor.
As we keep saying, there are always opportunities in the markets and it’s our job to find winning OTC penny stocks for our subscribers. Huge gains can be made in such a short amount of time.
If you like any of these 4 OTC penny stocks, 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)!
WHEN INSIDER FINANCIAL HAS A STOCK ALERT, IT CAN PAY TO LISTEN. AFTER ALL, OUR FREE NEWSLETTER HAS FOUND MANY TRIPLE-DIGIT WINNERS FOR OUR SUBSCRIBERS. WE SPECIALIZE IN FINDING MOMENTUM BEFORE IT HAPPENS!
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.