The penny stock market has been doing quite well during the last few months, benefiting from the general bullishness of the stock markets. In the first quarter of last year, many small companies went bankrupt or reduced staff and entire units because of the pandemic. Still, small companies are now reviving thanks to the cash injections from Fed, massive stimulus packages implemented by the US government, and the vaccination program rolled out a few months ago.
Since April, the main indexes tracking OTC stocks, including OTCQX Composite, OTCQX Billion+, and OTCQX US, have been updating their all-time highs, mimicking the trend of the S&P 500.
Most penny stocks are in recovery mode after a devastating pandemic. The earnings season has not been satisfying, even though it was in line with expectations. Still, investors hope that the COVID vaccines will support a V-shaped recovery.
Keys To Penny Stock Investing
Thanks to the ongoing bull run, there are plenty of opportunities for investors. If you follow us here at Insider Financial, you can discover the best trending penny stocks.
Remember that the key to trading penny stocks is determining the momentum BEFORE it happens and then hold the shares for as long as needed. We make sure to provide our subscribers with key insights that can help them find momentum BEFORE it shows up.
For example, we got our subscribers in early on RVVTF when the stock price was below $0.2 – you can read our first article about Revive (CSE: RVV, USA: RVVTF) here. This penny stock is still trending, and we are about to discuss it in the present article, along with three other penny stocks worthy of watching, including Hertz Global Holdings (OTCPK: HTZGQ), iMD Companies (OTC: ICBU), and SOHM, Inc. (OTC PINK: SHMN).
Before going any further, we’d like to stress that the best approach to investing in penny stocks is to build a dedicated portfolio conducive to proper diversification. Otherwise, penny stocks are highly volatile, and investing in individual companies might be risky even if their fundamentals are promising.
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.
Now let’s continue with the four penny stock to watch these days.
PENNY STOCK TO WATCH #1 HTZGQ
Hertz Global Holdings is currently trading at $2.72, down 15% on May 4, though it’s still up over 60% since the beginning of April. Most of the gains came during the last 5 days, with the stock price adding over 50%.
HTZGQ has become extremely volatile on Tuesday on the news that it had received a revised proposal from affiliates Knighthead Capital Management, Certares Opportunities, and Apollo Capital Management to get it out of bankruptcy.
Once a leading global car rental and leasing service provider, Hertz filed for bankruptcy exactly one year ago as it couldn’t withstand the damage caused by the COVID-19 pandemic, with demand for airport and off-airport car rental services tumbling dramatically.
Obviously, HTZGQ’s veteran stakeholders have lost money due to the pandemic, but it doesn’t mean there is no opportunity now that the stock has been trading at its bottom for months.
What may give Hertz a boost is the reorganization plan that is allowed under the Chapter 11 bankruptcy form. For those unfamiliar, companies seeking to file for bankruptcy can choose from several forms, but the two most popular ones are Chapter 7 and Chapter 11. Under the former one, the company is forced to stop all operations and goes out of business.
Elsewhere, Chapter 11 bankruptcy enables the company to reorganize and hopefully return to normal business. While this form is the most expensive and complex of all bankruptcy proceedings, it keeps filing companies away from liquidation.
Earlier on Tuesday, May 4, Hertz received a renewed proposal from Knighthead Capital Management, Certares Management, and Apollo Global to fund the rental car company. The trio would handle Hertz’s bankruptcy exit through direct common stock investments of $2.9 billion, direct preferred stock investments of $1.5 billion, and a right to raise $1.36 billion.
According to the announcement, the revised proposal also includes:
“An amended Plan of Reorganization that contemplates payment in full of all secured and unsecured funded debt and provides holders of common stock with $0.50 per share in cash and either 10-year warrants for an aggregate of 10% of the reorganized company or, for eligible stockholders, the possibility of subscribing for shares of common stock in the rights offering.”
While HTZGQ has tumbled by over 10% after the news, this might be part of a price adjustment attempt following the announcement of the best offer so far. Investing in HTZGQ right now carries some risks and can be based primarily on speculation, as the company hasn’t confirmed whether it green-lights the deal.
PENNY STOCKS TO WATCH #2 ICBU
iMD Companies is down 8% on Tuesday, though it has been gaining over 90% during the last 5 days. The stock is trading at only $0.024, so you can expect higher volatility compared to $2+ stocks. Moreover, the company is linked to the cryptocurrency market, which is another factor that might add to the already extreme volatility.
The Florida-based company has rebranded into a holding firm for acquisitions and development in the cryptocurrency and blockchain markets. This might be a big plus for ICBU investors. Even though Bitcoin and altcoins are trading close to their all-time highs, the sentiment is still bullish, especially thanks to emerging trends such as Decentralized Finance (DeFi) and non-fungible tokens (NFTs).
At the end of April, iMD said that it would focus on farming Chia (Chia.net) coins.
“From our first announcement in March, we have been building Servers for plotting and farming Chia Coins. Our facilities have been winning Chia coins nearly every day from the start of our operations,” the company said.
iMD’s initial goal is to reach over a petabyte (1000 Terabytes) on the Chia mainnet later this month.
Thus, ICBU’s stock price will depend on how well Chia is doing. The good news for ICBU investors is that Chia might leverage the general bullishness of the crypto market. The blockchain network is promoted as a Bitcoin and Ethereum alternative that doesn’t require huge amounts of electricity (since it doesn’t rely on the Proof of Work consensus mechanism). Besides this, it supports smart contracts while being more decentralized and secure.
The blockchain project was founded by Bram Cohen, the inventor of BitTorrent. The project has tremendous growth potential, judging by the caliber of investors that have already bet on it, including Andreessen Horowitz and Galaxy Investment Group.
Chinese media reported that many local miners were jumping into Chia to diversify their Bitcoin mining operations. The cryptocurrency, which went live at the beginning of May, is about to get listed on major exchanges with the ticker XCH. The coin’s price is currently close to its bottom at less than $700, after peaking at over $1,900 right after the launch.
ICBU can generate decent returns in the following months if Chia manages to stand out as an efficient blockchain network.
PENNY STOCK TO WATCH #3 RVVTF
Canadian biotech firm Revive Therapeutics is trading at 40 cents per share, gaining over 8% during the last 5 days.
While the stock has been gradually declining from its ATH hit in mid-December of last year, investors should keep an eye on it since it might be one of the most undervalued stocks traded on OTC markets, as we already explained on previous occasions.
Moreover, from a technical analysis perspective, RVVTF has just broken above the upper line of a triangle pattern, which might mark the start of a fresh uptrend.
If you are concerned that the liquidity and trading volumes of penny stocks make technical analysis less relevant compared to blue chips, rest sure that Revive has no shortage of robust fundamentals.
RVVTF’s most important product that might attract investors’ attention is Bucillamine, an easy-to-use COVID-19 treatment option that has reached Food and Drug Administration’s (FDA) Phase 3 clinical trial, which is quite an achievement for a $100 million company. The study is about to conclude this quarter, with RVVTF expanding from 14 clinical sites to 26 clinical sites as of May, aiming to reach 50 sites.
On Monday, May 3, Revive announced that it had reached a sponsored research agreement with the University of California, San Francisco (UCSF) to analyze the efficiency of Bucillamine as a treatment for severe forms of COVID. Revive will be able to research in the laboratory of Dr. John Fahy to trial the efficiency of Bucillamine in pre-clinical models of COVID-19.
Michael Frank, CEO of Revive, stated:
“We are excited to expand the use of Bucillamine as a potential treatment for severe COVID-19 with our research agreement with UCSF and Dr. Fahy as Principal Investigator. Revive is focused on proving Bucillamine’s clinical utility for all forms of COVID-19. Evaluating Bucillamine for severe COVID-19 along with our dedication in completing our ongoing Phase 3 clinical study for mild-to-moderate COVID-19, which has grown from 14 clinical sites to now 26 participating sites in 10 U.S. states, will position Bucillamine as a potential oral treatment option for mild-moderate to severe COVID-19.”
If Bucillamine succeeds as an efficient oral treatment for COVID and gets approved by the FDA, the stock price of RVVTF is expected to surge as the pandemic figures continue to increase. While the vaccination campaigns will likely go on for the years to come, there is a huge demand for COVID treatment as well, and there aren’t many treatment options so far.
Besides Bucillamine, Revive is advancing the development of Psilocybin-based treatments for mental illness and neurological disorders after the acquisition of Psilocin Pharma Corp.
PENNY STOCKS TO WATCH #4 SHMN
US-based SOHM is another pharmaceutical company traded on OTC markets that has great potential to expand its valuation. SHMN is super-cheap – it’s less than 1 cent per share, to be more precise. That means it can easily double or triple in price, though such small companies (SOHM is a million-dollar firm) carry much higher risk.
SHMN has been trading above $0.001 since January, gaining over 1,000% year-to-date. This kind of return is possible with penny stocks, as they have more room for growth in terms of return on investment (ROI) compared to large companies.
SOHM manufactures and sells several generic pharmaceutical and cosmeceutical products.
At the end of April, SOHM announced that it had signed a Letter of Intent for Acquisition of a leading Southern California-based pharmaceutical company, as it aims to expand in the US. The fact that SOHM is conducting acquisitions proves that the company is forward-looking and has the potential to expand further.
The Final Note
There are always opportunities in the OTC markets, and we do in-depth research to identify hot penny stocks for our subscribers. The great thing about small caps is that investors can generate huge gains in a relatively short amount of time.
If you like any of the discussed 4 penny stocks, it is best to stay patient and buy stocks below the market price. Buying dips and selling rips as swing trades remains the best strategy.
If you build a solid penny stock portfolio, all you need is one or two to perform extremely well, and you beat the major indices for the year.
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.