Investing in penny stocks can be a tricky business, especially given the current market sentiment. After the Trump Government came to power, stock markets have been witnessing some wild swings, and penny stocks have been very volatile. We get you a lowdown on the pros and cons of investing in most volatile penny stocks. The trick is not just identifying a bargain buy but knowing the company with the right growth potential and appropriate disclosures in place.
Top 10 Most Volatile Penny Stocks:
So here is a look at top ten most volatile penny stocks in the market now:
- TravelCenters of America
- Antares Pharma
- MoSys Inc
- Western Copper & Gold
- Glu Mobile
- Southcross Energy Partners
- SunPower Corp
- Mueller Water
Innovation and technology have been the key focus areas recently. It would not be wrong then to pretty much call them the flavor of 2017. Given the Trump Government’s relatively pro-business policies, it becomes even more important that you are able to bet on prospects whose growth is guaranteed in the recent future.
In this segment, Arotech comes across as a dependable penny stock. Though the stock price has seen volatile swings, rising to a high of $4.20 and then nose diving to $3.66, the business fundamentals are worth a watch.
This company is into designing and manufacturing devices for defense purposes. Drones and Virtual Reality are two of their biggest focus areas. The company is betting heavily on these two growth platforms to take forward their prospects.
Arotech services more than 80% of the global aviation sector, the future of this company pegs heavily on the opportunities in this industry.
The earnings declared provided a further fillip to the stock and made it a reliable buy despite the huge volatility in the stock price. But you must remember the investment mantra for volatile penny stocks, never hold it for long. Penny stock investment needs to be short-term.
2. TravelCenters of America
This stock has a market cap above $450 million. Given the recent surge in crude oil prices, oil business is a rather lucrative space to bet on at the moment. But you might say that there many ways to bet on this space.
TravelCenters of America is more of a pure gas station play. It has more than 250 travel centers and close to 80 gas stations.
The wild swings in the commodity in general and crude oil specifically makes this a volatile counter. As the oil prices keep shifting from major highs to sudden lows, the stock also sees a huge movement in prices.
Though it is one of the most volatile penny stocks, the margins for the company have maintained an upward trajectory up to 20% levels from under 15% earlier. However, the revenues have nosedived almost 25% in the same period. But knowing the sector that this stock belongs to, you need to be prepared for these sharp swings. After all, oil prices have again begun their upward surge. The revenue picture is also likely to reflect this upward movement and go up in the near future in sync with the price rise.
3. Antares Pharma
This penny stock is trading significantly below the the 200-day moving average and the 50-day moving average and its all-time highs above $5. In the list of volatile penny stocks, this one is seen as a particularly wild one.
However, the price swing happens within a narrow band. That said, given the low price range, even a cent’s difference makes a huge difference to the overall investment position in this stock. In fact, every tick on the stock accounts for significant upswings and downward move in the net value of the stock in all.
If you analyze the technical movement of the stock since it hit the high of $5.58 in 2012, you will notice some really interesting aspects.
It recovered from the multi-wave downtrend in the early part of 2016 and went on to breach the 2014 support levels of $1.80 in November 2016. This unleashed fresh new upswing in the price and generated significant buying interest. As a result, in just 4 months, the stock has clocked almost 50% gains.
The upward movement is seen continuing after the stock breached the resistance level. The expectation is that it will rise 100% and revisit the 2015 highs above $3. The next resistance zone for this volatile penny stock is at $3.50, and several market experts see the stock breaching this level as well in the recent run-up.
4. MoSys Inc
Technology, undoubtedly, is the flavor of the moment. A semiconductor maker, it was founded in 1991 and is currently trading around $0.20. It had earlier risen to around $0.80 and then nosedived to the current price on the back of negative cash flow.
However as MoSys gets back into positive cash flow zone, analysts are continuously raising the target of this terribly volatile penny stock. For a stock that is trading at $0.20, it has a target price close to $2. This is what makes the whole set up so interesting. The last two year’s price action clearly makes it one of the volatile penny stocks in the market.
That said, this is not a long-term investment option. It is a pure technical play and whatever might be your risk exposure, it does not make sense to stay invested for very long in this counter.
The best strategy for this type of play would be to ride the swing and get out when you are in profit.
5. Western Copper & Gold
Given the impact of the Syrian crisis and the overall upmove in the commodity stocks, Western Copper & Gold features prominently in the list of most volatile penny stocks. Currently trading above its 50-day moving averages, the stock has hit its floor around $1.20 last December.
The resistance for the stock continues to be its all-time high of $4.49 that it hit in 2011.
Given the current trend in the market, experts anticipate a breakout going above the crucial resistance levels that the stock hit in 2012 and eventually the 2011 highs. Buying the current range may pay off to investors over the short to medium-term and be able to bring about sustained gains in the shorter term.
But investors or traders betting on this volatile penny stock need to be extra careful about the swings in the commodity market and pay attention to the Geopolitical developments in the Middle East. This is because that could have a direct bearing on the stock price movement for the entire asset class and the sector at large.
The volatility index and the penny stock’s performance in relation to it determine the overall trading strategy for this counter.
6. Glu Mobile
With a market cap of over $600 million and a stock price above $3 levels, is surely not the type of stock that you would want to risk if you want a stable investment portfolio. For those who enjoy the thrill of trading in the market and the wild swings that you experience occasionally, Glu Mobile is the type of volatile penny stocks that they would like to bet upon.
One of the pioneers of mobile games, they soon lost their innovative first mover’s advantage in the market. The economic downturn that the international markets were in the grips of post the Lehman fall resulted in their ultimate doom.
Their recent popular offering, the Kin Kardashian: Hollywood mobile game is seen as a means to recuperate the losses that this volatile counter has suffered thus far. In fact, this game alone contributed about 30%+ to their second quarter results in 2015. Thereon, the stock has charted steady gains in a constructive manner and maintained an upward swing to the current $3 levels.
But given the vulnerability of the business to the whims and expectation of the mobile gamers, a lot depends on how effectively can Glu Mobile anticipate the trade and act in accordance with it.
For most mobile gaming counters, the stock price is closely linked to the demand supply scenario in the market. Innovation and staying ahead of competition have invariably impacted the ultimate stock movements. Moreover, its charts also indicate the potential of a downtrend as it is close to its all time high levels. So for investors or traders who have a position in this penny stock must tread with caution and pay attention to every tick in the counter. Any communication from the management too can significantly impact the stock price.
This one also figures prominently in the list of the most volatile penny stocks to watch out for this year. Way back in 2011, this counter had hit a high around the 20s mark after a multi-year rally and peaked out there on. It again went on to hit those highs after two years.
From then on the stock has been on a downward spiral. The downward trend in the stock continued well within the early part of 2016, and it hit a whopping 19-year low at 85 cents.
However soon after that, there was a bounce back in the stock price, and it went on to recover almost 50% of ground there on. The stock again hit another selling wave in early 2017 and offered interesting entry points. For day traders and those who want to make some easy gains, this is a rather interesting level to explore.
Given the fact that highly volatile counter is now testing its 50-day moving average, any potential breakout will take it all the way above the $3.50 mark and might even breach $3.75 levels. The next resistance level is all the way up at $4. If this stock can breach that as well, you can be poised for gains well above the 2015 levels across $7. However, at that point of time bears might take control.
8. Southcross Energy Partners
A relatively new player in the market, this one did not debut as a penny stock on the exchanges. It listed in 2012 in the early 20s level but thereafter well through 2015 plunged to all-time lows of $0.38 early in 2016.
From there on the stock has followed a highly volatile pattern, gaining some ground, losing some and then again an upswing. It went up to $3+ levels and then tanked to $1 and after that once again gained 100% over its 2015 levels. If it is able to clear the next resistance level, the stock might be able to go up as high as $6.
But given the volatile pattern the stock has followed thus far, it surely isn’t for the weak-hearted in the market. The best option is to have a small position in this counter and create quick and easy exit routes. Though the breakout could lead to $6 levels, the downside could take it significantly below $1 mark.
9. SunPower Corp
The next one in the list of most volatile penny stocks to bet in 2017 is undoubtedly this solar play. With a market cap close to $3 billion, this one is currently trading around $3 mark. Though this is a significant retracement from its 2015 lows under $2.65 levels, you must remember that this volatile counter has come well below the $3.50 levels it had hit in 2015.
Though this volatile stock is down almost 15% from the beginning of the year, it is better poised to take on the challenges of the stock market volatility. This is mainly on the back of its lower reliance on debt.
10. Mueller Water
From solar, we now move to water plays in our quest for the most volatile penny stocks. It is one of US’ best-known fire hydrant makers and has strong business fundamentals to back the stock price movement. However, its pricing and profit margins are dependent on commodity swings to a large extent. If you are planning to invest in this counter, you are best advised to pay careful attention to the extent of volatility that commodity prices can instill in this counter. After all, your eventual risk exposure would depend on it.
Overall when you are investing in volatile penny stocks, the principles of stock picking remain the same. You have to be looking at an easy marriage of business fundamentals with stock market trends.
The entry prices of most volatile penny stocks always remain attractive, but you have to be careful about the kind of profitability and risk that it entails. You must, after all, understand that given the volatility of penny stocks, it is never advisable to pick these for the longer term. The overall percentage of the rally cannot be the sole criterion of choosing the counter. Timing your entry and exits are crucial as well.