Usually, investment writers bury the fine print at the end of the article. You know the story, though: all investments involve risk and therefore, you must practice due diligence. That’s fine when discussing blue-chip equities. But when you’re dealing with penny stocks, you’ve got to go above and beyond.
One of the biggest reasons for the extra precautionary disclosures is that penny stocks are wildly risky. When you speak with a certified investment professional (as in, not this author), you will almost certainly be directed to a portfolio of high-quality securities and investments with rational bullish narratives. Unfortunately, the speculative fare tempts you with their cheap prices — which typically get cheaper after purchase.
Sure, your “friends” on social media will brag about their gains and their newfound financial freedom acquired through penny stocks. First off, people lie on the internet (believe me, it happens). Second, someone somewhere will win the lottery. But that doesn’t bear any relevance to whether you will win out.
Therefore, I’m going to share with you what my former martial arts instructor told me: rule number one is don’t get hurt. This applies to self-defense as it does to these penny stocks to consider.
Overall, the important point is that if you decide to gamble on these ideas, you’re doing it because you feel it’s the right opportunity. Don’t let me or anybody else sway you into investments you are not comfortable taking. And with that in mind, let’s dive in and take a closer look at these penny stocks to consider.
Penny Stocks: Bolt Biotherapeutics (BOLT)
A close-up concept image of a tiny glass vial with a strand of DNA in it.
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Most of the ideas I have will be priced literally as penny stocks, at least as of the time of this writing. In contrast, most folks will consider Bolt Biotherapeutics as being priced on the upper spectrum of what would be considered a penny stock. However, you should note that one year ago, Bolt was one of the more promising initial public offerings (IPO) in the biotechnology space.
On Feb. 5, 2021, shares closed at $32.15. However, at the end of the third week of 2022, BOLT stock ended the session at $3.63, nearly an 89% loss. Even on a year-to-date (YTD) basis, the numbers are horrifying, with a drop of more than 30%. If you didn’t pay attention to anything I said about penny stocks above, it’s time to sober up.
This is not a comfortable trade by any stretch of the imagination.
However, there is a possibility that Bolt — which is pioneering a new category of targeted immunotherapies to facilitate anti-tumor immune responses — could eventually enjoy a resurgence. Currently, a huge need exists for therapeutics designed to address difficult-to-treat solid tumors. With that in mind, Bolt has provided some encouraging data, though early-stage biotechs are almost always crapshoots.
AMMO Inc. (POWW)
many ammunition bullets pattern background
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A positive element about penny stocks is that they can facilitate equity ownership in underappreciated industries. I’m not entirely sure I would classify the ammunition industry as underappreciated, but the supply shortage that prompted massive runs on guns and price hikes on ammo created a huge opportunity for AMMO Inc.
However, the narrative has shifted, at least on the charts. On a YTD basis, POWW stock plummeted nearly 25%. Over the trailing six months, the damage is even more pronounced, with the security hemorrhaging more than 43%. Some of the negativity could be due to shareholders being worried about Ammo’s acquisition of GunBroker.com, which is the world’s largest marketplace for firearms and related products.
In my view, the selloff seems overdone, mainly because the supply crunch in the ammo industry isn’t yet over. According to the National Interest, both hunters and stores in the deep south are “having trouble accessing ammunition during the height of hunting season.”
Of course, a major headwind is that new production takes time to distribute throughout the supply chain. Furthermore, the spike in gun demand from average everyday citizens have forced ammo manufacturers to concentrate on the most profitable calibers. Either way, there’s still a supply shortage, boding well for POWW stock.
Penny Stocks: Seanergy Maritime (SHIP)
A photo of a large oil shipping rig.
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From a charting analysis perspective, Seanergy Maritime is among the more intriguing penny stocks. While other speculative ideas have incurred horrendous losses on a YTD basis, SHIP stock has kept relatively afloat, losing only 4%. That’s a better profile than some of the blue-chip equities that I’ve seen during this broader market fallout.
With the exception of a brief blip higher, SHIP stock has been trending in a horizontal channel since the beginning of December last year. That’s usually a frustrating condition for most other asset categories. For penny stocks, though, it could be a sign that at any moment, a wave of buying activity could lift SHIP stock — if only temporarily.
According to its website, Seanergy is billed as the “only pure-play Capesize shipping company listed in the US capital markets.” As you know, the shipping industry has been under the microscope due to the ongoing global supply chain crisis. But looking beyond the novel coronavirus pandemic, experts project the dry bulk shipping market to be worth $5.5 billion by 2030, registering a compound annual growth rate of 4% between 2022 and 2030.
Sure, it’s slow growth. But at these deflated levels, SHIP stock might be interesting to the hardened speculator.
McEwen Mining (MUX)
a cart filed with gold in a gold mine
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As I write this, McEwen Mining closed the Jan 21. session at 95 cents. Depending on how broader sentiment plays out, this could be one of the penny stocks that are no longer literally the case by the time you read this. Specializing in precious metal mining, MUX stock might generate interest among those who wish to speculate on the possibly incoming fear trade.
Although an interesting concept, it’s a tough one to have confidence in. Namely, the Federal Reserve has admitted great concern over soaring consumer prices. Therefore, it seems a sure bet that the central bank will implement an aggressively hawkish monetary policy. That will likely raise borrowing costs, thus lifting the dollar above other international currencies.
On paper, that wouldn’t be positive for precious metals. Then again, this sector has been looking enticing since December last year. It could be that fear of the unknown will lift the metals, irrespective of a rising dollar.
However, it’s also important to note that McEwen is also involved in copper mining, with the underlying asset being critical for electric vehicles (EVs). That’s no guarantee of upside, but MUX stock is one of the penny stocks to watch carefully.
Penny Stocks: Waitr (WTRH)
Photo of Waitr (WTRH) logo in a mobile app store browser.
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To be completely upfront, I don’t have the greatest of confidence in Waitr, an on-demand food-delivery service that connects users with several local establishments. As you might imagine, the platform experienced a surge in demand following the initial intrusion of the coronavirus pandemic. But as people became acclimated to the crisis, WTRH stock suffered considerably.
Also, Waitr came to the public market via a reverse merger with a special purpose acquisition company (SPAC) before SPACs became a hot commodity. Still, post-business combination SPACs have underperformed benchmark indices over the trailing year. Overall, WTRH stock truly demonstrates the risks involved with merging with shell companies. The equity unit is down almost 95% against its $10 initial offering price.
However, is there an outside chance that WTRH stock could be worth something for the speculator? Suffering a 25% YTD loss, the situation doesn’t look good. However, mitigation protocols to address the omicron threat makes going to restaurants a bit of a drag. More critically, according to experts, a possibility still exists that a highly infectious and deadly variant could emerge.
That said, I don’t want to think about it and that’s the point. WTRH stock is one of the penny stocks that largely only has a cynical thesis.
Boxlight (BOXL)
Boxlight (BOXL) website under magnifying glass
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Billed as an innovative education platform that provides better solutions for better results, Boxlight from a bigger-picture perspective seems like one of the most compelling penny stocks available. Essentially, the company offers a holistic solution to the academic market, enabling students to learn key subjects such as STEM (science, technology, engineering, math) in an effective manner, thus improving educational outcomes for everyone.
Sadly, the market doesn’t exactly feel the same way. Since the January opener, BOXL shares have dropped nearly 26%, a conspicuously steep figure even when stacked against other risky penny stocks. Over the trailing half-year period, the security has succumbed to a 48% move below parity.
If you’re asking why, the issue likely stems from the omicron variant, specifically its impact on school systems. They’re shutting down, eschewing the traditional learning experience for at-home learning. It’s a tough position to be in because, in the name of safety, we could really be damaging future generations of American workers.
Furthermore, the Washington Post warned about a lost generation as research indicates students are sliding backward. Thus, Boxlight’s relevance could spike up BOXL stock. We just don’t know when that will be.
Penny Stocks: First Graphene (FGPHF)
A digital illustration of 3D graphene molecules.
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Before we get into a discussion about First Graphene, I own a few shares of this extremely speculative idea. Therefore, take it with a grain of salt and always conduct your due diligence, especially with risky penny stocks.
Although buying shares presently priced at 14 cents is not necessarily the wisest move, I was nevertheless encouraged by the underlying narrative. As one of the few legitimate research and developers of graphene-based products, First Graphene has enormous potential provided that its business strategies go according to plan. As the strongest material known to exist, the namesake asset offers substantial additive applications.
For instance, graphene-treated concrete could yield more resilient buildings and cut down on material waste. Also, concrete is a surprising source of carbon emissions; thus, improving its durability is an environmentally accretive endeavor.
If that wasn’t enough to pique your curiosity, First Graphene recently achieved a milestone with its high-performing supercapacitor materials project, which has obvious implications for EVs and the next generation of clean transportation initiatives. It’s no wonder so many have labeled graphene as a miracle material.
Still, this is a super-risky play. So only gamble with money you can afford to lose.
On the date of publication, Josh Enomoto held a LONG position in FGPHF. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.
