/shutterstock_1176872-5bfc46c5c9e77c00514a2650.jpg)
Penny stocks have a well-deserved reputation for low quality, high risk, and intense volatility. However, by practicing due diligence, you can discover some hidden treasures in the most unexpected places. Below, you’ll find updates on previously discussed penny stocks from this column, followed by a few new intriguing and inexpensive trade ideas that are still flying under most investors’ radar.
Some of the set-ups describe below may no longer be relevant or intact as of the time you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds Newsletter. Peter may own shares in some of the investments mentioned, in which case that fact will be clearly indicated. Please note that penny stocks are notoriously volatile.
First, Some Updates
Gold Resource Corporation (GORO)
Gold Resource Corporation (GORO) was up 11% over November, mostly on mounting fears over inflation and the ensuing rush to “safe” stocks like gold companies. The stock is positioned for continued gains on the back of the seasonally strong November-February period for gold, which usually sees prices of the precious metal rising. An excellent forward price-to-earnings (P/E) ratio of 14.21 also suggests that Gold Resource stock should outperform in 2022.
TradingView.com
Denison Mines Corp. (DNN)
In the first half of November, Denison Mines Corp. (DNN) shares soared 20% to $2.14. It has struggled since then, however, likely due to shareholders taking gains and a lack of newsflow to keep the momentum going.
That said, a brighter future may await investors who enter Denison Mines stock now, given the company’s strong balance sheet (with quick and current ratios at 5.60 and 5.80, and zero debt/equity), the possible beginnings of a bullish morning star candlestick pattern, and triple-digit quarterly sales growth as of the most recent results.
TradingView.com
Taitron Components Incorporated (TAIT)
Taitron Components Incorporated (TAIT) was a stock profiled in this column many times over 2019 and 2020. At its peak, it racked up a 170% gain from the first time it was discussed here. Now it is in focus once again due to a host of strong fundamentals, including 75.40% earnings per share (EPS) growth this year, a profit margin of 27.80%, and a P/E ratio of 10.79—all in a stock that is currently priced at only $4.24.
TradingView.com
Some New Ones
Chembio Diagnostics, Inc. (CEMI)
Chembio Diagnostics, Inc. (CEMI) stock gapped up by almost 6% around the end of November, which is a bullish sign for the short term. From a non-technical standpoint, the group’s COVID-related products (diagnostic tests, specifically) should also be a draw to new shareholders given the global concern about the new Omicron variant.
TradingView.com
TOMI Environmental Solutions, Inc. (TOMZ)
TOMI Environmental Solutions, Inc. (TOMZ) stock is looking very intriguing at the moment. A hammer candlestick, underpinned by strong trading volume, at the end of November is a good sign that the stock could be seeing a bullish trend reversal in the short term.
Furthermore, from a fundamentals standpoint, a fantastic balance sheet and five-year average revenue growth—as well as excellent EPS this year—could draw more new investors to the stock. And finally, like Chembio, this play could do well given its COVID/Omicron exposure.
TradingView.com
Best Brokers for Penny Stocks
Interactive Brokers
Interactive Brokers’ very low per-share trading commission of $.005 ($1 minimum per trade) and up-to-the-split-second real-time margin calculations are ideal for penny stock traders. IBKR Lite clients can trade penny stocks for $0.
-
Low commissions, maximum 1% of trade value for IBKR Pro, $0 for IBKR Lite
-
Streaming real-time data, including account information
-
IBot, IB’s AI-powered online assistant, can help find features
-
Data streams on only one device at a time
-
Traders Workstation a steep learning curve
-
IBKR Pro customers charged fees to trade, though they are low
Charles Schwab
Schwab’s research pages point out the exchange on which a stock trades, which will keep you informed of the inherent risk. There are a variety of platforms available; the StreetSmart platforms have customizable charting and streaming real-time quotes. Schwab does not charge trading commissions on all stocks (including penny stocks) and ETFs.
-
Excellent screeners available on StreetSmart Edge
-
Free access to a wide array of news feeds
-
Strong customization and personalization options on StreetSmart Edge
-
The sheer number of features and reports available sometimes overwhelming
-
Transaction history for just 24 months online
-
Uninvested cash not swept into a money market fund
Penny stocks are volatile and can generate catastrophic losses. Price levels in this article are hypothetical and do not represent buy recommendations or investment advice. Keep in mind that it’s your responsibility to make trading decisions through your own skilled analysis and risk management.
Peter Leeds is the author of several books, including the international bestseller, “Penny Stocks for Dummies.” He and his team also issue a newsletter devoted exclusively to penny stock picks and analysis, as well as a popular YouTube channel PeterLeedsPennyStocks.
