The stock markets have been tumultuous since the beginning of 2022. Due to inflation, conflict, food poverty, volatile stock markets, an impending recession, and fluctuating energy costs, investors are caught between taking cover and pursuing countless chances.
There are several attractive opportunities available right now, not just despite the general economic turmoil but, in some cases, because of it. In the domain of penny stocks, the following investments should perform well when most stocks are under pressure.
The penny stock market is where instant investing success tales are formed, yet this market is too volatile for most investors. If you want to succeed, you must comprehend the dynamics of competing directly with other traders and selecting solid businesses. Penny stocks may not be suitable for everyone, but you may succeed if you conduct thorough research and are ready to accept risk. Examining the most volatile penny stocks enables you to generate quick money with an immediate purchase and sell.
Volatility is only a statistical indicator that indicates the range of returns for a particular stock or market index.
This variation is measured by the variance or standard deviation between results.
The volatility of a stock is equivalent to the amount by which its price will diverge from the initial cost (also known as the mean price) at which it was previously traded. This is comparable to a pendulum.
The greater the deviation of the pendulum from its initial (mean) position, the greater its volatility. More fierce the swings, the greater the volatility, and vice versa.
When volatility is intense, dispersion will be more excellent, resulting in a more fantastic price range. The reverse is true for stocks with little volatility.
Penny stocks have existed since the beginning of the stock market. Government regulation distinguishes the penny stock market from the mainstream today. After the Crash of 1929 and the accompanying Great Depression, the Securities and Exchange Commission (SEC) defined "penny stock" to place more robust controls on its trading.
In the Securities Exchange Act of 1934, the SEC defined penny stocks as those that trade for less than $5 and are not listed on a national stock exchange. Until the Great Recession of 2008, this theory held. This was followed by a substantial clarification from the SEC on penny stocks, saying that securities traded on major US markets could use the name if specific requirements were fulfilled. There are few exceptions, such as securities issued by companies with net tangible assets surpassing $2 million after three years of operation or $5 million after less than three years. Penny stocks aren't, for example, securities issued by companies with three-year sales averages of at least $6 million.
Some penny stocks are traded on significant exchanges, but most are sold over the counter. These penny stocks trade predominantly on the Pink Market. This market features a vast array of enterprises, even those that may be insolvent.
1. Wrap Technologies, Inc. (WRAP)
After appearing in "Penny Stocks to Watch for April 2022," Wrap Technologies, Inc. (WRAP) hit $3.70 in the third week of that month, an almost 40 percent increase from the beginning of March 2022.
However, the previous several weeks have been less beneficial for this public safety stock, as the firm reported poor earnings at the start of May. As a result, as of the writing of this report, Wrap Technologies stock was trading for only $2.07 per share.
Nonetheless, Wrap Technologies may be due for a long-term turnaround. With no debt and quick and current ratios of 12.60x and 13.30x, respectively, the firm should have the firepower to weather the supply chain interruptions and pandemic difficulties. Quarter-over-quarter operating profit (EPS) growth of 8 percent and revenue growth of 6.70 percent may not be the exploding figures investors are looking for. However, those who indicate that supply for the company's flagship product, the BolaWrap, which can subdue attackers without trying to kill them, is slowly increasing.
2. Remark Holdings (NASDAQ: MARK)
After soaring to all-time highs in 2020's coronavirus market, Remark Holdings became a significant player in the biotech industry. Because of its implications for coronavirus screening, the company's artificial intelligence (AI) technologies have garnered widespread media attention. Before this influx of favorable publicity, the corporation was best known for owning the website Bikini.com. From there, securing an exclusive deal with Wynn Resorts (NASDAQ: WYNN) to supply COVID-19 thermal scanners is a significant leap, but it is legitimate.
MARK has agreed to offer its AI solutions application to Steve Wang's online sports fantasy betting platform, Super Draft Inc. Utilizing cutting-edge technology, MARK aims to capitalize on trends in sports betting.
3. LiqTech International, Inc. (LIQT)
LiqTech International, Inc. (LIQT) has failed to find its footing since releasing consecutive disappointing financial reports, sending the stock down 88 percent over the previous six months. A 55 percent quarterly decline in earnings per share, as reported in the statistics for the first quarter of 2022, was alarming.
Despite its incredibly high risk, LiqTech International stock may be worth further examination. A P/C ratio of 2.34x is good, and it is expected that EPS will increase by 97.30 percent next year. When this post was published, shares had climbed around 5 percent over the past week, possibly signaling that a trend reversal was imminent.
4. Sonoma Pharmaceuticals Inc (NASDAQ: SNOA)
The biomedical market is suffering a craze because of the coronavirus. Investors are purchasing stock after stock in search of the unicorn that will commercialize a vaccine. These pumps are typically followed by massive selloffs that leave the stock in the same position as before. Sonoma Pharmaceuticals is a notable exception to this tendency.
Sonoma didn't acquire its pump from a COVID-19 vaccine PR hoax. It is in the sanitization industry, and its Nanocyn® sanitizer product just got clearance in Australia. The majority of disinfectants are designed to combat bacteria. However, Nanocyn® appears to be effective against viruses. This would make it effective against the coronavirus, but it would also provide the company with a unique product to offer when the COVID panic has passed.
5. Chimerix (NASDAQ: CMRX)
While every other biotech business is devoting its newly acquired R&D funds to coronavirus technology, Chimerix has garnered notice for its efforts to combat smallpox. The U.S. Food and Drug Administration (FDA) recently authorized Chimerix to submit its application for brincidofovir's approval as a smallpox countermeasure. The company's partnership with the U.S. Department of Health and Human Services entails substantial contract work for a successful clinical study.
Chimerix achieved prominence in the past for its cancer therapies and other treatments for chronic conditions. According to several industry analysts, the goodwill has translated into all-time highs that still have exponential upward potential. Suppose you're interested in biotechnology but don't want to gamble on a short-term coronavirus bet. In that case, investing in a firm with established activities outside of COVID-19 therapy may be in your best interest.
6. Smith Micro Software, Inc. (SMSI)
Smith Micro Software, Inc. (SMSI) is a pioneer in Family Safety software for mobile phones. Its SafePath application offers parents' kid location and internet monitoring services.
The market appears to be disregarding the firm's future potential at present, focusing solely on its operational losses and ignoring the fact that next year's earnings per share are predicted to increase by 200 percent, the company has no debt, and the gross margin is close to 80 percent.
Long-term investors that are patient enough to wait for SafePath migrations to be completed in the first quarter of 2023 would find Smith Micro Software stock an intriguing investment opportunity.
7. Red Cat Holdings, Inc. (RCAT)
In recent months, Red Cat Holdings, Inc. (RCAT) has experienced strong momentum as a result of recent deals with the United States Army (for a drone prototype) and the United States Customs & Border Protection agency, and the order of Golden Eagle drone components from a yet-to-be-identified NATO member nation.
The global market for drones is projected to reach $63 billion by 2025, up from $4.4 billion in 2019, so even if Red Cat can only acquire a small fraction of the market, its sales might skyrocket in the coming years.
In addition, a future P/E ratio of 6.15x, five-year revenue growth averaging 278%, triple-digit expected EPS growth for next year, and 86% quarter-over-quarter EPS increase indicate that the company is now cheap and overdue for a bullish trend reversal.
8. Weidai
Weidai works in China and provides micro and small enterprises with finance. The organization combines investors with debtors and utilizes vehicle-backed lending. It should also be noted that this is the first company to offer this type of financing. Weidai takes pleasure in providing excellent service throughout the entire process. And it utilizes technology to expedite transactions and facilitate payment.
In addition, the firm is pleased to have held a 35 percent market share in 2017, according to the Oliver Wyman Report.
9. Ucloudlink Group Inc.
Ucloudlink was established in 2014 with headquarters in Hong Kong. A mobile technology corporation with operations in more than 140 countries. The organization attempts to provide an internet connection of superior quality. And more Internet methods to maintain connectivity. Moreover, Ucloudlink has maintained a compound annual growth rate (CAGR) of 150 percent. And it has done so from 2016 through 2020.
Ucloudlink is one of the market's most volatile penny stocks. Additionally, it has garnered several honors. For instance, the most recent "2020 Innovative 5G Application Enterprise" award is one of these. The China Economy TMT Leaders Chart provided them with this information.
The Ucloudlink Group provides three distinct levels or types of connection. Global Connectivity, Local Connectivity, and Complete Sharing are the three. The three reflect the progression of the business and its various stages. And each represents and serves a distinct segment of the market.
As the stages progress, the company's approach becomes increasingly specialized.
To elaborate, the first phase acknowledges the global demand for connection. High demand exists for worldwide Internet connectivity. And the firm responds to and meets this need. The second phase concentrates on local relationships. In other terms, it facilitates connectivity within nations. The third is undergoing beta testing. This enables people to share and exchange any unused data.
10. TuanChe Corporation
TuanChe is one of China's most volatile penny stocks and a platform for auto trading. To do this, TuanChe links diverse auto industry professionals. From automakers to services to sales.
The firm operates via several methods. In addition, TuanChe uses the internet to promote offline sales and assist them.
And the management is excellent. The CEO is also the Board of Directors chairman. Moreover, he has more than ten years of expertise as an entrepreneur. In addition, these ten years encompass firm ownership in the IT and car industries, which aligns nicely with TuanChe's business practices.
Should We Purchase Volatile Stocks?
The most pleasing aspect of volatile stocks is that volatility can be quantified and, therefore, strategically used to generate profits.
Volatility is the active investor's best friend. The positive gains are evident and relatively more significant than an essential long position in a company for a more extended period.
When going by bus, the dilemma is whether we want a rough, undulating trip or a smooth, straight one.
We are loss-averse investors by nature, and according to the Prospect theory of behavioral finance, we choose specific gain over potential gain.
The futures and options market provides an additional investment opportunity. In reality, the vast majority of derivatives need profit substantially from volatility.
Having discussed loss aversion, if we can time the market with the abundant knowledge accessible to us and are active investors, a little fund may be maintained to generate enormous gains.
Typically, these stocks are from the mid-cap and small-cap segments, as stocks in these segments display significant price fluctuations.
Final Thoughts
The most volatile stocks have had substantial price fluctuations, resulting in a big difference between their intraday highs and lows. When significant new information impacting the stock's value is released to the public, stocks may experience high price volatility. However, the market cannot predict how this information will affect the stock's long-term prospects. Price volatility is computed by dividing the difference between the intraday high and low by the stock's previous closing price.
Increase your performance with volatile stocks. Overnight gains of 50 percent or more are probable. And however, keeping penny stocks can also result in 50% losses. Therefore, the optimal strategy is the optimal strategy for day trading volatile stocks with a large trading volume, favorable price action, low spreads, and appropriate triggers.
The 1-minute chart is a typical timescale for day traders, and some even utilize tick charts. A reliable broker and trading platform are essential for effective trading. The shorter the time window, the greater the need for effective order execution and prompt broker support.
Always trade on paper using a simulated account if you are trying something new or taking your initial steps in trading, especially if you are trading volatile stocks for the first time.
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