Penny stocks are renowned for being very volatile and prone to frauds of all types. Very little financial information is given to the public regarding certain companies, including penny stocks, pink sheets, or those sold over the counter.
It is crucial to have the right education and understanding of how the stock market operates. If a stock is lightly traded, it is likely that you will be forced to take a substantial financial blow if you are unable to sell it quickly.
The trading volume of a stock informs investors of the total number of shares traded on the market at any given time. While volume does not always foretell the impending occurrence of reversals, it does provide traders with some insight into what is likely to occur in the near future.
Any stock that trades for less than $5 is referred to as a penny stock. Certain penny stocks are traded on large platforms such as the New York Stock Exchange (NYSE) or the Nasdaq. Are penny stocks untrustworthy? Yes, indeed. Some are ineligible for large exchanges. Rather than that, they trade on the over-the-counter (OTC) markets.
How much does a high volume cost? That may seem like a simple question, but believe it or not, the answer is not so simple. Consider a penny stock (defined as a security trading below $5) and the average daily volume of shares traded over a 30-day period. While a stock with an average daily volume of 1 million shares may be deemed high volume, a closer examination may indicate otherwise. If the penny stock is in a sector where average stocks often trade in excess of 10 million shares, a penny stock with a high volume of 1 million shares is probably not a strong pick.
Thus, a more precise way of measuring high volume is to utilize a minimum daily average standard. In most circumstances, a minimum average daily volume of more than 2 million shares is a rather good technique for identifying high-volume penny stocks.
A high volume occurs when a catalyst induces a stampede of new purchasers into a stock. This might be a new contract, a press statement, or a suspected buyout, among other things. Following that, there are the stock pumps. Promoters and pumpers entice investors by hyping their stocks as the next Microsoft or Netflix. All of this activity may prompt traders and investors to buy.
When volume increases to 200,000, 500,000, or even one million shares, you know something is wrong. Dollar volume is also significant, and a million shares of a penny stock cost just $10,000.
How to Find Penny Stocks With High Volume?
You can discover high-volume penny stocks by using an online stock screener, which identifies stocks that meet your set criteria. Access a stock screener on any financial website that has one.
Within the screener's search criteria, locate the price parameter.
Select a low price per share as the maximum price in the box next to the attribute. The screener will return only stocks trading at or below this price. You may be required to select from a list of prices or enter your own. For instance, if you're looking for high-volume penny stocks trading for less than $2, set a maximum price of $2.
Locate the market capitalization parameter, which contains information on the overall market value of the company's stock.
In the adjacent box, select a low maximum market capitalization. Penny stocks are typically categorized as "microcap" stocks with less than $300 million in market capitalization. Select a market capitalization of $300 million as the maximum in this case.
Determine the daily volume average.
This value represents the average daily volume of shares traded over a recent period, such as three months. Choose a somewhat large daily minimum volume, such as 1 million or 2 million. Assume you chose a minimum of 1 million in this example.
To view a stock table that satisfies your specified criteria, click "View Results."
This table provides one stock per row and the average daily volume, price per share, and market capitalization of each stock in columns. The table in this example contains:
Only stocks with a price of less than $2.
A market capitalization of less than $300 million.
An average daily volume of at least 1 million shares.
Finally, click the average daily volume column heading to sort the list such that the most actively traded penny stocks are at the top. Click on its ticker symbol or abbreviated letters to discover additional information about a stock.
Indeed, only high volume penny stocks are worth trading. Penny stocks are inherently dangerous, and low volume penny stocks amp up the hazard.
Low volume penny stocks are easily manipulated by a single large player who can use a pump and dump plan to move the stock up and down.
Additionally, when a trader purchases stock with little volume, he may have difficulty finding a buyer when he wishes to sell. In that circumstance, he is compelled to sell at a discount or not at all.
The Advantages and Disadvantages of High Volume Stocks
Reduce volatility: By definition, a stock trading at a higher volume is likely to be less volatile. This means that large price movements are less likely to occur within a trading day. This can reduce your risk factor as more investors pour money into stocks.
Narrow spreads: Stocks with a high volume of trading typically have a considerably narrower spread between the bid and ask prices. A buyer establishes a bid price, while the seller establishes an asking price. Reduced spreads might provide investors with greater buying and selling opportunities.
Reduced liquidity risk: Liquidity refers to the ease with which your investments can be converted to cash. Investors tend to be more active when it comes to trading high volume stocks. As a result, they mitigate the danger that you will be unable to sell assets.
Could necessitate additional speculation: Stocks with a high volume of trading may be rather obscure. For instance, you could invest in penny stocks that are trading at a premium. Penny stocks may present an opportunity if they gain traction. However, you may be taking a greater risk by working with an unproven company.
1. AgriFORCE Growing Systems (NASDAQ: AGRI)
Since the outbreak of the Russia-Ukraine conflict, food stocks have been on fire. One of the primary reasons is that bans on everything from wheat to oil have been imposed. As you can see on the AGRI stock chart, momentum and share price have increased dramatically since March 10th. Additionally, AgriFORCE has updated this with its own updates.
The company is expanding through M&A. It stated earlier this month, that it had signed a binding letter of intent to acquire Deroose Plants, a provider of young plant material, for $69 million. With a deal worth more than the company's market capitalization at the time, it struck a significant chord with the market. The acquisition aims to expand AgriFORCE's position in the tissue culture propagation and plant cultivation markets to facilitate high-value crops' expansion.
2. Denison Mines Corp. (NYSE: DNN)
By the end of the day on March 21st, shares of DNN stock had risen by more than 3.6 percent. This large sum demonstrates Denison's and the uranium industry's current prominence. DNN stock has gained more than 17% in the last five days and more than 37% in the last month. Therefore, why have DNN stock shares increased?
In recent weeks, the Ukraine crisis has resulted in a renewed focus on the energy sector. And because uranium and nuclear energy, in general, constitute a significant prospect for investors, corporations have grown in popularity. We have seen good operational and financial results from DNN during the last few months, and as a result, investors continue to place their trust in the company. With this in mind, will DNN be added to your watchlist of penny stocks or not?
3. Evofem Biosciences Inc. (NASDAQ: EVFM)
While shares of EVFM stock have not been performing well in recent months, recent optimistic trading may hint that this is about to change. To provide context, Evofem is a biotechnology business focused on the development and commercialization of products for women's sexual and reproductive health.
Its primary commercialized product is Phexxi, a contraceptive gel available in various markets worldwide. Additionally, Evofem is developing numerous anti-STD products, including EVO100, an antibacterial gel for preventing urogenital Chlamydia transmission.
Evofem Biosciences announced its second-quarter financial results for 2021 on August 11th. Net product sales climbed 68 percent quarter over quarter, a significant milestone for the company. Additionally, the business claimed gains in Phexxi prescriptions, dispensed units, and the number of Phexxi prescribers of 47%, 65%, and 52%, respectively.
These are significant figures, indicating that commercial use of Phexxi is continuing to grow. While obtaining clearance for medicine is one thing, commercializing it extensively is quite another. As a result, many investors are keeping an eye on EVFM stock at the moment.
4. Progenity Inc. (NASDAQ: PROG)
Progenity was one of the top penny stocks to follow late last year, skyrocketing from under $1 to over $6. This rise did not occur overnight, but PROG stock made an incredible leap before reversing course a little more than a month later. As trading volumes increase in March, it appears as though the retail masses have picked up where Progenity left off.
There have been no fresh updates in nearly a month. However, the coming week is a critical one for the corporation. Progenity develops oral biotherapeutics for gastrointestinal health and will release financial results and a company update for the fiscal year 2021 on Monday. Its efforts have been concentrated on diagnostic sampling and drug delivery technologies that enable more precise diagnosis and improved patient outcomes. Progenity presented its tofacitinib platform at the Belgian Week of Gastroenterology last month.
Adi Mohanty, CEO of Progenity, stated, "We hope that this technique would enable the delivery of greater therapeutic dosages directly to the mucosa while avoiding the existing toxicity associated with systemic uptake. We would like to express our gratitude to the clinical teams responsible for this independent study, particularly those at IBD Leuven and Amsterdam UMC, for their outstanding efforts toward our common aim of improved therapeutic efficacy for patients with inflammatory bowel disease."
PROG stock may come into focus later this year. The firm has advanced its performance research for its DDS capsules, but it will also present at the May Digestive Disease Week event on May 21st and 24th.
5. Aehr Test Systems Inc. (NASDAQ: AEHR)
Aehr Test Systems is one of the day's biggest gainers so far, surging about 30% in morning trading. While many significant gains occur in the absence of news, the AEHR stock made an interesting statement early in the day. The statement came after the company reported extremely good fourth-quarter 2021 earnings, significantly outperforming expectations.
Aehr Test Systems is a provider of semiconductor testing and certification equipment. AEHR stock reported a 102 percent growth in fourth-quarter net sales to $7.6 million, compared to Q4 2020. Additionally, it generated a GAAP net income of around $0.02 per share, compared to a loss of $0.13 per share in the same period last year. Additionally, its bookings climbed by almost 113 percent to $5.5 million, a significant rise.
6. ReShape Lifesciences Inc. (NASDAQ: RSLS)
ReShape Lifesciences, founded in 2002, is a provider of weight loss and metabolic health solutions. Its portfolio is well-integrated, consisting of tried-and-true goods and services for the treatment of obesity and metabolic illness. Its Lap-Band Program has been shown to be minimally invasive and effective for long-term obesity treatment. This is a less intrusive operation than stapling, gastric bypass, or sleeve gastrectomy.
Recently, RSLS provided an update to shareholders on company developments and quarterly results. The company claimed in the results that the merger with Obalon Therapeutics was completed effectively. Additionally, it conducted a capital offering of around $46 million, eradicating its debt burden.
7. Clarus Therapeutics Holdings Inc. (NASDAQ: CRXT)
Clarus Therapeutics is another penny stock that is currently surging. While the heavy emphasis on biotech stocks may be a factor, Clarus is also making significant moves as a corporation.
Clarus has gradually fallen to new lows in recent months, and this is because CRXT's stock is typically less liquid than that of many of its biotech peers. On Monday, the company's shares traded at some of their best levels since Q4 of 2021. Volume is an excellent measure of popularity, and as a result, we can see that the CRXT stock is extremely popular at the moment.
There were few headlines to accompany the increase in CRXT stock. However, a Phase 4 trial that was announced earlier this month may have resurfaced. Clarus announced the start of the latest phase of its clinical trial for JATENZO, a prospective therapy for chronic kidney disease. The results of the trial are anticipated in the first half of next year.
8. Kaixin Auto Hldgs (NASDAQ: KXIN)
Kaixin Auto Holdings is a dealership that sells new and used cars. It primarily sells Audi, BMW, Mercedes-Benz, Land Rover, and Porsche vehicles. Revenues are generated primarily through used automobile sales and fees earned as a channel partner for third-party auto loans and other value-added service providers. Automobile sales and others are included in the company's operating section. The Automobile sales segment generates the most revenue for the corporation, and China is its primary source of revenue.
9. Ion Geophysical Corporation (NYSE: IO)
While the larger technology sector is trading lower today, this is not true for all technology stocks. Ion Geophysical, a data technology firm, demonstrates this. With more than 1.7 million shares exchanged by mid-morning, IO stock is trading at a faster pace than the market average. The company is focused on employing data to aid in decision-making for its offshore energy and maritime customers.
While the company's primary focus has been on its debt, the market appears to have concentrated on a few other factors. To begin, the majority of energy and energy-related stocks have risen in lockstep as Russia-Ukraine headlines focus on supply constraints. Additionally, a retail trading emphasis on penny stocks with a high level of short interest has become a more prevalent motif in the market.
10. Cinedigm Corp. (NASDAQ: CIDM)
Cinedigm Corp. is an entertainment-related penny stock that is up more than 10% today. This increases its year-to-date gain to almost 150 percent, which is extremely significant. If you're unfamiliar with Cinedigm, it is a company that owns and distributes film, television, and other forms of media. These pieces of content are provided on behalf of numerous organizations, including the NFL, NHL, Hallmark, and Televisa. Its material is available on Apple, Netflix, Amazon Prime, and Hulu. Cinedigm's streaming services are also available in brick-and-mortar establishments like Target and Walmart.
11. Jumia Technologies (JMIA)
Bulls refer to Jumia as "Africa's Amazon (NASDAQ: AMZN)." Africa boasts a population of approximately 1.4 billion people despite its volatile business environment. Thus, the company that eventually cracks African e-commerce will profit handsomely. Having said that, investors are hopeful it is Jumia. There are legitimate concerns about its business — all the more so given that it works at a loss. However, there is much promise. Investors are undoubtedly expecting more than the projected revenue growth of 23% and 25% in 2022 and 2023, respectively, but if it does, it will be the first step toward a bright future.
Final words
These are only a sampling of the greatest high-volume penny stocks available at the moment. If you're seeking stocks with a low price per share but plenty of upside potential, you might want to consider these. Conduct due diligence prior to purchasing any shares, particularly penny stocks.
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