Penny stocks have always been controversial on Wall Street.
For many risk-tolerant investors, penny stocks offer a rush coupled with potential gains that safer options just don’t provide. Penny stocks have the potential to turn pocket change into big gains and for many people, they’re just too tempting to ignore.
On the other hand, these stocks can be the ruin of many an investor. By many professional investors, penny stocks are viewed as little more than a “get rich quick” scheme that should be avoided at all costs.
In the eyes of these risk-averse investors, companies with shares trading at such low prices could be indicative of more systemic problems within the operations. Poor fundamentals or overwhelming headwinds could be dragging prices lower, signaling a stock that should be avoided.
Indeed, one need look no further than companies like Ford or Hertz to see once-great companies now trading near penny stock levels.
That can make finding the best NASDAQ penny stocks a challenge.
To be sure, there are opportunities out there. For the price of a single share of Amazon, one could purchase hundreds, maybe thousands, of penny stocks. Amazon itself started trading in penny stock territory. But the top NASDAQ penny stocks won’t necessarily reveal themselves easily and require diligent research and analysis.
Many penny stocks trade over the counter, or OTC. Stocks moving from OTC to NASDAQ are a rare breed, but they do happen. If you buy penny stocks stocks over the counter and the listing moves to the NASDAQ, you have nothing to worry about. You still own the same amount of shares in the company.
With all of that said, we’ve assembled a list of NASDAQ penny stocks to watch.
Each of these stocks trades on the NASDAQ exchange and is available to any investor willing to put down the money. Take a look, and see if there’s anything that seems like it might be a good fit for your portfolio.
1. ElectraMeccanica Vehicles ($SOLO)
Electric vehicles have been increasing in popularity exponentially each year. As battery technology improves, causing prices to fall, more people are becoming interested in purchasing their own electric vehicle.
Investors have shown an appetite for similar large-cap stocks like Tesla and Nikola Motors, which have drummed up a fair amount of publicity and trading activity in recent years. So it seems only logical that interest may soon pivot to cheaper options.
Enter ElectraMeccanica Vehicles.
This Canadian EV company recently saw its shares skyrocket from its March lows of 92 cents to more than $2.50 in more recent weeks. That jump followed news that ElectraMeccanica’s sales rose in the first quarter from $101,404 to $116,831.
Shareholders were also happy to see that the company was planing to build an assembly plant and technical center in the United States. SOLO announced it was looking at Arizona, Colorado, Florida, North Carolina, and Tennessee as candidates for its future home South of the border.
At the same time, the Vancouver-based company announced the accelerated development of its “electric micro-car,” a three-wheeled vehicle known as the SOLO EV. The SOLO is a three-wheeled single-passenger car that boasts a top range of 100 miles and speeds of 82 miles per hour on a 17.3-kilowatt hour battery pack, according to the company’s press release.
ElectraMeccanica is clearly vying for a spot amidst the ranks of names like Tesla and Nikola, but time will only tell if this is one of the best NASDAQ stocks under $5.
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2. Zovio ($ZVO)
Schools are moving their operations online at an increasing rate. Especially with the coronavirus pandemic that has swept the world, educational institutions are looking for ways to facilitate learning online.
Zovio is a California-based education technology company that has seen a turbulent year, exceeding $6 per share in August before settling down around $4 a share.
Consensus seems to be that educational companies like Zovio will see their shares rise in the near-term as colleges and universities continue to feel the strain of reopening. Zovio is well-situated in this current climate.
Zovio’s software may seem like nothing more than a video conferencing tool, but it’s much more. Schools use Zovio’s software to run their online courses, where it provides data management and software to help manage everything from the curriculum to enrollment, tuition, and even financial aid.
Zovio has plans to expand to the corporate world where it will provide training and certification. With more companies switching to work-from-home models, this could be another space for Zovio to excel, making it another of our NASDAQ penny stocks to buy.
3. Cerecor Inc. ($CERC)
Cerecor has set out to address what it sees as significant unmet needs within various medical fields, including neurology, pediatric, and orphan diseases.
This would also make it a good candidate for any biotech or stem cell company stock lists out there.
Many analysts look at Cerecor’s current low share price as a unique buying opportunity.
CERC’s lead product candidates are CERC-801, CERC-802, and CERC-803, which serve as therapies for inherited metabolic disorders known as Congenital Disorders of Glycosylation.
Additionally, Cerecor’s CERC-002 candidate has been designed for respiratory complication management in severe cases of COVID-19. At the end of May, the company released positive biomarker analyses that showed positive implications for patients suffering from acute respiratory distress syndrome (ARDS), a condition that plagues about 15-20 percent of Coronavirus patients.
In a show of confidence, the company’s CFO Christopher Ryan Sullivan recently purchased 5,095 shares of stock in early December. The shares were acquired at an average price of $2.28 per share with a total value of $11,616.60. Sullivan now owns 8,049 shares of the company’s stock
Insider trading like this is important because it demonstrates a level of confidence in the company’s operations. If Cerecor’s CFO is familiar with the company’s operations and decides to invest money in the stock, it shows a level of faith in the the company moving forward.
Moreover, a number of institutional investors have been getting involved in CERC. Jane Street Group recently bought a new stake in the company valued at $37,000. American International Group currently holds 17,647 shares of the stock worth $46,000. California State Teachers Retirement System increased its holdings by 45.1 percent during the third quarter to 48,493 shares. Those shares are valued at $110,000. Other key investors include Charles Schwab Investment Management and Two Sigma Advisors.
With confidence like that, it could be one of the NASDAQ penny stocks to watch.
4. Soleno Therapeutics ($SLNO)
Soleno’s primary operations is in the development and commercialization of therapeutic treatment for rare diseases.
The company’s lead candidate has been dubbed DCCR, which was being evaluated for use in Prader-Willi syndrome,a genetic disorder that can lead to weak muscles, poor feeding, and slow development in newborns. Unfortunately, the company flunked a late-stage study in obesity disorder when the drug “did not sufficiently separate from placebo as measured by the change from baseline in hyperphagia (abnormally strong desire to eat) score to week 13.”
Eventually, the stock found a floor and continued on until a somewhat disappointing earnings report in November, which missed expectations by $0.02. That saw the stock take a bit of a dip, but it has largely regained its footing.
However, none of this is necessarily bad news.
If Soleno can get another treatment to market, it has clearly shown potential to the upside. Currently, the company has approximately $56.1 million in cash and cash equivalents as of September 30, 2020. That signals there’s a bit of a runway while the company tries to get other treatments through trial phases.
At its current low share price, this could be one of the best NASDAQ stocks under $5.
5. Resonant Inc. ($RESN)
Resonant is a late-stage development company that designs and develops filters for radio frequency and front-ends used in mobile devices, automobiles, medical devices, Internet-of-Thing (IoT) products, and related industries. Ostensibly, RESN’s products are used to select RF signals and reject unwanted signals.
The company operates in the United States and internationally, using Infinite Synthesized Networks technology alongside a platform that configures and connects resonators to build blocks of RF filters.
Founded in 2012 and headquartered in Goleta, California, the company has managed to weather the Coronavirus pandemic rather well. Its stock was trading at $1.18 on March 11, 2020 when the Coronavirus officially reached pandemic status according to the World Health Organization. Since then, shares of RESN have increased by more than 98 percent and is currently trading in the range of $3.50.
6. Boxlight ($BOXL)
Boxlight develops technology solutions for interactive learning.
Among its products are things like panels, projectors, and peripherals. The company also has a series of offerings for the growing STEM (Science, Technology, Engineering, and Math) category that includes robots, coding systems, 3D printing, and portable science labs.
In July 2020, the company announced that it had received two Tech & Learning Awards of Excellence for its Boxlight-EOS Distance Teaching Essentials and MySTEMKits products. The news was enough to send the company’s stock skyrocketing higher by more than three dollars.
Since then the price receded and found a floor around the $1.50 mark, but the move shows that there is upward potential for the stock.
Boxlight also boasts a relatively large distribution footprint, with its products sold across 60 different countries and currently in more than one million classrooms. There is also a strong ecosystem of resellers with more than 500 partners.
The pandemic has clearly put pressure on Boxlight’s business, but the company has been able to weather the storm relatively well. For example, Lind Partners invested $22 million in the company while management was able to secure a $34.5 million secondary public offering.
Another check in the “positive” column for Boxlight’s stock is that the company recently announced a strategic acquisition. Boxlight acquired Sahara Presentation Systems in September 2020. Sahara also developed interactive classroom products, but brought with it an especially strong presence in the EMEA (Europe, Middle East, and Africa) regions, which is expected to provide Boxlight with even more growth potential.
If you’re looking to buy NASDAQ stock, this may be a good option.
If you’re looking at all penny stocks on the NASDAQ, you should expand your search beyond those stocks under $1. There is a lot of potential for profit when looking at cheap NASDAQ stocks, but it’s imperative that you do your research.
In 2003, there was a small company named Hansen’s Natural Soda whose stock was sitting around $0.25 per share. A few years later, the company changed its name to Monster Beverage Corporation and shares were worth more thn $50 a piece.
So, it’s obvious that penny stock fortunes have been won, but there is a lot of risk involved. For every Monster Energy Drink there’s a Fitbit. The iconic wearable fitness-tracking device manufacturer first went public in June 2015, and quickly saw its share price double in the following weeks to reach a high of $51.90. After that, the value of shares saw a steady decline that took four years to bottom out just below $3 – a fall from grace of more than 90%. The company was eventually bought by Google.
This list of NASDAQ penny stocks is far from complete. That’s the rub when it comes to penny stocks, there could be potential gains under any corner. NASDAQ penny stocks under 10 cents today could turn out to be a windfall in the future.
But don’t be roped in too easily, investing is a game with a few winners and many losers.
At the end of the day, investing in the cheapest NASDAQ stock is a gamble. If you need to know how to buy NASDAQ stock, you should start by talking to a qualified broker. And before looking at how much a stock is trading for, look at the company’s fundamentals. That’s the best place to start.