OUR #1 HOT STOCK OF THE WEEK
Since the Great Recession rocked global markets in 2008 and 2009 stocks have largely rebounded. New all-time highs have been reached while the price-to-earnings ratios of many S&P 500 companies are increasingly expensive, often prohibitive to many investors.
So where do these investors turn when they’re looking for low-priced stocks that haven’t already exploded in value over the last decade? After all, it’s very difficult to find good deals in the market when even smaller S&P 500 companies are showing market caps near $1 billion.
As a result of this decade-long bull run, stocks have risen both in terms of share price but also their valuation to earnings. Typically, the average S&P 500 company trades at about 15-times its earnings, but the last few years have seen stocks trading closer to 25-times their annual earnings.
Luckily, while the stock market may be expensive overall, there are still many undervalued stocks trading below $0.50 a share.
Of course, any stock under 50 cents is going to come with higher risk, but that also means a higher potential for reward. These companies are almost always smaller and working in sectors that are generally unloved by the market or have yet to be discovered. Depending on the type of investor, these stocks can offer long-term games if you invest well and are patient. Eeking out gains from penny stocks like these may require holding on to your shares through different and turbulent economic cycles.
Companies of this size are often ideal for average investors because they are too small to attract the interest of the big mutual funds or investment firms. Most are so small they are even ignored by market analysts. It’s not uncommon to find companies operating in untested corners of the market like marijuana stocks or cryptocurrency stocks.
With that in mind, we’ve compiled a list of stocks under 50 cents that may be of interest. As always, this article should not be taken as investing advice. Make sure you do your own research and due diligence, but hopefully the companies we’ve compiled here can serve as a jumping off point for your investigations.
Now, on to the companies:
1. Green Mountain Development Corp. (GMND)
Green Mountain Development Corporation provides project development services for capital providers and technology operators. The company also distributes licensed products within the energy, agricultural, and environmental sectors.
Headquartered in Carlsbad, California, GMND has been in operations since 1986.
The companies stock is well below the nickel-mark, trading at less than a penny most days of the year. But as of October 12, shares were trading up 150 percent which shows the company may have some room to grow.
According to a technical analysis, the stock is listed as a “Buy” while its moving averages also indicate a “Buy” rating.
A few of Green Mountain Development’s more well-known products include names like Spill Kill Pro, a product for cleaning up oil spills; Manure King, for control of farm animal manure; Sparkle Clean, which is used to clean septic tanks and cesspools; and Too Tall Tomatoes and Compost Pal, for composting acceleration in backyards and commercially.
2. China Teletech Holding, Inc. (CNCT)
China Teletech Holding is another company whose stock trades below one cent, offering a lot of volatility alongside potential gains.
Founded in 1999 in Guangzhou, China, CNCT is an investment holding company. It also distributes mobile phone handsets and pre-paid calling cards to certain regions within the People’s Republic of China. The firm also involved in the mobile telecommunications sector and research and development for various electronic, computer, environmental protection, and software technology projects.
At the beginning of October, the stock was up more than 110 percent, showing a lot of potential for investors. The stock is currently trading at one of its highest prices for the year, so investors should take note of this stock to see if it has more room to grow.
3. Acasti Pharma (ACST)
This Canadian company has a market cap of $20.1 million while its stock is currently trading around the 20 cent mark.
Acasti Pharma is a biopharmaceutical company that focuses on research, development, and commercialization of prescription drugs for the treatment of cardiovascular diseases.
At the beginning of the year, things were looking bleak for Acasti. In January, its stock plummeted after disappointing results of a study over its CaPre cardiovascular drug candidate. The news sent shares down more than 98 percent.
However, since then, the company has made moves to turn things around that seem to be piquing investor interest. For instance, in September the company announced it was formally exploring and evaluating strategic alternatives to enhance shareholder value.
And a more recent, Phase 3 study of CaPre in patients with severe hypertriglyceridemia, showed some positive results.
Acasti was incorporated in 2002 and is based out of Laval, Quebec.
4. Senseonics Holdings Inc. (SENS)
Senseonics opened its doors in 1996 and is based out of Germantown, Maryland. The company uses a cutting-edge approach to develop medical devices for people with diabetes, primarily in Europe.
Its key products include Eversense and Eversense XL, which work as implantable CGM systems to measure the glucose levels in diabetes patients for up 90 or 180 days, respectively.
Currently, the stock is trading around the 40 cent mark, but some experts believe the shares are undervalued.
The announcement of a commercial partnership with Switzerland’s Ascensia turned heads, and a financing agreement with Ascensia’s parent PHC Holdings should extend Senseonics’ cash runway through 2021. Ascensia will sell and market Eversense as the exclusive global distributor for the next five years. That will allow SENSE to reduce spending in order to focus on research and development, its product pipeline, regulatory work, manufacturing, and branding.
Beyond that, the company’s Eversense offering was highlighted by the Centers for Medicare and Medicaid Services (CMS) in its 2021 Physician Fee Schedule proposal. This meant that SENSE’s Medicare coverage would jump from a regional level to a national level.
“With ~80% insurance coverage in the U.S. and the national payment codes set to go into effect January 2021, we believe SENS is far ahead of where it was two years ago at the time of the initial U.S. Eversense launch,” BTIG's Marie Thibault commented.
Some investors are seeing the Ascensia partnership as a step toward an eventual acquisition of Senseonics, which would also be a boon for the stock price. At this point, investors can just wait and see… and invest.
5. Corbus Pharmaceuticals Holdings Inc. (CRBP)
This Norwood, Massachusetts-based company is a clinical-stage pharmaceutical firm focused on developing and commercializing therapeutics. Interestingly, Corbus’ treatments are usually for rare, chronic, and serious inflammatory and fibrotic diseases.
The company’s leading product is Lenabasum, which is in phase 3 of clinical trials for systemic sclerosis and dermatomyositis. The recent completion of phase 2B of the medicine’s effectiveness with patients with cystic fibrosis was less than favorable.
That led to the company announcing the layoff of more than half of its workforce as it sought to preserve its cash reserves through to the middle of 2022. News surfaced that the company would be terminating 89 employees, leaving a staff of 76. The company’s COO, Robert Discordia, is one of the employees taking a severance package.
Still, there are some positive aspects to Corbus’ core business. In August, the company released its second-quarter results for 2020 when it revealed a balance sheet with as much as $121 million in new capital. It is important to note though that the company did report a net loss of $38.1 million, compared to net income of $2.2 million.
It remains to be seen whether Corbus can reach its August levels once again, but investors will surely be keeping an eye on this company in the months ahead.
6. Zomedica Pharmaceuticals Corp. (ZOM)
Zomedica Pharmaceuticals Corp has proven one of the popular penny stocks under .50 cents for many investors.
The company is a developmental stage veterinary diagnostic and pharmaceutical company, focused on discovering, developing, and commercializing pharmaceuticals for household pets.
One of its core offerings, ZM-008, is an oral suspension formulation of a drug called metronidazole. The medicine is used to treat acute diarrhea in small dogs and puppies.
The company released its second-quarter results in August. Part of that release included the revelation that in April, Zomedica had completed a $4 million offering of common shares and warrants. The company did the same in May for $20 million. Despite that, ZOM was operating at a net loss. Zomedica was largely able to withstand the impact from the caronavirus pandemic, bolstering its balance sheet at the same time.
While the company’s shares saw a pretty significant drop off in 2020 (almost 70 percent by September), there is still reason for optimism. Zomedica’s proxy solicitor, Alliance Advisors, reached out to shareholders ahead of a special meeting to advise them to vote in favor of a reverse stock split. The stock split will be made at a ratio of 1 for 25 or 1 for 50 which, if it gains majority approval, will bring the firm back into compliance with the NYSE American Exchange.
7. Ocugen (OCGN)
Any investment in this biotech firm should be taken with a high degree of caution. There is very little consensus as to which way the share price of this company is going to go in the near-term.
That said, companies like iBio, Moderna, and Novavax have been taking up a lot of attention amongst investors of late. That will remain true until the COVID pandemic is over. But if you really want to speculate in the sectors, it’s often best to ignore the big names.
Some analysts are viewing Ocugen as a steady play that has been wrongly punished. The company’s core focus is on the niche of retinal conditions. Its most interesting program is the OCU200 treatment, which treats diabetic retinopathy, diabetic macular edema, and age-related macular degeneration. The market around these particular conditions – and the companies attempting to treat them – is $31 billion.
On top of that, Ocugen has been awarded four Orphan Drug Designations for OCU400, a designation for rare disease and condition treatments that can only be handed out by the US Food and Drug Administration. Basically, that’s the FDA giving the firm the go-ahead to aggressively pursue new drug candidates.
So Ocugen has a lot going for it, and at its low stock price, picking up a few shares likely won’t hurt.
Conclusion
Penny stocks are generally defined as “stocks under $5.” They’re known for their high volatility and their potential for big gains. Stocks under 50 cents, a type of “extreme penny stock,” if you will, come with their own unique considerations.
Investing in 50 cent stocks and penny stocks under 50 cents certainly comes with a certain amount of risk.
Many of these companies ply their trade in industries that are untested and unloved by the greater market. It can be difficult to find information on some of these companies thanks to their size alone (Heck, China Teletech Holding doesn’t even have a website as far as we’ve been able to find at the time of this writing); and all of that can make investing in a 50 cent stock somewhat unappealing.
But there is certainly potential upside to be had. Getting in on the ground floor of a company before the take the markets by storm is the kind of story that investors dream about. And there’s no way for that to happen if you don’t by stock.
However, it’s important to remember your research. Conduct the due diligence necessary for any investment of any size. It’s also a good idea to diversify your portfolio so that if you do encounter big losses in one stock, you’re protected from complete financial ruin.
This list of penny stocks under 50 cents should get you started. If you make sure you have a solid trading system made up of the technical aspects and the proper structure, and a certain amount of luck, you’ll hopefully start to see some positive returns.
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