Penny stock crash

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4 Penny Stocks to Watch To Hedge Against a Market Crash

While there are no impending signs of a market crash right now, penny stocks investors always consider this as an option to stay ahead. Some investors believe that the large rise in the stock market following the crash in early 2020, could be a sign that the market is due to correct. However, there are plenty of signs that the opposite will occur as well.

Right now, it does seem as though both penny stocks and blue chips are in a state of flux. With Delta variant-related Covid cases rising right now, many investors are cautious about where they are putting their money. And this cautiousness has led to very interesting trading patterns in the market.

[Read More]Former Penny Stocks To Watch After Merck’s (MRK) Latest FDA Win

In addition to this, we have the effect of retail traders and those who trade ‘meme stocks’. These are highly volatile stocks that are pushed and pulled by the amount that they are trending online. So, if we combine all of this, we see that the stock market is in a very interesting place at the moment.

But, as prudent penny stocks investors, events like these can always be taken advantage of. As with any large market movement, there are ways for investors of all types to profit. And because penny stocks don’t like to play by the rules, many small-caps will show massive gains even on days of larger bearish market sentiment. So, keeping all of this in mind, let’s take a look at four penny stocks to watch to avoid a market crash.

4 Penny Stocks to Watch Right Now

  1. Darkpulse Inc. (OTC: DPLS)

  2. NanoVibronix Inc. (NASDAQ: NAOV)

  3. Senseonics Holdings Inc. (NYSE: SENS)

  4. Sesen Bio Inc. (NASDAQ: SESN)

Darkpulse Inc. (OTC: DPLS)

On Thursday, August 12th, shares of DPLS stock managed to climb by over 18% at midday. This brings its six-month gain to over 320%, which is one of the main reasons that so many investors are paying attention to DPLS stock right now. Many investors believe that Darkpulse Inc. could have a lot going for it right now if all operations continue to go as planned. And, it’s worth noting that DPLS stock is commonly discussed on social media as a meme stock.

[Read More]Are These Penny Stocks on Your Watchlist Right Now?

For some context, Darkpulse is a producer of laser systems for various monitoring purposes. This includes monitoring temperature, strain, and stresses across infrastructure, surveillance, mining safety, and much more. In addition, it provides fiber-based monitoring systems that can be used in a wide variety of industries. Only a day or two ago, the company announced the acquisition of Optilan, a global security provider for everything from energy to rail, telecom, and more.

“This acquisition completes a monumental leap forward of Darkpulse’s expansion into global critical infrastructure markets. As a recognized leader for more than 30 years, Optilan brings a highly experienced team and operational footprint with physical assets across key international markets including, South America, Europe, Africa, Middle East, Asia, and the U.K. I look forward to working with the nearly 200 member Optilan team working throughout the globe.”

The CEO of Darkpulse, Dennis O’ Leary

Considering this big move and DPLS’s constant momentum, it could be worth keeping an eye on.

Penny_Stocks_to_Watch_DarkPulse Inc. (DPLS Stock Chart)

NanoVibronix Inc. (NASDAQ: NAOV)

NAOV stock is another trending penny stock right now and over the past few weeks. And today, shares of NAOV managed to climb by over 27% at midday. This is a sizable gain and one that should be taken into consideration if you plan on investing in NAOV stock. Over the past two weeks or so, we’ve covered NanoVibronix several times for its innovative products and constant market momentum. Yesterday, the company announced that it received registration approval for its PainShield product from the Australian Regulatory body for Therapeutic Devices (TGA).

“This regulatory approval enables us to expand availability of PainShield to Australia and follows closely after TGA’s approval of UroShield just last month. We are positioned to serve beneficiaries in this important market with a strong distribution partner in DukeHill HC, an industry leader with proven distribution capabilities in Australia.”

The CEO of NanoVibronix, Brian Murphy

If you’re unfamiliar with NanoVibronix, it is a producer of medical devices that utilize its proprietary low-intensity surface acoustic wave technology. These products can be put to use for everything from the disruption of biofilms to pain relief and more. Because it is such a new and groundbreaking product, many investors are excited about the potential future that NAOV could have. Whether this makes NAOV stock worth adding to your watchlist, however, is up to you.

Penny_Stocks_to_Watch_NanoVibronix INc. (NAOV Stock Chart)

Senseonics Holdings Inc. (NYSE: SENS)

SENS stock is another decent gainer of the day, pushing up by around 8% in afternoon trading. For some context, Senseonics is a producer of medical products that monitor metrics for those with diabetes. Its product line includes several CGM (continuous glucose monitoring) systems such as the Eversense and Eversense XL.

These devices utilize a sensor inserted under the skin to track a patient’s glucose levels. It can then send this data to a smartphone which puts it ahead of the existing technology by quite a ways. At the beginning of this week, Senseonics announced its second-quarter 2021 financial results. In the report, the company posted revenue of around $3.3 million and managed to raise more than $50 million in proceeds through an at-the-market offering.

“In the second quarter we made progress driving increased patient and provider awareness of Eversense through a targeted direct-to-consumer digital advertising campaign and presentations of the PROMISE Study, an evaluation of our 180-day sensor, at the ADA and ATTD conferences.

As announced when we submitted this data to the FDA, we are pleased with the strength of the data from the PROMISE Study which we believe represents a top-tier CGM safety and accuracy profile.”

The CEO of Senseonics, Tim Goodnow

In the U.S. and around the world, diabetes is a condition that affects millions. Because of this, Senseonics could have a sizable market opportunity moving forward. For these reasons, SENS stock could be worth keeping an eye on.


Sesen Bio Inc. (NASDAQ: SESN)

The last penny stock on this list of sizable gainers today comes in as Sesen Bio. Today, shares of SESN stock shot up by more than 18% at midday, indicating sizable bullish sentiment. And, at over $4.75 per share, SESN stock is quickly moving out of penny stocks territory right now. While no news came out today that is prompting this we can look at some announcements made earlier in the week to see why SESN stock may be gaining right now.

Read More

Yesterday, the company announced that John Knighton would join the company as its new VP and Chief Compliance Officer. In addition to this, it stated that it is on track to get an FDA decision on its Vicineum product for a Biologics License Application by August 18th.

“At Sesen Bio, we believe a strong culture of compliance is a source of competitive advantage because a thorough understanding of laws and regulatory guidance allows us to fully explore innovative commercial models and strategies. This enabled us to do the right thing while maximizing launch uptake of Vicineum.”

Dr. Thomas Cannell, CEO of SESN

With its lead product ready for a big announcement from the FDA next week, many investors seem excited about the potential of SESN moving forward. Considering this, is SESN stock worth adding to your watchlist?


Which Penny Stocks Are You Watching Right Now?

With so many penny stocks to choose from right now, it can seem difficult to pick the best ones to buy. However, buy considering all that is going on in the world, investors can do their best to try and make a watchlist that competes with the most educated traders out there. Considering all of this, which penny stocks are you watching right now?


SINGAPORE - The couple linked to the penny stock crash of 2013 which wiped out $8 billion in market value was back in the High Court on Tuesday (May 11) with one of the alleged masterminds choosing not to testify.

Quah Su-Ling, who was unrepresented, told the court that the numerous adjournments of the trial had depleted her resources to pay for a legal counsel.

"I would like to place it on record that these numerous adjournments caused mainly by late disclosures of revised versions of evidence which was in drips and drabs, have severely prejudiced me in conducting my defence... I feel that it is therefore unfair and prejudicial if I were to take the stand without legal representation," said Quah who is 55.

Malaysian John Soh Chee Wen, 61, and his girlfriend Quah are accused of masterminding Singapore’s most serious case of stock market manipulation.

They had failed last year in a bid to stay criminal proceedings against them.

In their application they claimed, among other things, that the prosecution was “effectively waging a war of attrition” instead of conducting the trial in an expeditious manner.

They cited an “exceptionally lengthy examination-in-chief of the prosecution witnesses, despite the use of conditioned statements prepared”.

But High Court judge Hoo Sheau Peng disagreed in judgment issued last September, saying the length of the examination-in-chief reflected the scale and complexity of the case, and the amount of evidence to be adduced from some of the key witnesses.

Soh is facing 188 charges while Quah has 177 charges against her.

The pair allegedly exploited family, friends and business associates to manipulate the share prices of Blumont Group, Asiasons Capital (now Attilan Group) and LionGold Group - collectively known as BAL.

The stocks surged by at least 800 per cent over nine months before plunging during three days in October 2013.

The High Court trial before Justice Hoo had started on March 25, 2019, with 96 witnesses testifying over 169 days.

They included trading representatives from local brokerages, 20 representatives of both local and foreign brokerages and private banks, officers of the companies in question and expert witnesses.

During earlier sessions, the court had heard from numerous witnesses who were trading representatives or third-party intermediaries how Soh and Quah apparently gave them trading instructions for accounts that were not under their names to place trades in BAL.

Several others also alleged that Soh and Quah had told them to manipulate the share prices, often in conjunction with company announcements.

On Tuesday, Soh, who is represented by N. Sreenivasan of K&L Gates Straits, took the stand and provided a brief background of his childhood.

Soh said he was born in Batu Pahat, Johor in 1959. His father was a shopkeeper in a rubber estate and his mother was a housewife.

He said he was admitted to Universiti Malaya in 1979 to study economics but dropped out after three days because he wanted to focus on his business.

At that time, he had started a multi-level marketing business selling T-shirts and shampoo. He claimed to have made his first million at the age of 22.

By 1984, Soh's business had expanded to include over 100 items and he was running his own factories. But his business folded that year because he said the banking system in Malaysia was going through a crisis and banks were recalling loans to businesses.

Soh also recounted his relationships with some of the witnesses in the trial and his involvement in Malaysia politics.

In 1981, he said he joined the Malaysian Chinese Association and was made the youth leader and branch chairman of Petaling Jaya in a short time.

In 1995, he was appointed to the party's presidential council. He said he was the only council member back then who did not hold any government position or was not a Member of Parliament.

And he said he became friends with then Deputy Prime Minister Anwar Ibrahim.

The trial continues.

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4 Signs a Penny Stock Is Worth Millions

When it comes to equities, there are few riskier investments than penny stocks. These stocks, which trade under $5 per share, are usually priced that low for a good reason. For example, a penny stock could belong to a once-thriving company that is now on the brink of bankruptcy or has had to de-list from the larger exchanges and is now trading over-the-counter (OTC). It could also be a new company, so it has a scant market history and hasn't yet met the criteria to be listed on a major exchange.

Penny stocks are volatile and risky by nature, and they're especially susceptible to price manipulation. Once in a while, however, a penny stock will greatly reward the risk-hungry investor. If you had bought shares in the Monster Beverage Corporation (MNST) in 1996 when it was trading at $.04 a share, you would be a happy investor today: Monster traded above $66 in 2020.

If you're intrigued by the potential to find such exponential gains, it could be worth diving into the murky waters of penny stocks.

Key Takeaways

  • Penny stocks are low-value shares that often trade over-the-counter as they do not meet the minimum listing requirements of exchanges.
  • Penny stocks can be far riskier than listed stocks and may be susceptible to manipulation.
  • Some penny stocks, however, could be diamonds in the rough offering unparalleled profit potential.

Check the Fundamentals

Investors should conduct thorough due diligence before taking chances on any penny stock. For example, it might have looked like a good bet to invest in the ailing Walter Energy Co. After all, Walter Energy had traded as high as $143.76 a share in 2011. But those who bought Walter Energy when it fell to $0.16 would have still been burned as the company soon declared bankruptcy. On the other hand, an investment in Inovio Inc. (INO), which was trading below $1 in 2008 gave investors a number of opportunities to get out above $10 in 2009 and 2013 through 2020.

The stark contrast between these two stocks lies in company fundamentals. Walter was an established company in metallurgical coal, an aging sector prey to cyclical demand and political pressures. When world leaders made commitments to lowering greenhouse emissions, this placed more downward pressure on Walter Energy, which already was reeling from a worldwide coal supply glut and slowing demand from China. Walter ended up selling its assets to two companies in 2016.

By contrast, Inovio is a speculative biotechnology play with strong partnerships in its cancer vaccine portfolio, which offers strong buyout potential. As of 2020, a buyout hasn't happened, but the stock continues to sell off and then see huge upside moves that quickly dissipate.

So when researching penny stocks, you should carefully weigh any potential gains versus fundamental factors underlying the company: its debt, cash flow, buyout potential, and Porter’s Five Forces of Competition among others. You should have the complete picture as to why the stock's trading at its current price before you even think of buying it.

Just like with any stock purchase, when considering buying penny stocks, fundamental analysis and due diligence of the company's management quality can help lead to the winners and avoid the losers.

Industry Life-Cycle Analysis

Along with analyzing a company’s balance sheet, the penny stock trader should look to do an industry life-cycle analysis. Some penny stock companies are in a sector still in its “pioneering phase." This initial phase is characterized by the presence of a large number of small-sized competitors in the space, novel products and concepts, and low customer demand for the products. Because this period is marked by a slew of start-up firms (particularly in tech or biotech), all of which have high costs and little-to-no-sales to date, most of these companies will trade at very low prices owing to their speculative nature.

Following this initial phase is the “growth phase," in which many of these companies gain greater market attention and thus their sales and demand skyrocket.

The perfect example is the tech boom (and crash) of the late 1990s. Many tech startups started life as penny stocks and then experienced astronomical gains in their market caps and valuations as investors snatched up anything related to the then-novel concept of the Internet.

Penny Stock Industries

Industries that offer binary outcomes for most of its companies will unsurprisingly contain a plethora of penny stocks. Binary outcomes, or “make or break” speculative plays, are found predominantly in biotech or resource sectors.

The Canadian TSX Venture Exchange was the home of many resource-based penny stocks that took off during the commodity boom of the 2000s. Then the party ended, and most of the stocks crashed back to nothing, similar to many technology stocks in the 2000 crash.

However, traders can still take advantage of binary-type companies when conditions are favorable, such as when commodities are booming. But investors in these areas must also realize that the stocks can fall just as quickly as they can rise.

Sound Management

In real estate, it’s all about “location, location, location." For penny stocks, it’s about “management, management, management." Sound management can turn around a struggling firm and launch a startup to new heights. More importantly, experienced and ethical management that have a vested interest in the company via share ownership can provide investors with a sense of security.

Of course, superstar managers aren't often found working for penny stock companies, but there are a few examples. Take Concur Technologies, which bounced back from its post-tech bubble price of $0.31 and got bought out in 2014 at $129 per share. This remarkable comeback is owed to many factors, but one that stood out was the strong vested interest of President and COO Rajeev Singh. Singh, who had co-founded the company in 1993, filled a plethora of management roles over the firm’s lifespan before he finally stepped down after Concur’s acquisition by software giant SAP SE (SAP).

The Bottom Line

Penny stocks are extremely volatile and speculative by nature. As most trade on OTC exchanges or via pink sheets, where listing standards are lax, penny stocks are susceptible to manipulation and fraud. Still, the potential to make large returns is a strong allure, driving risk-taking investors into taking positions in these securities. Though many penny stocks go bust, if an investor exercises careful fundamental analysis and picks sound management teams, they could find the coveted diamond in the rough.

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Making Money With Penny Stocks During a Stock Market Crash

3 Tips For Investing in Penny Stocks in a Down Market 

When the stock market is down, it presents a sizable number of opportunities for penny stock investors to capitalize on. But, it takes understanding why the market is down to do so. With penny stocks, there are several differences that traders need to keep in mind. First and foremost is that penny stocks don’t like to play by the rules. This means that even if the broader stock market is down, there are still plenty of ways to make money with penny stocks. 

During a bearish market turn, we can often see a large number of penny stocks that climb substantially. This is due to their overall volatility and the high speculation that comes with stocks under $5. So, finding penny stocks that could do just that is a winning strategy that many traders attempt to use. But to do so, there are three things to keep in mind. 

First and foremost is understanding what caused the market to drop. This can help to determine which industries could be worth watching and why. Second, traders need to have a strategy that is both individualized and in line with the reason for the market dropping. 

[Read More]Why Stocks Are Down Today & 3 Penny Stocks To Watch Now

And lastly, investors need to know where to find the best penny stocks to buy when the market is down. This means understanding which stocks could benefit and what their relationship to the broader market is. So, with all of this in mind, let’s take a look at three tips and tricks for making money with penny stocks when the stock market is down. 

How to Make Money With Penny Stocks When the Market is Down

  1. Understanding Why the Market is Down 
  2. Strategies for Trading Penny Stocks in a Down Market
  3. Finding Penny Stocks to Buy When the Market Turns Bearish

Understanding Why the Market is Down 

More times than not, when the market crashes there is a reason for the major declines. If we look at today on September 20th, the main reason was a crash in the Chinese housing market. As a result, one of the largest investors in real estate in China came close to defaulting. While there is not always one concrete reason for a market crash, there are usually a combination of factors that are contributing. Right now, there are several aspects that investors should understand to use as an advantage for their portfolios. 

why is stock market down

The first and most obvious is the pandemic. Although case numbers are dropping in some areas of the country, investors are still showing signs of fear in the market. This means that volatility is high and that we are seeing many days with bullish and bearish trading patterns. The second factor in play right now is a combination of ending stimulus and high inflation in the U.S. 

[Read More]3 Tech Penny Stocks to Watch During the Market Crash

Both of these have investors sitting on the edge of their seats for the future. So, as we see, it is difficult to pinpoint one succinct reason that the market is down right now. But, if we combine all of the happenings of late 2021, we see that it makes sense. And, with all of this, investors can begin to form a strategy on how to trade in the current stock market. 

Strategies for Trading Penny Stocks in a Down Market 

When it comes to trading penny stocks in a down market or any market for the matter, there are a few strategies to consider. First and foremost is the choice to find penny stocks when they are down, and hope for an eventual rebound. This is usually a longer-term strategy (more than one trading day) and can result in sustained gains if done correctly. Often, those who trade penny stocks will do so in short term or swing trading methods. But, traders forget that there are plenty of penny stocks with long-term potential. 

trading strategy penny stocks

To do this, investors should have a thorough understanding of the company in question. In addition, traders should consider if its price dropped due to overall bearish trading or news relating to the company. If it’s the latter, it may be worth staying away from. However, if the price of the company dropped on non-company related news, it could be worth looking into at a value price. 

The next strategy is short-term or swing trading. Even in days of large downtrends, many penny stocks can bounce back either later in the day or at random periods throughout. To make money by swing trading, investors should have a strong trading education and a commitment to understanding how to read chart patterns. All of this will help to ensure that you know exactly what you’re doing in this regard. Whether you’re looking at penny stocks for the long or short term, having a trading strategy will always be your best friend in a down market. 

Finding Penny Stocks to Buy When the Market Turns Bearish 

Finding penny stocks to buy in a downtrend is a mixture of the above tips, in combination with thinking outside of the box. For example, when something is affecting the market, often we will see an inverse reaction with a correlating industry. 

penny stocks to buy

Let’s say that the oil and gas industry takes a hit. We could see alternative energy penny stocks rise as a result. Or, let’s say that the real estate market is down due to inflation. With this, we could see more stable stocks such as gold stocks or mining stocks, begin to push up. As you can see, there is always a clear cause and effect. And even if it isn’t clear in the moment, it can become more clear as time passes. 

[Read More]Best Penny Stocks To Buy? 5 To Watch This Week With Biotech Catalysts

So, think outside of the box, and use all of the information you can gather as a way to guide your investing strategy. While it may be hard right now given that there are so many different variables at play, utilizing this method can help to give your portfolio a greater chance of profitability. Considering this, which industries are you watching in September 2021?

3 Penny Stocks to Watch Right Now 

  1. Leap Therapeutics Inc. (NASDAQ: LPTX) 
  2. Reed’s Inc. (NASDAQ: REED) 
  3. Entasis Therapeutics Holdings Inc. (NASDAQ: ETTX) 

Are Penny Stocks Worth Buying?

When the market is down, it can be a challenge to find penny stocks that are worth buying. However, this doesn’t mean that it is impossible. Rather, by using a strong investing strategy, research, and a creative approach, it can be much easier to make money with penny stocks in 2021. Considering this, do you think that penny stocks are worth buying right now or not?

Midam Ventures, LLC | (305) 306-3854 | 1501 Venera Ave, Coral Gables, FL 33146 | [email protected]


Stock crash penny

3 Tech Penny Stocks to Watch During the Market Crash

Can These Tech Penny Stocks Gain Momentum While the Market Dips?

During a market dip, those who invest in penny stocks will often look for companies that could have gaining potential. And to do so, we have to first look at the underlying causes of the market crash, to identify which areas could be most resistant. 

Why is the Stock Market Down Today?

During pre-market, the Dow Jones Industrial average futures fell by around 650 points or almost 2%. The root cause of this is a major sell-off that occurred in equities in the Chinese property market. This put the major Chinese developer, Evergrande Group close to default, which is inspiring fear around world markets. However, if we look at trends, we see that September tends to be a month where losses are common. 

[Read More]Best Penny Stocks To Buy? 5 To Watch This Week With Biotech Catalysts

The Stock Trader’s Almanac states that September averages a decline of around 0.4%. So, while today’s bearish trading may seem disheartening, we have to remember that both penny stocks and blue chips trade in periods of ebb and flow. This means that when there are downtrends, they are usually followed by uptrends and vice versa. And, if we consider the extraordinary times we’re living in, this makes even more sense. 

With Covid cases beginning to slow, however, we could start to see more confidence in the market moving forward. However, a lot will depend on what happens in the coming weeks. So, with all of this in mind, let’s take a look at three penny stocks to watch during the market crash today. 

3 Tech Penny Stocks To Watch During Today’s Crash 

  1. Sonim Technologies Inc. (NASDAQ: SONM)
  2. Advaxis Inc. (NASDAQ: ADXS) 
  3. BEST Inc. (NYSE: BEST) 

Sonim Technologies Inc. (NASDAQ: SONM)

Sonim Technologies Inc. is a tech company that sells rugged mobile phones and accessories. Its products include the Sonim XP8, Sonim XP5s, and Sonim XP3 which are based on the Android platform. It also provides speaker microphones, charging accessories, cloud-based software, and much more. All of this makes it out to be a mostly pure-play tech stock with exposure to the mobile market as well as the accessories industry. 

On September 14th, the company announced a reverse stock split. This reverse stock split took place on September 15th. This one-for-ten reverse stock split is now active and its volume is extremely high at the moment as a result. Often, split’s like these will take place to increase liquidity and raise capital for the company. However, it does usually take some time to see positive results from this. In other recent news, the company just launched its new XP3 plus ultra-rugged flip phone. This new phone is available at T-Mobile stores across the nation. The launch of new products is always exciting for the company involved and investors alike. 

“There’s a large base of frontline and field workers who need reliable, durable and simple communications, and for the last two years the XP3 rugged flip phone has met those needs to become Sonim’s highest volume product.”

Chief Marketing Officer of Sonim, John Graff

Overall, SONM stock is performing well in the market amid these announcements. So will you be adding SONM to your list of penny stocks to watch?


Advaxis Inc. (NASDAQ: ADXS)

While ADXS is not a tech penny stock for the most part, it is working on groundbreaking technological advancements in the biotech field. Advaxis Inc. is a penny stock that has climbed by over 25% in the past month alone. This company discovers, develops, and commercializes biotech products. The U.S.-based company is currently developing ADXS-PSA which is in Phase 2 clinical trial to treat prostate cancer. It also offers ADXS-504 for treating prostate cancer which has a very large target market globally.

[Read More]Top Penny Stocks to Buy Right Now? 3 to Check Out This Month

On September 10th, the company reported its third-quarter financial results and business update. During this quarter, the company entered a definitive merger agreement with Biosight Ltd. to advance its pipeline of clinical-stage oncology programs for solid tumors and hematological malignancies. The company experienced a drop in research and development expenses because of a reduction in costs associated with winding down clinical studies.

“We expect that the coming months will provide data readouts from our expanded off-the-shelf neoantigen program in both NSCLC and prostate cancer which will build upon our strong foundation of data show consistent clinical benefit, the potential to enhance and/or restore responsiveness to checkpoint inhibitors and on-mechanism innate and adaptive immune system stimulation.”

President and CEO of Advaxis, Kenneth A. Berlin

If we consider the merger with Biosight and the potential that ADXS has as a leading biotech penny stock, it could be worth keeping in mind in the coming weeks. 



BEST Inc. is a tech penny stock that has climbed by over 70% in the past month and 18% in morning trading today. If you’re unfamiliar, BEST Inc. is a smart supply chain service-providing company. Its BEST Cloud technology platform enables its customers to operate through various SaaS-based applications. The company applies its technology to network and route optimization applications as well as smart warehouses and store management. BEST additionally offers integrated services and solutions across the supply chain as well such as warehouse management and order fulfillment.

On August 17th, the company announced its unaudited second-quarter financial results for 2021. BEST’S revenue fell 5% year over year because of a decrease in average selling price for its express and freight business types. The company also experienced a net loss and gross loss as a result of this decrease. 

“Given the supportive industry regulatory environment and continued strong e-commerce growth, we are optimistic that our strategic refocusing plan will position us to deliver improved operating and financial results in the coming quarters.”

Founder, Chairman, and CEO of BEST Inc., Johnny Chou

This may seem bleak, but in the last month, BEST stock has performed well in the market as illustrated by the numbers. With this new info in mind, will BEST make your list of penny stocks to watch?


Which Penny Stocks Are You Watching During Today’s Market Crash?

While a market crash is not ideal for investors, it does present opportunities to take advantage of. On one hand, investors can look at the root cause of the crash to try and find alternative penny stocks that could benefit.

[Read More]Best Penny Stocks on Reddit That You Need to Know About

And on the other hand, when stocks hit intraday lows, it could present buying opportunities in either the short or long term. With all of this in mind, which penny stocks are you watching during today’s market crash. 

Midam Ventures, LLC | (305) 306-3854 | 1501 Venera Ave, Coral Gables, FL 33146 | [email protected]


The Risks and Rewards of Penny Stocks

Penny stocks come with high risks and the potential for above-average returns, and investing in them requires care and caution.

Because of their inherent risks, few full-service brokerages even offer penny stocks to their clients. Many are shares in companies that are headed for bankruptcy, small or new companies with little or no following, or businesses deep in debt.

There are two ways to make money with penny stocks, and both are high-risk strategies.

First, consider what penny stocks are.

The Lowdown on Penny Stocks

Penny stocks are often defined as shares that trade for less than $1. Others define them as stocks trading for less than $5. The Securities and Exchange Commission (SEC), however, defines penny stocks (or microcap stocks) as ones with a market capitalization with less than $250 million.

Generally, penny stocks trade on the so-called Pink Sheets or the OTC Bulletin Board (OTCBB). Both exchanges should be approached with extreme caution. That's especially true for the Pink Sheets since the companies traded on it aren’t required to file with the SEC, unlike OTCBB stocks.

And don’t get your hopes up even for trading on the OTCBB. It’s difficult to find enough solid information to form a logical conclusion on whether or not the company is likely to survive, let alone thrive. Keep in mind that there are no minimum standards for a company to remain on the Pink Sheets or the OTCBB.

Penny stock scammers get rich luring inexperienced investors into investing in worthless companies and taking their money. There is a long list of of common penny stock scams that you should avoid.

Key Takeaways

  • The penny stock market is full of scams. Ignore the noise.
  • There are some interesting prospects, including "fallen angels" and promising newcomers.
  • Do your research, and don't spend more than you can afford to lose.

Pump-and-Dump Schemes

This fraud happens all the time. Promoters drum up interest in a little-known or unknown company. Inexperienced investors buy the shares, lifting the price. Once it reaches a certain inflated level, the bad guys sell, or dump, the stock at a huge profit. Investors are left high and dry.

These pump-and-dump schemes are often distributed through free penny stock newsletters. The publisher or the writer or both are paid to promote these dogs.

If you get a penny stock newsletter, read the fine print on its website. It may disclose a financial relationship with stock promoters.

Short-and-Distort Scams

This is the opposite of the pump-and-dump. In this case, the scammers use short-selling to make a profit.

An investor who sells short is betting on a stock's price falling. Using the shorting strategy, the investor borrows shares from a broker and immediately sells them in the open market. If it price falls, the short seller scoops up shares at the lower price. The borrowed shares are then returned to the lender and the short-seller pockets the difference in profit.

Penny stock scammers short-sell a stock and then make sure its price falls by spreading false and damaging rumors about the company.

Investors hold a losing stock, while the short-sellers make money.

Reverse Merger Deceptions

Sometimes a private company merges itself with a public company so that it can become publicly traded without the hassle and expense of going through traditional listing methods. This makes it easy for the private company to falsify its earnings and inflate its stock price.

While some reverse mergers are legit, you can catch a reverse merger by reviewing the business’ history and detecting spotty activity in its merger.

Mining Scams

Gold, diamonds, and oil have always had an allure, and mining scams can be traced back through the history of mankind.

One of the most famous mining scams was Bre-X, in the mid-1990s. Founder David Walsh falsely claimed his company had discovered a massive gold mine in Burma. Speculation soared until the company’s valuation, all in penny stocks, reached $4.4 billion by 1997.

When the company collapsed, most investors lost everything.

The Guru Scam

Anyone with an advertising budget can be a guru. Sadly, they often gain a devout following.

This type of false advertising promises to reveal a special secret that the financial guru used to acquire a lakefront mansion and a fancy car. The expert promises to share penny stock trading secrets with you for a one-time low sum.

Trash that email or envelope. There is no one-size-fits-all path to riches in the stock market.

Also avoid pitches from anyone claiming to be the new Thomas Edison and offering you the opportunity to invest in the biggest thing since the lightbulb.

The No Net Sales Fraud

The scammers offer shares of a stock with the stipulation that they cannot be resold for a certain period of time. The investors are told that there is a huge demand for this stock.

By the time the SEC gets around to closing these scams down, the investors are left with nothing.

Offshore Rackets

Companies that operate outside the U.S. do not need to register their shares in the U.S. when they are selling to U.S. investors. Penny stock scammers love this.

They buy cheap and unregistered foreign company shares and sell the stock to investors at an inflated price. This influx of unregistered shares causes the company’s stock price to drop. The thieves make money while U.S. investors get little or nothing.

How to Avoid Scams

The penny stock world is rife with market manipulation, fraud, and chicanery.

$3 billion Canadian

The amount of investor money lost in the Bre-X mining scam in 1997.

Investors should know that such abusive practices aren't the exclusive domain of penny stocks and micro-caps, as the notorious cases of Enron and WorldCom prove.

That said, how can you avoid being scammed by dishonest penny stock promoters who are out to make a fast buck? Below are some suggestions.

Promotion vs. Research

Promoters hire newsletter writers to write flattering reports about their stocks. They make a convincing case for investing in dud penny stocks, using hyperbole, outlandish projections, and, in some cases, deliberate distortion.

These promotional pieces look very similar to legitimate research reports. The penny stock investor has to learn to distinguish between stock promotion and equity research.

One way is to read the disclosures section at the end of the report to see whether the writer is being directly compensated by the company they're recommending, often in a combination of cash and stock.

If that's the case, this is an advertisement, not a research report.

Grade the Quality of Management

A company's success depends on the quality of its management, and penny stock companies are no different.

The OTC Markets Group divides securities into a three-tier marketplace based on the integrity of its operations, its level of disclosure, and investor engagement: OTCQX (the top tier), OTCQB (middle tier) and OTC Pink (bottom tier).

You're unlikely to find a Steve Jobs running a penny stock company, but you still can delve into management's track record. Find out whether the company's executives and directors have had any notable successes or failures or, in fact, any relevant experience at all.

Evaluate the Financials

Penny stock companies generally don't furnish in-depth financial information, but it won't hurt to check the financial statements it does release.

Scrutinize the balance sheet to see if the company has any substantial debt or liabilities outstanding as well as its amount of net cash on hand.

If the income statement shows a huge growth in revenues of late, that's a promising sign.

Know the Quality of Disclosure

The more disclosure the company provides, the better. It indicates a greater level of corporate transparency.

For instance, the OTC Markets Group divides its securities into a three-tier marketplace: OTCQX (the top tier), OTCQB (middle tier) and OTC Pink (bottom tier). These categories are based on the integrity of a company's operations, its level of disclosure, and its investor engagement.

Since OTC Pink company reporting can be spotty, OTC Markets Group further segments that group, based on the quality and quantity of information provided, into Current Information, Limited Information, and No Information.

Warning Signs

Obviously, investing in a company with limited or no information is best avoided.

In addition, stocks for which OTC Markets Group advises investors to exercise additional care and thorough due diligence typically flash a skull-and-crossbones Caveat Emptor sign.

Penny stocks can earn this symbol for a number of reasons: The company or its insiders may be under investigation for fraudulent or criminal activity, or the company may be involved in such dubious promotional activities as spam emails.

Is the Business Plan Achievable?

Investors should evaluate whether the company's business plan is achievable and if it actually has the asset base it professes to have.

Recall the infamous case of Bre-X, mentioned above. It was a Canadian exploration company that claimed to have found one of the world's biggest gold mines in Busang, Indonesia.

The story turned out to be a colossal fraud. Before it was found out, Bre-X shares climbed from 12 cents to $280.

Its collapse in 1997 wiped out $3 billion Canadian in market value.

How to Buy Penny Stocks

Once you've learned to dodge the scammers, there are five steps to follow when purchasing a penny stock. 

It's important to evaluate whether the stock has upside potential. You're investing because you'd like to get a return, right? So you need to ask yourself whether the penny stock you're considering truly has upside potential, or if it seems more to be a flavor-of-the-day stock, such as a company that's trying to ride the coattails of the latest investment fad.

Four Rules to Follow

You should devise a realistic risk-reward assessment for the stock even if you're only investing a small amount of money.

  1. Limit your holdings and diversify. You might be excited about the prospects for your favorite penny stock, but you still need to protect yourself. Cap your losses by limiting your holdings in the stock to no more than 1% or 2% of your overall portfolio. It also makes sense to diversify your penny stock portfolio, which shouldn't exceed 5% to 10% of your overall portfolio, depending on your risk appetite.
  2. Check liquidity and trading volumes. Even if you've made a successful investment in a penny stock, you'll want to sell your shares eventually. You should have adequate liquidity and trading volumes in the stock so that you can trade it efficiently. Otherwise, you may wind up with a wide bid-ask spread, making it nearly impossible to convert your paper profit into an actual one.
  3. Know when to sell. It's rare for a penny stock to be a long-term buy-and-hold investment. The sector is built on short-term trades. If you notch a sizeable gain over a short period, book it now rather than waiting for bigger profits that may never materialize.
  4. Search for high-quality stocks. Good prospects include ventures that are set up by experienced managers who have successfully exited a previous company, and stocks with promising outcomes in biotechnology or natural resources. There also are fallen angels. These are the once-great companies that ran into trouble but still have comeback potential. Many of today's leading technology stocks were trading in the low single digits at the end of the 2000-2002 "tech wreck," and household names like La-Z-Boy Inc. (LZB) traded below a buck in March 2009.

Using an Online Broker

Most online brokers offer the ability to buy and sell penny stocks through their platforms. We've done an extensive review and ranking of the Best Online Brokers for Penny Stocksto help you pick the right one for you.

Top Alternatives To Penny Stocks

Buyer Beware

Penny stocks are a huge gamble. A casino might have better odds.

Despite the short-term potential for gains, stick to a sustainably profitable approach by buying shares in proven companies with strong track records.

If you want to allocate some capital to speculative plays, it may be best to look at companies trading between $3 and $5. But only pull the trigger after substantial research that leads to a conviction in your position.


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