The Best Penny Stocks for 2019
The US Securities and Exchange Commission (SEC) considers the term “penny stock” to describe any stock that belongs to a small company, is not listed on any of the major exchanges (though this is sometimes disputed), and is currently valued at less than $5. The penny stock market has had a long and interesting history in the United States, attracting both critics and opportunists alike.
There are quite a few reasons why investors are attracted to the penny stock market. Because these stocks already have such low values, the amount that can be lost is relatively limited. Additionally, the penny stock market is remarkably volatile. While volatility does increase the risk of opening a specific position, it also increases the likelihood that a stock will experience a tremendous value increase overnight. Because of this, most penny stock traders will open relatively short positions.
At the same time, the risks of trading penny stocks should not be overlooked. The penny stock market is very lightly regulated and is exposed to the risks of insider trading and price manipulation, such as “pump and dump” schemes. If you are going to succeed in the penny stock market, you will need to open and close your positions with care.
If you are a high risk, high reward individual, then the penny stock market may be the exact sort of thing you’ve been looking for. The list of best penny stocks for 2019 can change quite quickly, meaning it will be important for you to do your research before opening any given position. However, as of July 2019, there are a few stocks that appear to be on the rise. In this article, we will briefly discuss some of the top picks for the current year. We will also offer a few tips to keep in mind while trading. (Prices and weekly growth quotes come from the week of 7/9/2019)
The Eight Best Penny Stocks for July 2019
1. Naked Brand Group Limited
The clothing company Naked Brand Group LTD opened July with some very impressive gains. Within the course of a week, the company increased in value by 94 percent, rising to a modest price of $0.26. While the stock’s performance for the rest of the month is yet to be seen, this positive swing is attractive for momentum penny stock traders.
Global Eagle Entertainment
Global Eagle Entertainment is an up and coming entertainment company that has made a surprising splash in the penny stock trading scene. The company has experienced daily trading volumes over 70,000, which is fairly high for a penny stock. It is not uncommon for Global Eagle stock to experience a 8 percent upswing within a single day.
3. Fuel Cell Energy
Fuel Cell Energy had one of the most impressive first weeks of July and, contrary to what many spectators believed, has actually been able to maintain most of its gains. The company opened the nation’s hottest month with a 325 percent increase in value. While this may suggest the stock has overshot its “true value”, at $0.75, this stock may be a risk worth taking.
4. US Energy
US Energy is a penny stock that benefits from a national energy industry that is constantly changing. While the stock’s trading volume hovers around 20,000 per day, it has enjoyed the increased demand for energy that is typically associated with the summer months. Within a single day, its value recently increased from $0.44 to $0.49.
5. Alta Mesa Resources
Alta Mesa’s stock has experienced a fairly wide range of prices over the past year, trading for as much as $7.39 (theoretically removing its “penny stock label” for a short period of time) and as little as $0.11. Currently trading around $0.17, the stock is near the bottom of its price channel and appears to have some positive momentum.
6. Taronis Technologies
Taronis Technologies primarily works with water decontamination and fuel generation, two things the world constantly needs. Currently trading around $0.27, the stock is among the most affordable stocks connected to both these industries. To begin the month of July, the stock enjoyed an impressive 81 percent increase in value.
7. Obalon Therapeutics
Obalon Therapeutics is one of many penny stocks that is loosely tied to the always growing, always volatile medical industry. On July 9, the stock increased in value by a head-turning 17 percent in a single day. While this stock still has a high potential for risk, it also has a very high potential for strong returns.
8. Oasmia Pharmaceutical AB
Oasmia Pharmaceutical AB is one of only a handful of companies that has experienced a greater than 100 percent increase in value thus far in July. After opening the month trading around $1 even, the stock shot up to reach $2.28. If things keep moving in a positive direction, as many technical indicators are suggesting they might, the stock may eventually lose its penny stock label.
Things to Keep in Mind when Trading Penny Stocks
As suggested, trading penny stocks is all about accepting high levels of risk in pursuit of high potential returns. Many of your penny stock positions will end up losing money, despite the fact that you entered into them near a relative low point. However, if you are able to select the right stocks, your overall portfolio can still be quite lucrative.
There are many time-tested strategies that can help you reduce the risk of trading penny stocks. Some of these strategies include:
- Do plenty of research: the more you can do to understand what drives a stock’s underlying value, the more likely you will be able to open profitable positions
- Use technical indicators: technical indicators—particularly, momentum indicators—can help you objectively evaluate the risk of opening a specific position
- Diversify: opening many different positions will reduce the risk attached to each stock you own
- Trade on paper: the penny stock market is incredibly risky. To avoid losing more money than you need to, consider practicing with a “paper trading” program
- Understand risks: learn how to identify when a stock is authentically on the rise and when a penny stock’s increase is simply the result of a pump and dump scheme
When applied correctly, these penny stock trading strategies can help you successfully trade each of the stocks that’s mentioned in this article.
Conclusion
After the Federal Reserve’s Jerome Powell hinted at a possible rate cut, the stock market—whose value is indirectly tied to the bond market and money supply—experienced a tremendous rally. Beyond the usual indexes containing America’s largest companies, pink sheets and other penny stocks enjoyed a major increase in value. 2019 is poised to be an excellent time for trading penny stocks.