“Meme stock mania” shows no signs of slowing down. The capacity of short-sellers to endure pain is being examined quite severely by day traders driving up the share prices of meme stocks like AMC (NYSE:AMC) and GME (NYSE:GME). However, although these two stocks are trading places for the most popular Reddit stock out there, there are also plenty of penny stocks making waves on subreddits.
Now you may be thinking if penny stocks are worth the trouble. A penny stock refers to a small company’s stock that trades for less than $5 per share.
They are not at the top of the list for value investors. Many of the penny stocks are traded over the counter. Thus, the liquidity of the stocks is low.
In turn, due to the low liquidity, an investor might not be able to cash out at the right time. Furthermore, the low liquidity results in low trading volumes. Even small transactions can have a massive impact on the price of these stocks.
However, they are interesting performers that have caught the attention of Reddit users, who have become one of the most potent forces on Wall Street recently.
So, without further ado, here are seven names that are making a major impact on the message boards recently.
- Zomedica (NYSEAMERICAN:ZOM)
- Ideanomics (NASDAQ:IDEX)
- Genius Brands (NASDAQ:GNUS)
- Naked Brand (NASDAQ:NAKD)
- Globalstar (NYSEAMERICAN:GSAT)
- Nokia (NYSE:NOK)
- Applied Genetic Technologies (NASDAQ:AGTC)
Now, let’s dive in and take a closer look at each one.
Penny Stocks to Buy: Zomedica (ZOM)
Zomedica is a very interesting company.
A development stage veterinary diagnostic and pharmaceutical company, it is known for its Truforma platform, a machine allowing veterinarians to conduct in-office diagnoses for common diseases affecting canine and feline companions. As a result of the machine, medical professionals can charge higher fees in quick time, increasing margins and reducing costs.
The company has made only one sale; to Jason Berg, founder, and president of Guardian Veterinary Specialists, a 29,000-square-foot hospital in Brewster, New York.
Reddit momentum can only help so much. To that end, it has inked a deal with Miller Veterinary Supply, one of America’s oldest wholesale distributors of pet supplies to veterinarians, to market Truforma.
At the end of 2020, ZOM stock traded for around 23 cents per share. It went as high as $2.91 per share but is now trading under a buck. However, if last week is any indication, you should not treat this stock lightly.
Considering the popularity of electric vehicle (EV) stocks from mid-2020 onwards, it is not surprising Ideanomics has made its way onto this list of penny stocks.
Analyzing the company is a tough task. Professional wrestling scion Shane McMahon founded Ideanomics as a financial technology company in 2004. At that time, it was known as China Broadband. A lot of water has passed under the bridge since then and IDEX has gone through several iterations, pivoting in and out of high growth industries at a rapid pace. This has earned the company an unenviable position.
Ideanomics operates two main divisions, Mobile Energy Global and Ideanomics Capital. The former helps customers get access to commercial electric vehicles, and the other offers fintech products.
Again, it’s important to highlight Ideanomics is not a fundamentally sound company. However, considering the areas in which it invests, Reddit users will not lose interest in this one anytime soon.
Penny Stocks to Buy: Genius Brands (GNUS)
CEO Andy Heyward believes Genius Brands can become the Netflix (NASDAQ:NFLX) of children’s TV. That is an ambitious claim. However, if any company can pull it off, it stands to make a substantial amount of money.
For now, Genius Brands does not have the numbers. What it does have our partnerships and licensing agreements with prominent brand names like Stan Lee, Arnold Schwarzenegger, to name a few. In fact, Schwarzenegger has inked an agreement to be a “significant investor,” in the kid’s media company.
The company has made it a habit of sorts to issue fluff press releases that inevitably leads to a bump in the share price. It’s a classic case of “Sell the Sizzle, Not the Steak.” But in the long run, we need to see some traction on the bottom line.
Naked Brand (NAKD)
Reddit has acted like Santa Claus for a number of companies. However, there are few who will be as thankful as Naked Brand. The New Zealand-based company owes its resurgence largely to the r/WallStreetBets subreddit forum.
At this point, I was fully expecting the company to desist, but in a show of power, the retail investors have given this intimate apparel retailer a new lease on life. Now, NAKD is back in full force and has put into motion a plan to transform itself into a digital enterprise instead of a brick-and-mortar business in Australia and New Zealand.
Considering Reddit loved this penny stock even before this initiative, I can only imagine how high the stock can go now that there is a semblance of a story to back their ambitions.
Penny Stocks to Buy: Globalstar (GSAT)
You might have not heard of Globalstar but it’s a pretty solid tech penny stock. It offers two-way voice and data devices such as mobile voice and data satellite communications products.
There are several names on a typical list of penny stocks that do not offer much of a story. However, that is not the case with Globalstar, it provides products and services that we use in our daily lives such as personal tracking, emergency location, and messaging solutions.
Even without the Reddit-induced price action, this is a great company to have in your portfolio.
Many thought the Nokia story was over after it lost its epic smartphone battle with Apple (NASDAQ:AAPL). On the contrary, the Finnish multinational telecommunications company has not transformed itself into a 5G giant.
In the last decade, Nokia has had several ups and downs. New CEO Pekka Lundmark has said that he wants to work against “complacency and accepting the status quo.” Those are bold words and harken back to the unfortunate circumstances that the multinational had to face as a result of its smartphone business debacle.
However, investors can rest easy this time around. The company is aggressively buying the 5G spectrum, capital expenditures are healthy and its quarterly earnings are also moving in the right direction.
Considering all of this, NOK stock becomes one of the safest investments out there.
Applied Genetic Technologies (AGTC)
Applied Genetic Technologies is a biotechnology company that utilizes a proprietary gene therapy platform to produce genetic therapies for patients. It was founded in 1999 and has meandered along since then.
However, Redditors took an interest in the company recently and pushed up the share price to $9.67 a pop. As I write this, the stock is trading under five bucks again, highlighting the perils of investing in Reddit stocks.
On a more positive note, the company recently announced additional data from its ongoing X-linked retinitis pigmentosa (XLRP) gene therapy Phase 1/2 trial. The data was positive, indicating an improved, durable response in retinal sensitivity.
Like most Reddit penny stocks, AGTC is highly sensitive to news releases. So, you need to keep an eye on that section if you want to day trade this one.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the biedexmarkets.com.com Publishing Guidelines.
Faizan Farooque is a contributing author for biedexmarkets.com.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.