3 Penny Shares Robinhood Traders Love It: Are They Shopping for?
As soon as upon a time, penny shares price solely pennies. Nevertheless, america Securities and Trade Fee (SEC) subsequently modified the definition of penny inventory from one which trades at lower than $ 1 per share to at least one that trades at lower than $ 5 per share. motion.
Robinhood traders appear to notably like penny shares nowadays. Fifteen of the 100 hottest shares on the buying and selling platform are at present buying and selling for lower than $ 5 per share. Many even meet the unique definition of the penny inventory to have a share value beneath $ 1. Listed below are three of these shares that Robinhood traders love – and whether or not or not they’re good selections to purchase now.
1. Producers of sundials
Producers of sundials (NASDAQ: SNDL) ranks as essentially the most extensively held penny inventory amongst Robinhood traders. He’s at present No. 4 on Robinhood’s “100 Most Standard” record. Sundial shares are at present buying and selling at $ 0.85 per share.
The Canadian marijuana inventory fell 84% in 2020. Sundial posted declining gross sales and large losses because it shifted from a enterprise mannequin targeted on wholesale hashish to at least one targeted on constructing manufacturers. retail hashish.
However then Sundial grabbed the eye of the WallStreetBets service provider neighborhood on Reddit earlier this yr. These Reddit customers have began harvesting shares from the Canadian hashish producer. Earlier than too lengthy, Sundial had develop into the most well liked pot inventory in the marketplace – and a favourite for Robinhood traders.
At its peak, Sundial shares have soared greater than 500% for the reason that begin of the yr. The sizzle has largely muffled now. Nevertheless, Sundial stays one of many prime performing hashish shares of 2021 up to now.
Zomedica (NYSEMKT: ZOM) is the sixteenth hottest title on Robinhood. And it is positively a penny inventory with shares which can be buying and selling nicely beneath $ 1.
The corporate focuses on veterinary well being. Zomedica lately launched its Truforma point-of-care diagnostic system for veterinarians, marking its first sale final month.
Like Sundial, Zomedica has caught the eye of WallStreetBets merchants. Zomedica shares skilled an absolute tear earlier this yr. Originally of February, the inventory was 10 baggers.
These huge positive factors had been fleeting. Zomedica has since fallen a bit, however remains to be up over 280% for the reason that begin of the yr.
3. Tonix Prescribed drugs
Tonix Prescribed drugs (NASDAQ: TNXP) is approach down the record of the 100 hottest shares on Robinhood, arriving at # 97. Nevertheless, with shares barely beneath $ 1, Tonix is nonetheless a penny inventory that Robinhood traders purchase.
The primary candidate of the pipeline of this small biotechnology is TNX-102 SL. The investigational drug is at present being evaluated in a sophisticated stage research for the remedy of fibromyalgia. Tonix hopes to have the ability to file for U.S. regulatory approval in 2022 if the pivotal medical trial goes nicely.
Nevertheless, this system that has most excited traders is Tonix’s TNX-1800 COVID-19 vaccine candidate. The corporate introduced constructive outcomes from a preclinical research of the vaccine in March. Tonix believes TNX-1800 has the potential to supply long-term immunity towards COVID-19.
Like Sundial and Zomedica, Tonix made massive positive factors earlier this yr, with its share value almost tripling in early February. Nevertheless, like the opposite two shares, Tonix gave up most of his winnings. The inventory is now up about 40% year-to-date.
Are they purchases?
It is enjoyable to personal penny shares like Sundial, Zomedica, and Tonix once they’re hovering. That enjoyable evaporates fairly shortly when shares go down – as they’ve lately. Possibly some or all of those standard Robinhood actions may bounce again, however every one comes with challenges.
Sundial operates in a extremely aggressive Canadian hashish market with a lot bigger and higher funded rivals. The corporate was pressured to resort to dilutive inventory presents to boost further liquidity. Sundial filed a prospectus with the SEC in March to promote as much as $ 800 million of its shares. It seems that Sundial is planning to embark on a serious shopping for spree to develop into the worldwide hashish market. Nevertheless, this might be of venture that doesn’t repay.
Zomedica’s Truforma diagnostic system exhibits promise. The unhealthy information, nonetheless, is that the corporate introduced final week that it plans to section out using distributors to market the platform and promote it fully by itself. It’s a riskier technique. And that is the one which apprehensive traders, the motion of Zomedica plunging into the information.
Of those three penny shares, Tonix strikes me as essentially the most intriguing. He nonetheless has a low market cap of simply over $ 300 million. Nevertheless, most traders can be higher off staying away from clinical-stage biotech shares.
Penny shares are usually low-cost for a motive. My opinion is that there are lots of different shares (together with some that Robinhood traders like) that provide significantly better risk-reward profiles than Sundial, Zomedica or Tonix.
This text represents the opinion of the author, who could disagree with the “official” suggestion place of a premium Motley Idiot consulting service. We’re motley! Difficult an funding thesis – even one in all our personal – helps us all to assume critically about investing and make selections that assist us develop into smarter, happier, and richer.