It’s been said many times before, but penny stocks, especially those under $2, are not for the faint of heart. That especially rings true today, with markets at their weakest point since the 2008 financial crisis following the coronavirus outbreak. Much like 2008, it looks very likely that we are on the verge of a global recession, and that could represent a huge opportunity for risk-tolerant investors who are willing to get down in the dirt to find a few hidden gems.
Some economists believe that we may be headed for a “V-shaped recession,” which is a sharp drop in economic activity followed by a quick bounce back. Former Nasdaq CEO Bob Greifeld told CNBC earlier this week that this is exactly what he expects to see. “There will be a lag factor. People will have to have data that says this thing is under control … and then they’ll evolve into normal behavior. But that can happen in a relatively safe period of time,” he explained.
A sharp drop followed by a quick bounce is the prime hunting ground for investors, and penny stocks under $2 are now full of undervalued treasures, some of which could even capitalize on the virus outbreak. Let’s take a closer look at the five stocks on our radar today:
Penny Stocks Under $2: BIO-key International (NASDAQ:BKYI)
BIO-key is a New Jersey-based authentication company that specializes in biometric solutions that enable convenient and secure access to information and high-stakes transactions. Cybersecurity is an increasingly popular business and one that is on track to surpass US$133 billion by 2022 as the launch of 5G increases global interconnectivity and our dependence on digital networks for payment services.
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BKYI stock took off on March 11 after the company announced that it secured a US$30 million contract to supply biometric security solutions in Nigeria. BIO-key will facilitate the enrollment of users and the positive identification of individuals for a telecommunications company in what is Africa’s biggest economy, working in conjunction with its Nigerian identity supply partner, Chams PLC.
Mike DePasquale, Chairman and CEO of BIO-key, said, “Today’s announcement represents a major step in addressing the extensive and growing opportunity for large-scale identification, enterprise and consumer security in one of the largest and fastest-growing economic regions of the world. Nigeria’s population is estimated at over 206 million, making it the seventh most populous country globally.”
This penny stock had been trading between $0.55 and $0.65 for much of the last six months but soared as much as 145% on Wednesday alone to see out the day at $1.18. Thursday, March 12, saw the Dow suffer its worst losses since 1987 as we officially enter bear market territory, which has brought BKYI stock back down to $0.90, which is still double its opening price on Monday.
Penny Stocks Under $2: Moxian (NASDAQ:MOXC)
Moxian Inc is in the O2O (Online-to-Offline) digital marketing business, providing an online platform for small and medium-sized enterprises (SMEs) with physical stores to conduct business online, interact with existing customers and obtain new ones. Moxian is also the exclusive operator of the Games Channel of the Xinhua App, an application developed and operated by Xinhua New China News Agency, the official state-run press agency of China. Through this affiliation, Moxian has developed extensive contacts with the mobile gaming industry in China.
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This stock crashed from $0.15 to $0.50 last weekend but then bounced back to $1.64 just a day later off a massive spike in volume despite no news being released about the company. This suggests a bump in insider trading likely further boosted by speculators taking a punt on a stock in the green when the market is in the red. MOXC stock now trades at $1.13.
Penny Stocks Under $2: China Pharma Holdings (NYSEAMERICAN:CPHI)
China Pharma is a specialty pharmaceutical company that develops, manufactures, and markets a diversified portfolio of products, focusing on conditions with high incidence and high mortality rates in China, including cardiovascular, CNS, infectious, and digestive diseases. No prizes for guessing what caused a massive spike in this biotech penny stock, many of which have been riding a wave of bullishness towards healthcare firms following the outbreak of the coronavirus.
When talking about coronavirus stocks, some of the best-performing ones have been those working on a vaccine, but there are definitely more secondary industries that are benefiting. China Pharma manufactures one product that has been flying off shelves since the outbreak—hand sanitizer.
This stock spent the majority of 2019 trading between $0.20 and $0.35 before taking off right as the virus broke out at the end of December. In the two months between January 1 and March 1, CPHI stock gained almost 400% before reaching a peak of $1.14 on March 2. Since then, it has fallen back towards the $0.60 mark, which is still almost triple its average price last year.
Penny Stocks Under $2: KBS Fashion Group (NASDAQ:KBSF)
KBS Fashion Group Limited is in the business of designing, manufacturing, selling, and distributing its own casual menswear brand, KBS, through a network of 38 KBS branded stores and over a number of multi-brand stores. Interestingly, this stock fell to its lowest-ever valuation of $1.51 on Monday and hasn’t stopped climbing since despite the company having no connection to the coronavirus.
In February 2019, KBS announced that it would acquire Tribe Wearables, a private smart clothing technology company, located in Komotini, Greece. That deal appeared to have gone quiet over the next year, but a little digging on their website suggests that an announcement on the closing of that deal could be imminent. Trading volume on this stock spiked from around 35,000 to 2.4 million overnight, and the share price is surging past the $2.00 mark, which suggests insiders know something about the Tribe deal that the market doesn’t.
Penny Stocks Under $2: Trinity BioTech (NASDAQ:TRIB)
Trinity BioTech is a Dublin-based company that specializes in the development and manufacturing of test kits for the diagnosis of autoimmune and infectious diseases, with an extensive distribution network to over 100 countries. As testing for the coronavirus becomes increasingly more vital to slowing the spread of the disease, this biotech stock has seen some interesting spikes in recent weeks. In fact, one of the company’s subsidiaries, Fitzgerald Industries, actually developed tests for SARS back in 2002, the last coronavirus strain to breakout.
Opening the year at just above $1.00, TRIB shares climbed to $0.40 last week before being dragged back down by the spread of the virus to Ireland. Today, the Republic of Ireland announced measures to essentially shut down all non-essential businesses in the country for the next two weeks, meaning Trinty’s primary operations in Bray, County Wicklow, are likely to be operating at reduced capacity or closed altogether until the end of March.
The Takeaway
There seems to be only one word on everyone’s lips lately, and it doesn’t look like it’s going anywhere soon. The coronavirus is causing chaos for the vast majority of stocks, but it’s also brought about the perfect storm for a lucky few. The above-mentioned penny stocks for under $2 all certainly have a case to benefit from the virus, yet they are equally as prone to volatility. It’s a rare and difficult environment to invest in, but with the right combination of timing and insight, you could be on to the next big winner.
Featured Image: DepositPhotos © Frankljunior
