Despite ongoing uncertainty surrounding the future of the global economy, investors are still very active in the markets, and many are looking at high volume penny stocks as potential winners.
Indeed, a high volume of trading can signal that a penny stock is doing something right, whether that be an exciting news release or a bright future based on market conditions.
Of course, it’s important to remember that while high volume is a good indicator, if you are interested in high volume penny stocks, it’s essential to look at a number of other factors as well before deciding to buy a stock.
Let’s take a look at five high volume penny stocks that saw over 20 million shares trade hands today and why they might be better left out of your portfolio for the time being.
5 High Volume Penny Stocks to Avoid: Top Ships Inc. (NASDAQ:TOPS)
Top Ships Inc. comes in at the top of the list of high volume penny stocks because of the sheer volume of trades on April 15.
By midday, TOPS stock saw a massive trading volume of over 94 million shares. Of course, when you look at the stock’s history, Top Ships has seen even high trading days over the month.
So, what is the reason behind the high volume of trades?
It is likely to do with the registered direct offering of 33,333,333 common shares at a public offering price of US$0.18 per share that the company announced on Wednesday.
This offering is a downsize from a previously announced offer of 40 million common shares at a price of $0.20 per share.
Considering that TOPS stock has been higher than the public offering price of $0.18 since March 26, it is obviously an attractive price point for investors. Of course, when you compare the company’s current stock price to the start of the year, TOPS is down just over 70%.
Top Ships Inc owns and operates tanker vessels worldwide, with medium range tanker vessels that transport crude oil, petroleum products, and bulk liquid chemicals.
Moving forward, if the oil market doesn’t rebound, TOPS stock could crash along with it.
Analysts don’t seem to think TOPS stock will get back to its previous high of $15. In fact, although Maxim Group reiterated its “buy” rating for TOPS stock, the $0.50 12-month price target is pretty tiny compared to the stock’s 52-week high.
Based on the current state of the oil market, paired with Top Ship’s current price, which is down 20% to $0.22, this could be a risky purchase right now. Tread with caution on this one.
5 High Volume Penny Stocks to Avoid: MFA Financial Inc. (NYSE:MFA)
MFA Financial Inc. comes in second on the list of high volume penny stocks to watch on April 15, with a trading volume over 32 million by mid-afternoon.
This volume of daily trades isn’t anything new for MFA stock, which is consistently seeing a high volume of trades.
But is this stock worth buying?
According to analysts, you might want to hold off on this one. Of the four Wall Street analysts that have issued ratings and price targets for MFA, three of them suggest “hold,” and one has offered the stock a “buy” rating.
When it comes to 12-month price targets, the high target for MFA is $8.50, while the lowest is $8.00. When you compare that to the company’s current share price of $1.69, that means the stock has a potential upside of 388%.
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Of course, now might not be the right time to get in (or out) of MFA Financial.
By end of day Wednesday, MFA stock was down 7.2% at $1.69 and is down 77.8% for the year.
5 High Volume Penny Stocks to Avoid: Aurora Cannabis Inc. (TSX:ACB) (NYSE:ACB)
Next on the list of high volume penny stocks to watch is former cannabis giant, Aurora Cannabis.
Cannabis market enthusiasts are no doubt still feeling the sting of ACB’s drastic downfall in 2019, which saw the company’s stock drop from $9.00 to below $1.00.
Once considered an industry leader, Aurora Cannabis has continued to lose its appeal after posting consistently disappointing financial results and proving its inability to sell its product, while at the same time investing in expansions.
In the fiscal Q2 2019, Aurora’s revenue was $56.6 million, which reflects a large 26% drop from the previous quarter. The adjusted EBITDA for the period stood at $80.2 million, which was a substantial jump from the $39.7 million reported by the company in the prior quarter.
ACB has also stated that its revenue growth might continue to be weak in the next quarter, adding to widespread concern that the company might not become profitable any time soon.
Aurora’s share price has gotten so low that earlier this week, the company announced a 12-1 reverse stock split to restore compliance with the NYSE’s listing standards.
In the release, the company mentioned that it “remains on track with its previously announced business transformation targets, including: (1) material selling, general and administrative cost reductions; (2) significant reductions in capital expenditures; and (3) reducing complexity across the organization.”
Whether or not these efforts will pay off remains to be seen, but the news sent ACB stock down further.
So, where is Aurora Cannabis stock heading?
Analysts have mixed reviews, with 10 “hold” ratings, three “buy” ratings, and four “sell” recommendations.
In regards to 12-month price targets for ACB, those also vary greatly among analysts. The high price target for ACB is $9.07, which the low is $1.00. The average 12-month price target is $3.09, which suggests a potential upside of 337%.
When it comes to ACB, it might be best to follow analysts’ advice. If you already own Aurora shares, hold onto them. If you don’t, it is likely a good idea to steer clear.
5 High Volume Penny Stocks to Avoid: J.C. Penney Company, Inc. (NYSE:JCP)
Big box retailer J.C. Penney is one of the high volume penny stocks that is taking a serious blow amid the COVID-19 lockdown.
The coronavirus pandemic has forced the company to temporarily shut its 850 department stores. On Wednesday, things only got worse after investors caught wind that the retailer was contemplating filing for bankruptcy protection.
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JCP stock dipped 27% to $0.23, with a trading volume of over 43 million shares as investors seemingly jumped ship before things could get any worse.
J.C. Penney has not made any final decisions on how it will address its strained finances, which includes $3.72 billion worth of debt, but things are not looking good.
JCP stock is down over 79% this year, and based on the current situation with the coronavirus, it is unlikely the company will be able to recover from its losses anytime soon.
With that in mind, JCP is another one of the high volume penny stocks that is best avoided.
5 High Volume Penny Stocks to Avoid: Liberty TripAdvisor Holdings Inc. (NASDAQ:LTRPA)
After a massive day of trading, Liberty TripAdvisor Holdings is one of the few high volume penny stocks that ended in the green Wednesday.
After seeing over 30 million shares trade hands, LTRPA stock closed up 21.42% at $2.55, which is the highest the stock has gone in about a month.
Since the beginning of the year, Liberty TripAdvisor is down 65%, which isn’t surprising considering the travel industry has been hit particularly hard by COVID-19.
So, why is the stock trading at such a high volume today?
With no revelations in regards to travel regulations, there doesn’t seem to be any rhyme or reason as to why LTRPA experienced so much activity.
TripAdvisor did, however, release news last week regarding several initiatives to provide immediate economic support to local communities and enable diners and travelers to assist in the long-term recovery of travel and hospitality industries after COVID-19.
The initiatives involve reviewing, sharing, and posting on the company’s website in exchange for donations to support local businesses and its staff.
The company’s goodwill offering seems to sit well with investors. Since the announcement on April 7, LTRPA stock has increased by more than 42%.
Moving forward, it remains to be seen what will happen to the travel industry. Many predict that once travel restrictions are lifted, consumers will be rushing to book trips after weeks and months stuck indoors.
At this time, it’s a good idea to keep your eye on Liberty TripAdvisor but maybe hold off on buying the stock in the short-term until the future of the travel industry becomes a bit more clear.
An analyst at Guggenheim has issued a 12-month price target of $11.82 for LTRPA stock, which suggests a potential upside of 363%, and a “hold” rating.
Takeaway
Whether you are interested in travel stocks, gold stocks, or biotech, there are plenty of opportunities to be found if you focus on high volume penny stocks.
The aforementioned stocks are better off left alone for now, but there are also a good amount of penny stocks to buy right now.
Are there any stocks on your radar? Let us know in the comments!
Featured Image: DepositPhotos © zwolafasola
