Penny stocks are, and always will be, volatile creatures. We’re going to look at one today that is currently testing investors’ patience; steep declines are spelling disaster, but luck can change.
When investing in a penny stock—shares priced below $5—there will be risks involved. Some of these companies have stood the test of time and are now hanging on the lower price shelf due to dwindling operational performance. Others are new to the market, are young, and therefore lack experience. Investors must hedge their bets when investing here. These stocks are prone to change (and fast), offering sudden rewards but also sudden losses.
Here’s one on our radar today that is seven years active—is that old? Hardly not.
Penny Stocks to Watch: Hi-Crush Partners
Before releasing its recent Q1 report, shares of Hi-Crush Partners (NYSE:HCLP) were selling for anywhere around the $4 mark, even reaching a year-to-date high of $4.91 in March. Though shares had already lost over 80% since mid-2018, investors hoped that the Q1 results could cause a resurgence.
But they were disappointed. The company showed that revenue dropped 27% on a quarterly basis. For some, this was likely a final straw.
Now, this penny stock is selling for $1.62 USD and is down a further 9% on the day. From $15 approximately in 2018, that is a long way down in under a year.
However, analysts at Investopedia are calling HCLP stock oversold. There is still a lot to grab onto here:
“Look beyond that quarterly revenue drop and consider the group’s average sales growth rate of 36% over the past five years. Factor in a price-to-earnings ratio (P/E) of 3.02, a forward P/E of 8.28, and a relative strength index (RSI) of 31.56, and this is looking like one very oversold stock.”
Penny Stocks: The Takeaway
As a hydraulic fracking sand supplier, the climate has been challenging for this company. It has faced constrained pipeline capacity, and this has decreased the number of wells oil and gas producers are finishing. These conditions will directly affect Hi-Crush in terms of total sand volume sold as well as the price per ton of sand.
If conditions change in Hi-Crush Partners’ favor, the current price could easily rebound to bigger highs. If investors are patient and willing to hold, the low price might be an opportunity.
What do you think? Do you have any particular penny stocks on your radar?
Featured Image: DepositPhotos © cta88