Penny stocks are those which are valued at under $5, and they’re generally a risky bet due to the fact they’re mostly made up of once large stocks that have fallen on harder times and smaller companies that have yet to, and may never, reach their full potential.
Penny stocks are a hugely divisive topic of conversation among investors—some love them, and others loathe them. That doesn’t mean they’re not without their merits, with the opportunity to flip a minimal investment into a massive return too alluring a prospect for many to turn down. Here, we’ve picked out two particular stocks that could pad out your portfolio this week. Let’s take a look at Urban Tea and Callon Petroleum.
Urban Tea Inc (NASDAQCM:MYT) is an emerging trendy tea maker based in the Hunan Province of China, which currently markets a range of health-focused teas, light meals, and pastries to China’s new urban generation in Hunan, where there is a huge demand for such products. The reason this looks like such a good penny stock play right now is its recent acquisition of a 51% stake in 39 PU Tea, a privately held Chinese firm with extensive expertise in tea culture marketing and e-commerce marketplaces.
MYT shares are trading at $0.83 on the NASDAQ Capital Market, having been valued at $2.38 earlier in the year. Despite those losses, the stock has gained a massive 150% in the last month, heralding a recovery from the bottom on the back of that 39 PU Tea investment.
Callon Petroleum (NYSE:CPE) is a slightly riskier penny stock, but that means the gains could be all the greater. The oil and gas firm is currently engaged in a hotly disputed takeover of rival firm Carrizo Oil & Gas Inc (NYSE:CRZO), with some of Callon’s own shareholders opposing the deal. The company’s largest shareholder, Paulson & Co, argues that the company should scrap the deal and instead place itself on the market.
The market appears to favor Paulson’s stance, with the penny stock making gains back in September after John Paulson wrote to management expressing his views for the future of the Houston-based firm. Paulson received the backing of other major shareholders Institutional Shareholder Services (ISS) and Glass Lewis over the weekend ahead of the crucial vote on Thursday, so expect the outcome of that vote to have a seismic effect on CPE stock in either direction.
So that’s our pick of penny stocks for this Tuesday—are they your cup of tea?
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