Penny stocks are valued at $5.00 or less, and they definitely divide opinion among investors. Some love them for their low share price and the possibility for huge returns, while others loathe the level of risk and uncertainty involved.
US stocks have been in freefall this week as the coronavirus approaches pandemic levels with more than 90,000 cases reported worldwide. This week, the Fed made an emergency cut to interest rates for the first time since the 2008 financial crisis, although it wasn’t enough to halt a deepening stock sell-off.
The falling value of stocks could represent a serious buying opportunity for some of the more risk-tolerant investors, particularly in the area of penny stocks, which are possibly the most vulnerable equities to a huge economic disruption. Here, we’ll look at two such stocks with long-term potential beyond the current crisis.
Paratek Pharmaceuticals (NASDAQ:PRTK)
This penny stock soared to a six-month peak last week for a combination of reasons. The first of these was the release of the company’s Q4 earnings, which saw a loss per share of $0.81, well below the expected loss of $1.03. Secondly, the firm’s close links to the coronavirus have been ramping up interest in this stock.
Randy Brenner, Paratek Pharmaceuticals’ head of development, said last week, “many of the coronavirus fatalities are unfortunately associated with secondary bacterial pneumonia infections, further highlighting the importance of a novel once-daily well-tolerated oral and IV antibiotic in the treatment paradigm for pandemic preparedness.” PRTK stock is up nearly 30% in the last week to $4.50 and is fast approaching the penny stock threshold of $5.00.
The money remittance firm has seen little disruption to its business from the coronavirus, given its low exposure to international markets, although the penny stock is down around 9% today in line with the broader market trends. Last month, the company reported better than expected revenue in its Q4 earnings, boosted by an investment from crypto company Ripple. MoneyGram also recently launched FastSend, which it claims is the fastest money remittance service in the world now. MGI’s current value of $2.11 could be a serious bargain in the current environment.
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