Robinhood is a mobile trading platform that allows users to trade stocks with the benefit of zero commission fees and no minimum balance required. The platform is ideal for novice traders and investors with small portfolios, and Robinhood penny stocks have become hugely popular among day traders. Users can trade equities and penny stocks listed on the Nasdaq and the New York Stock Exchange with no commission or hidden fees. Robinhood even gives investors the opportunity to trade options contracts without commissions. That’s right, 100% free trading!
A penny stock refers to a small company’s stock that typically trades for less than $5 per share. These types of stocks are usually associated with small companies and trade infrequently, meaning they have a lack of liquidity or ready buyers in the marketplace. As a result, penny stocks are hugely speculative with a great deal of risk involved; however, with great risk can come great reward.
Robinhood Penny Stock #1: Denbury Resources Inc (NYSE:DNR)
Denbury is an oil and natural gas producer with operations focused in the Gulf Coast and Rocky Mountain regions. This penny stock has had a bumpy time over the last 12 months and took a huge hit this week when oil prices saw their biggest one day crash since 1991 after Saudi Arabia launched a price war against Russia. While that situation shows no signs of abating any time soon, falling oil prices could actually be an opportunity for investors hunting for an undervalued oil stock, and this Robinhood penny stock looks like the ideal candidate.
Falling oil prices aside, DNR stock has been hindered by the company’s debt burden, although this is now under control. According to its most recent earnings report, Denbury reduced its debt by US$250 million in 2019 and ended the year with no outstanding borrowings on its bank credit facility. The stock also suffered from the collapse of a merger with Penn Virginia in March 2019, with the company instead shifting its focus to fiscal discipline, which is clearly yielding results.
The collapse of that deal saw this penny stock fall to a low of $0.95 last August before bouncing 70% to $1.62 in mid-January. However, the escalating oil price war and the spread of the coronavirus have dragged DNR shares to as low as $0.31. While it’s impossible to predict when those two situations will be resolved, it is worth remembering that they are temporary events, and the strength of Denbury’s balance sheet makes it look likely to bounce back.
Robinhood Penny Stock #2: Corbus Pharmaceuticals (NASDAQ:CRBP)
Corbus Pharmaceuticals is a Phase 3 clinical-stage pharmaceutical company focused on the development and commercialization of novel therapeutics to treat rare, chronic, and serious inflammatory and fibrotic diseases. The company’s lead product candidate, Lenabasum, is a novel, synthetic oral endocannabinoid-mimetic drug designed to resolve chronic inflammation and fibrotic processes. Lenabasum is currently being evaluated in systemic sclerosis, cystic fibrosis, dermatomyositis, and systemic lupus erythematosus.
One major concern with this penny stock is its cash burn position. In September 2019, the firm had US$55 million in cash and was debt-free, but has burnt through US$39 million in the last year. So it has a cash runway of around 17 months from September. Analysts forecast that Corbus will break even in about four years, meaning the company had to seek outside financing in the form of a US$46 million stock offering carried out in February, meaning that cash burn concern can be put to the backburner for the time being.
As a biotech stock, CRBP has been prone to some wild fluctuations in recent weeks as a result of the coronavirus. Trading around the $4.30 mark in mid-November, this penny stock rocketed almost 70% to $7.20 before the economic impacts of the virus began to translate to the market, which, coupled with the dilution from the February offering, brought the stock back down to just above $4.
Robinhood Penny Stock #3: FuelCell Energy (NASDAQ:FCEL)
FuelCell Energy manufactures, sells, and services fuel-cell products, which efficiently convert chemical energy in fuels into electricity through a series of chemical reactions. It serves various industries such as Industrial, Wastewater treatment, Commercial and Hospitality, Data centers and Communications, Education and Healthcare, and others. Geographically, the company generates a majority of its revenue from the United States, followed by South Korea.
This penny stock has electrified Robinhood investors over the last year. Trading between $0.25 and $0.35 from July to November, FCEL stock took off in the winter months and shot up almost 100% from November, then went on to trade at a peak of $2.79 in February. This was before the coronavirus outbreak began hurting stocks, although its current valuation of $1.47 is still a sizeable increase on last year’s average price and could even be a bargain opportunity before the markets eventually begin to recover.
Robinhood Penny Stock #4: Organigram (TSX:OGI) (NASDAQ:OGI)
Organigram is a Canadian cannabis producer based in Moncton, New Brunswick. When Canada legalized cannabis in October of 2018, many investors rushed in to snap up stocks in what was known as the ‘Green Rush’. Hopes of a potential gold rush-like effect were dashed just a few months into legalization as the entire market was faced with a litany of problems, such as a lack of supply, poor retail visibility, and hugely underwhelming demand as consumers remain in the black market.
The majority of these issues can be pinned to regulators more so than the individual companies and will eventually be resolved once the market matures a little more. Organigram could be one of the pot penny stocks to watch on Robinhood for a couple of reasons. Firstly, the company’s cannabis 2.0 portfolio, which includes vapes and edibles, is one of the most impressive on the market and could be key to capitalizing on what analysts believe is a C$2.5 billion market.
Secondly, Organigram has taken a varied approach to financing, which has protected it from the worst of the losses incurred in the first full year of legalization. The company does not release guidance, but analysts are bullish on this Robinhood penny stock, with a consensus price target of $4.86, which is an upside of over 180% from its current price of $1.72.
Robinhood Penny Stock #5: Catalyst Pharmaceuticals (NASDAQ:CPRX)
Catalyst Pharmaceuticals is a biopharmaceutical company focused on developing and commercializing innovative therapies for people with rare, debilitating, chronic neuromuscular, and neurological diseases. It offers Firdapse, a proprietary form of amifampridine phosphate for the treatment of patients with lambert-eaton myasthenic syndrome, a disease in which the immune system attacks the body’s own tissues.
This biotech penny stock popped almost 40% between January 1 and February 21 after the company said full-year 2019 net revenue for Firdapse was around US$102 million, with fourth-quarter net revenue standing at US$30 million. The company looks in a healthy position for the year ahead and has forecasted 2020 sales of Firdapse to be between US$135 million and US$155 million. The company is also working “on expanding the possible use of Firdapse as a treatment for other indications,” suggesting it could be sold to even more markets.
The biotech penny stock has fallen from that February peak of $5.21 to currently trade at $3.52, which again has more to do with the coronavirus outbreak than the actual company’s performance. Analysts see huge potential in CPRX stock, with the six who have covered it all offering a ‘Buy’ rating and a consensus price target of $9.17, which is an upside of 160%.
The Takeaway
There’s little to be said about the impact of the coronavirus that hasn’t already been said. That crisis, coupled with the oil price war, was almost the perfect storm for a potential recession. However, for savvy, risk-hungry investors, it also represents a huge opportunity to take advantage of prices while they’re low. Robinhood penny stocks could be your best bet given the zero fees, and the space for huge upward movement. It’s an unusual environment for investing, but one that’s full of hidden gems—happy hunting!
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