There will be a disclaimer at the bottom of this article warning you about the dangers of penny stocks. However, just in case someone attempts to claim that they didn’t get that far, let me state upfront right now: This is a very dangerous arena. You can lose everything you put into these high-risk ventures — and quickly.
Further, you can safely assume that most penny stocks will eventually fail. Yes, some blue chips today previously traded in the dumps. However, don’t let survivorship bias distort your perspective on reality. One source claims that the failure rate for this sector nears 100%. However, Investor’s Business Daily probably provides the best advice: “In the long run, stocks with higher quality, big institutional support and strong growth will give you consistent results.” This means no penny stocks.
However, for risky investors who must ignore all the warnings I posted above, these ideas may inspire investors to conduct their own extensive due diligence. Following this research, if you want to buy these penny stocks, you’ll at least have the confidence that they’re tied to relevant sectors.
|Solar Integrated Roofing
Solar Integrated Roofing (SIRC)
Right from the get-go, you must exercise supreme caution with Solar Integrated Roofing (OTCMKTS:SIRC). First, SIRC trades over the counter. Therefore, you probably won’t receive the best bid-ask spread. And if you must ask what that means, here’s a friendly tip: penny stocks might not be for you because you’re ignoring the due diligence exhortation above.
Second, SIRC literally trades for pennies — 29 of them at the time of this writing. You might look at that as “cheap.” However, Solar Integrated has yet to file any documents with the U.S. Securities and Exchange Commission (SEC) this year. In fact, I encourage you to look it up yourself. As of this writing, I do not see financial documents for 2022.
The last Form 10-Q I could find was for the quarter ended May 31, 2021. At the time, Solar Integrated posted a net loss of $855,619. And this compared unfavorably to the net loss of $455,586 in the year-ago quarter.
So, why consider SIRC as one of the penny stocks to buy? Simply put, speculation on the Inflation Reduction Act, which earmarks about $369 billion for climate change provisions. Maybe, just maybe, SIRC stock can rise on the positive implications.
Wrap Technologies (WRAP)
Wrap Technologies (NASDAQ:WRAP) is a technology company that develops products and services for police, law enforcement and security personnel.
Law enforcement agencies have faced staffing shortages recently. According to the Wall Street Journal early this year, “Amid a tight labor market, rising crime rates and growing public scrutiny of law enforcement, many departments say they are short-staffed.”
To help remedy this crisis, Wrap Technologies offers two critical tools. First, it provides immersive training protocols, giving officers a chance to hone their skills in immersive digital environments. Further, the training allows supervising officers a chance to course correct any issues prior to hitting the streets. Second, Wrap develops non-lethal tools that enable police officers to arrest suspects without the use of lethal force.
Still, WRAP is one of the penny stocks because the underlying business is financially vulnerable. While the company has a strong balance sheet, its profitability metrics are terrible.
In some ways, I’m saving the best for last with Volta (NYSE:VLTA). A company tied to providing infrastructure for the electric vehicle (EV) rollout, Volta has a unique way of conducting business. VLTA still trades among the penny stocks, so volatility is a given. However, if you can handle the heat, it’s possible that it could facilitate significant upside.
While everyone loves saying that EVs are the future, the reality is that they’re very expensive. Further, not everyone in the U.S. has access to their own garage. Therefore, EV charging infrastructure represents a necessity. However, it also poses the classic chicken-and-egg problem. To justify building more EVs, automakers must see more infrastructure. But to justify more infrastructure, providers must see more EVs.
To help get around this issue, Volta brings to the table ad-driven charging stations. Think about the programmatic advertising sector helping streaming channels provide free content in exchange for broadcasting commercials. Now, apply that very same concept to the EV charging sector. Drivers get to charge their cars at public stations. In turn, these stations broadcast ads to passersby.
However, VLTA features terrible profitability metrics, just like Wrap Technologies above. Therefore, only those well-versed in penny stocks should consider Volta.
On Penny Stocks and Low-Volume Stocks:?With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that?InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article.