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Saturday, October 16, 2021

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Penny Stocks to Watch for October 2021

Final month, I talked about find out how to deal with funding losses gracefully, reaping the onerous classes of the inventory market as you re-assess your buying and selling objectives. Virtually as essential as dealing with loss is the way in which you deal with your successes.

You probably have invested thoughtfully in a well-researched inventory (and even in the event you’ve simply encountered an actual stroke of excellent luck), it’s possible you’ll end up with extra money than you already know what to do with. This “victory lap” interval could be an intensely harmful time for traders, nonetheless. Many overlook all of the hard-won knowledge they’ve discovered down the road and begin throwing their cash into any inventory with an thrilling story.

As a substitute of throwing warning to the wind, put much more of your time into due diligence. Belief your instincts, however keep cautious, keep away from getting grasping, and preserve a detailed eye on these fundamentals reasonably than the narrative an organization’s Funding Relations agency is promoting.

Beneath, you may discover some updates on some intriguing and high-potential equities, in addition to just a few new ones I have been wanting into. Could they convey you even higher income as you proceed alongside your funding journey.

A few of the set-ups I describe under might not be related or intact as of the time you learn this text. Please conduct your individual due diligence. Many shares talked about right here have been additionally mentioned within the Peter Leeds Publication. Peter might personal shares in among the investments talked about, wherein case that reality might be clearly indicated. Please observe that penny stocks are notoriously risky.

First, Some Updates

BRF S.A. (BRFS)

I launched BRF S.A. (BRFS) to readers of this column in September, and the ticker’s exercise since then has been nothing wanting ridiculous. We’re speaking intense volatility right here, simply as I had predicted final month—however even I wasn’t anticipating this a lot of a rollercoaster. 

The excellent news is that the bulls appears to have wrested management away from the bears, at the very least for now. As of the tip of September, after I was scripting this replace, BRFS was finally up 8% over the previous month and 12.35% over the previous week—all on the again of zero information from the corporate itself.

I believe it is doubtless that we’ll see extra volatility from this Brazilian meals firm, however I stay optimistic on its prospects given robust monetary ratios and still-much-cheaper valuation than its friends. Particularly, if it manages to climb above the $5.20 resistance level, BRFS shareholders may see some substantial positive factors forward.

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Sigma Labs, Inc. (SGLB)

In distinction to BRFS, Sigma Labs, Inc. (SGLB) had a tough September, heading as much as $4 by the center of the month however then careening downward once more. This resulted in an total 7.5% drop from the time I featured the inventory on this column till the previous few days of the month.

Mainly, traders have been mildly enthused by a contract win. Nonetheless, the thrill wore off, and now Sigma Labs inventory is caught at round $3.15 ranges.

Regardless of my disappointment that its preliminary climb wasn’t extra sustainable, I imagine that it is too early to surrender on SGLB. The earnings per share (EPS) figures are just too glorious to disregard (65% development this yr, 35% development projected for subsequent yr), and the balance sheet is rock-solid.

As well as, with 80% of producers purportedly trying to enhance their use of 3D printing applied sciences, Sigma Labs may very well be a significant winner over the subsequent yr.

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Entravision Communications Company (EVC)

Since I included Entravision Communications Company (EVC) within the June 2021 version of my “Penny Shares to Watch” column, it is had a implausible run from round $4.73/share to a peak of $8.11 in the beginning of September. (That is an roughly 70% theoretical revenue for readers.) Even at its present worth of $7.11, shareholders are wanting fairly sensible proper now.

For my part, Entravision’s penny inventory days are doubtless behind it, barring some catastrophic occasion. Its moving averages are pointing to a “Robust Purchase” sign, and its relative strenth index (RSI) has returned to regular (i.e., not overbought) ranges.

One potential problem is that EVC is doing SO nicely—as with, for instance, its consolidated adjusted EBITDA ascending 932% over the prior-year interval, as of the second quarter of 2021—that it will likely be tough for the inventory to proceed hitting this momentum.

The form of triple-digit income and EPS that Entravision is seeing may flip into what Wall Avenue analysts name “robust comps,” that means the inventory might wrestle to return to its earlier highs and skittish traders may consequently abandon it if/when its outcomes develop much less thrilling.

Whereas I imagine it is extremely potential that EVC will proceed to climb by at the very least 20% extra over the subsequent few months or so on the again of its world enlargement plans, it seems for now as if it might be taking a breather. Decrease entry factors could also be forward, so watch this one carefully.

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Some New Ones

PaySign, Inc. (PAYS)

PaySign, Inc. (PAYS) is undoubtedly one of many strangest penny shares I’ve come throughout in my a few years combing by these low-priced equities. It fairly actually offers in “blood cash,” offering pay as you go present playing cards to American plasma donation facilities, which subsequently use them as incentives to herald potential donors.

The blood garnered from American donation facilities is usually offered to pharmaceutical firms after which utilized in medical therapies for hemophilia and autoimmune issues, in addition to for chemotherapy. Two-thirds of the worldwide blood provide comes from the USA, and gross sales of blood plasma merchandise come to round $25 billion per yr.

In 2020, plasma donations within the U.S. dropped round 20%, and PaySign’s income suffered on condition that it makes cash from the charges on its pay as you go playing cards. As of the tip of 2020, the group’s gross sales had plummeted round 30% on an annual foundation. In the meantime, the world is dealing with a scarcity of many essential plasma-based medicines, with out which individuals will most definitely die.

Regardless that the delta variant continues to be a significant concern, there are numerous indicators that PaySign’s plasma enterprise will get better in 2021 and 2022. (The truth is, the corporate says that donations are already recovering considerably on a month-to-month foundation.) The federal government stimulus will finish or has already led to most states; childcare has opened again up; and people who find themselves afraid of contacting COVID are doubtless already double-vaccinated.

The corporate is due to this fact anticipating a big resurgence of enterprise within the third quarter of 2021 and past, to the tune of “a variety of $29 million to $32 million, reflecting development of 20% to 32%, and adjusted EBITDA of $350,000 to $1.9 million,” per administration’s feedback within the second quarter 2021 earnings name.

This represents large upside potential for PaySign, in my view, and mixed with a robust stability sheet and price-to-free cash flow (P/FCF) ratio of 5.04, I imagine that the corporate is nearly definitely undervalued.

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Alto Substances, Inc. (ALTO)

Alto Substances, Inc. (ALTO) is a penny inventory proper now, however I do not anticipate it to remain that approach for very lengthy. Not with projected EPS development subsequent yr at 71.54% and a forward price-to-earnings (P/E) ratio of 5.32, each of which recommend that 2022 might be a wonderful yr for ALTO shareholders. And never with—in my view—a recession-proof suite of merchandise involving “specialty alcohols,” that are utilized in such numerous (and in some instances important) items as cosmetics, cleansing merchandise, prescription drugs, animal feed, pet meals, and biodiesel feedstock.

Like lots of its low-priced friends, ALTO is a turnaround story. Regardless of its massive roster of blue-chip purchasers—with family names like Chevron, Cargill, and Procter & Gamble amongst them—its five-year income historical past is dispiriting.

Extra lately, nonetheless, the corporate has been pivoting from an ethanol producer to a specialty alcohols producer. Its gross sales have subsequently shot up over the previous two quarters, climbing roughly 30% and 35%, respectively.

Sadly, Alto Substances’ cost of goods sold (COGS) has additionally elevated over these intervals by roughly the identical percentages. I imagine that this can be a essential stage in ALTO’s journey towards sustainable development, nonetheless, because the group undertakes to transition its services towards producing specialty alcohols.

The complete fruit of its turnaround might take just a few extra months to seem. However as soon as potential shareholders get a load of all of ALTO’s plentiful potential, I believe its costs might skyrocket—and comparatively quickly, at that.

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Greatest Brokers for Penny Shares

Interactive Brokers

Interactive Brokers’ very low per-share buying and selling fee of $.005 ($1 minimal per commerce) and up-to-the-split-second real-time margin calculations are perfect for penny inventory merchants. IBKR Lite purchasers can commerce penny shares for $0.

Execs

  • Low commissions, most 1% of commerce worth for IBKR Professional, $0 for IBKR Lite

  • Streaming real-time information, together with account info 

  • IBot, IB’s AI-powered on-line assistant, will help discover options

Cons

  • Knowledge streams on just one system at a time 

  • Merchants Workstation a steep studying curve

  • IBKR Professional clients charged charges to commerce, although they’re low

Charles Schwab

Schwab’s analysis pages level out the change on which a inventory trades, which is able to preserve you knowledgeable of the inherent threat. There are a selection of platforms obtainable; the StreetSmart platforms have customizable charting and streaming real-time quotes. Schwab doesn’t cost buying and selling commissions on all shares (together with penny shares) and ETFs.

Execs

  • Glorious screeners obtainable on StreetSmart Edge

  • Free entry to a wide selection of reports feeds

  • Robust customization and personalization choices on StreetSmart Edge

Cons

  • The sheer variety of options and experiences obtainable typically overwhelming

  • Transaction historical past for simply 24 months on-line

  • Uninvested money not swept right into a cash market fund

Penny shares are risky and might generate catastrophic losses. Value ranges on this article are hypothetical and don’t signify purchase suggestions or funding recommendation. Needless to say it is your accountability to make buying and selling selections by your individual expert evaluation and threat administration.

Peter Leeds is the creator of a number of books, together with the worldwide bestseller, “Penny Shares for Dummies.” He and his workforce additionally problem a publication devoted solely to penny inventory picks and evaluation, in addition to a preferred YouTube channel PeterLeedsPennyStocks.

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