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June’s Penny Stock To Watch: Small Tech Emerges As Sweet Spots

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Speculation in penny stocks fell in May as capital exited U.S. equity funds due to delays in the Trump Administration’s agenda. Capital focused on blue chips, according to Investopedia. The trend could continue until low-risk, intermediate correction occurs.

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Junior biotechs suffered on account of health care reform’s impact on the pharmaceutical industry. Small technology stocks emerged as low-price sweet spots.

Low-priced winners have emerged, posting recoveries that indicate prices could rise later this year. Following are the June top 10 penny stocks to watch.

1. Sequans Communications S.A. (SQNS)

Source: Investopedia

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Sequans Communications SA (SQNS) led the list in May, surging more than 30%, reaching a 5-year high. The company moved to the top spot in June from the top fourth stock to watch in May.

The Paris-based company is a fabless designer, developer and supplier of WiMAX and LTE semiconductor solutions for the wireless broadband market. The company’s solutions incorporate baseband processor and radio frequency transceiver integrated circuits, as well as signal processing techniques, software stacks and algorithms.

The stock sold between $19.50 and 66 cents from 2011 to 2015, bottoming out in August and recovering through April to a multi-year high. The stock has seen sizable buying interest in the past two months.

First quarter revenue of $12.4 million fell 10.9% compared to the fourth quarter of 2016 mainly due to seasonality. Revenue increased 33.9% compared to the first quarter of 2016 on account of higher product sales.

2. Southcross Energy Partners LP (SXE)

Source: Investopedia

Southcross Energy Partners LP, a provider of natural gas processing and transportation services, held its number two position from May among the June penny stocks to watch.

The company went public in 2012 in the low 20s and reached an all-time high four months later at $26.49. The stock suffered when the bottom dropped out of the energy market, and hit an all-time low of 38 cents in February 2016.

The stock gained more than 20% following the Trump administration’s comments about liquefied natural gas. The stock posted a 17-month high due to the likelihood of continued gains.

The January stock rally pushed Southcross to a 17-month high before reversing above $4.75 in May. A breakout above $4.74 could push a fresh rally.

3. Castle Brands Inc. (ROX)

Castle Brands, Inc., which imports, markets and sells liquor brands worldwide, held the number three position for the second straight month.

The stock tumbled in the 2000s bear market, falling from its IPO of $9.60 in April 2006 to an historic low at 1 cent. A slow recovery reached $2.03 in November 2014 before giving way to a decline that posted a higher low at 65 cents in December 2016. Since then, the activity has been positive, with a  February rally that has entered a critical test at the 2014 high.

A breakout will open the door to a more vigorous uptrend that could achieve high single digits.

The company sells premium and super premium brands of whiskey, rum, whiskey, liqueur, vodka and tequila.

4. ImmunoGen Inc. (IMGN)

Source: Investopedia

ImmunoGen, a provider of of antibody-drug conjugates (ADCs) for the treatment of cancer, is a newcomer to the top 10 penny stocks to watch. The stock posted a 12-year high at $20.25 in 2013 and sold off to $5.34 in December 2014. A recovery in 2015 stalled less than a point below the prior peak, creating a decline that continued to an 18-year low at $1.51 in November 2016.

Buyers took over in 2017, generating an uptick that reversed at 2014 resistance approximately two weeks ago. The pullback could signal a buying opportunity, with a bounce at or above the April gap at $3.25, setting the stage for a breakout toward resistance near $8.00.

ImmunoGen is a clinical-stage biotechnology company that creates targeted cancer therapeutics using its proprietary ADC technology. The company’s candidate, mirvetuximab soravtansine, is in a Phase 3 trial for an ovarian cancer, and is in Phase 1b/2 testing in combination regimens for earlier-stage diseases.

The technology is used in Roche’s Kadcyla, in three other clinical-stage ImmunoGen product candidates, and in programs in development by Amgen, Bayer, Biotest, CytomX, Lilly, Novartis, Sanofi and Takeda.

5. China Commercial Credit, Inc. (CCCR)

Source: Investopedia

China Commercial Credit Inc. (CCCR), which provides business loans and loan guarantee services to small-to-medium enterprises, farmers and individuals in China’s Jiangsu Province, went public on the U.S. exchanges at $6.50 in August 2013.

The stock experienced a downtrend that bottomed out at 25 cents in February 2016 and began an uptrend that stalled at $3.20 in September. The stock hit a higher low in March 2017 before recovering, testing the 2016 high. A breakout should bring broad buying interest that could support continued upside into a critical test at the IPO opening print.

6. Hovnanian Enterprises, Inc. (HOV)

Source: Investopedia

Hovnanian Enteprises, a home builder founded in 1959, topped out in the mid-70s in 2005 but got crushed when the real estate bubble burst, falling to an all-time low at 52 cents. The stock bounced to $8.05 in 2010 and tested that resistance level in 2013, bringing a reversal and downtrend that posted the second higher low of the 10-year period in January 2016.

A subsequent uptick peaked in December, ahead of a rounded correction that has yielded a base breakout above $2.50. The bullish price action sets the groundwork for a breakout at 2-year resistance just above $3.00.

Second quarter revenues were $585.9 million, a decrease of 10.5% compared with $654.7 million in the second quarter of 2016. For the six months ended April 30, 2017, total revenues decreased 7.5% to $1.14 billion compared with $1.23 billion in the first half of the prior year.

Consolidated net contracts per active selling community increased 18.5% to 10.9 net contracts per active selling community for the second quarter of fiscal 2017, versus 9.2 net contracts per active selling community in the 2016 second quarter, reflecting a strong spring selling season.

7. Pieris Pharmaceuticals, Inc. (PIRS)

Source: Investopedia

Pieris Pharmaceuticals Inc. (PIRS), a clinical-stage biotechnology company committed to providing novel solutions for oncology, respiratory disease and other therapeutic areas, launched on the OTC market in 2014, and traded between $2.00 and $4.25 before falling to $1.26 in January 2016. It ground sideways through November, then testing the first-quarter low ahead of a January 2017 breakaway gap that has drawn steady buying interest. The rally gathered momentum in early May after announcing a partnership with AstraZeneca PLC and is currently testing the 2015 high, an all-time high.

The company’s product includes immuno-oncology multi-specifics tailored for the tumor microenvironment, an inhaled Anticalin protein to treat uncontrolled asthma as well as a half-life-optimized Anticalin protein to treat anemia. Anticalin proteins, proprietary to Pieris, are a novel class of therapeutics validated in the clinic and in partnerships with pharmaceutical companies. Anticalin is a registered trademark of Pieris.

8. Radiant Logistics, Inc. (RLGT)

Source: Investopedia

Radiant Logistics, Inc. (RLGT), which provides domestic and international freight forwarding services, returns to the top 10 from April at a higher ranking. The company, which went public in 2006 at 95 cents and hit an all-time low at 9 cents at the end of the bear market, recovered and reached an all-time high at $8.00 in June 2015, following a correction that extended into the second half of 2016, pushing down the stock to a 2-year low at $2.45.

The stock recovered in November, but stalled in February at $5.96. A March decline settled at the 50-day EMA mid-month. The stock has not yet recovered, but relative strength cycles have favored an uptick that could send the price to the 2015 high in coming months.

The stock has been basing on the 50-day EMA for the past three weeks and could lift into a test of resistance this summer.

The company operates through the U.S. and Canada geographical segments.

9. CymaBay Therapeutics, Inc. (CBAY)

Source: Investopedia

CymaBay Therapeutics Inc. (CBAY), a clinical-stage biopharmaceutical company developing therapies to treat specialty and orphan diseases, rallied to an all-time high at $13.78 in February 2015, then a steep downtrend continued into the first quarter of 2016. The stock then dropped to an all-time low at 82 cents before bouncing back to $3.04 in April, a yearly high, ahead of a pullback that continued to a November low at $1.15.

The stock broke above the 2016 high in February 2017, reaching a 2-year high at $4.81.

Net loss for the 2017 first quarter was $5.4 million, or $0.20 per diluted share, compared to $6.8 million, or $0.29 per diluted share in the first quarter of 2016. Net loss in the 2017 first quarter was $1.4 million lower compared to the prior year period, primarily due to the recognition of collaboration revenue in 2017.

10. Zynga, Inc. (ZNGA)

Source: Investopedia

Zynga, Inc. (ZNGA), a developer of social games that are played by more than 100 million consumers monthly, went public at $11 in December 2011 and began a strong uptrend, reaching an all-time high at $15.91 in March 2012. A subsequent downtrend continued into October 2014, hitting a low at $2.20 before easing into a basing pattern that eliminated the last supply of sellers when it hit an all-time low at $1.78 in February 2016.

The stock achieved a base breakout about three weeks ago, starting an uptrend that could hit the 2014 high at $5.89 in the coming months while a pullback to $3.00 could bring a low-risk buying opportunity.

The company has created franchises such as FarmVille, Zynga Casino and Words With Friends. Zynga’s NaturalMotion, a mobile game and technology developer, has created mobile games in entertainment categories, including CSR Racing, CSR Classics and Clumsy Ninja. Zynga games are available on a number of global platforms including Apple iOS, Google Android, Facebook and Zynga.com.

First quarter revenue was $194.3 million, up 4% year-over-year and up 2% sequentially.

Low May liquidity dampened penny stock speculation, but a group of low-priced winners has emerged, carving bullish recovery patterns that point to higher prices into the second half of the year.

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Biotech And Industrial Metals Top Penny Stocks To Watch For August

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Leading market benchmarks hit new highs in July, generating interest in small-cap stocks and low-priced securities for August, according to the Investopedia penny stocks to watch for August.

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Suffering sectors like industrial metals and brick-and-mortar retailers also perked up, driving swing traders and bottom feeders into the market. Such developments bode well for penny stocks in the near-term, even though traders have to recognize higher than average risk.

Biotech stocks performed well during the month as major sector funds broke out of basing patterns set in 2015. The strength of biotechs signals the start of secular uptrends that should support rallies at all capitalization levels in the next few months.

Four of this month’s stocks return from the previous two months while the balance are newcomers.

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1. ImmunoGen Inc. (IMGN)

Source: Investopedia

ImmunoGen, Inc. has grown by more than 70% since it joined the penny stock watch list in June, raising odds for double digit growth.

Immunogen, a provider of antibody-drug conjugates for the treatment of cancer, leads the top penny stocks for the second straight month after joining the list in June as the number four top stock to watch.

The stock posted a 12-year high at $20.25 in 2013 and sold off to $5.34 in December 2014. A recovery in 2015 stalled less than a point below the prior peak, creating a decline that continued into an 18-year low at $1.51 in November 2016.

The stock reached a 14-month high above $8.00 in early July. A mid-month pullback dropped the stock into intermediate support at the 50-day EMA, creating a healthy bounce that could now test the prior high, pushing into double digits.

ImmunoGen creates targeted cancer therapeutics. The company’s candidate, mirvetuximab soravtansine, is in a Phase 3 trial for an ovarian cancer, and is in Phase 1b/2 testing in combination regimens for an earlier-stage disease.

The technology is used in Roche’s Kadcyla, in three other clinical-stage ImmunoGen product candidates, and in programs in development by Amgen, Bayer, Biotest, CytomX, Lilly, Novartis, Sanofi and Takeda.

2. RADA Electronic Industries, Ltd. (RADA)

Source: Investopedia

RADA Electronic Industries, Ltd. (RADA), a defense electronics system of advanced electronic systems for airborne and land applications, rose from number 7 in July’s top penny stocks to watch to number two in August.

The stock fell into a multi-decade decline after it joined Nasdaq in the 1990s. It ground out a series of lower highs and lows through January 2016’s all-time 54-cent low. The stock spent 16 months moving sideways in a narrow basing pattern before turning higher in May 2017 and rallying back to 2016 resistance at $1.78. The bullish activity completed a cup and handle breakout pattern that could point to a fast rally into the August 2015 gap between $3.70 and $2.50.

The stock continues to gain strength, targeting the August 2015 gap at $4.24

Revenues totaled $4.7 million in the 2017 first quarter, up 91% compared to revenues of $2.5 million in the first quarter of 2016.

Gross profit totaled $1.7 million in the first 2017 quarter of 2017, a gross margin of 35.7%, compared to gross profit of $6,000 (gross margin of 0.2%) in the 2016 first quarter.

Operating income was $0.4 million in the first 2017 quarter compared to an operating loss of $1 million in the 2016 first quarter.

Net income attributable to RADA’s shareholders in the 2017 first quarter was $0.4 million, $0.02 per share, versus a net loss of $1.8 million, or $0.23 per share, in the 2016 first quarter.

3. 22nd Century Group, Inc. (XXII)

Source: Investopedia

22nd Century Group, Inc., a plant biotechnology company that is a provider of tobacco harm reduction and development of proprietary hemp/cannabis strains, rose from the number five spot in July’s top penny stocks to watch to number three in August.

The stock broke out above multi-year resistance near $1.50 in 2013, rallying to a record high a few months later at $6.36. It then began a persistent decline through August 2015 before finding support at 56 cents, followed by a bounce to $1.75.

The stock traded within those boundaries for 22-months, bouncing at support three times and reversing at resistance in equal measure. The price returned to that level a fourth time, improving odds for a breakout that could double the price in the year’s second half.

The stock found support near 70 cents in the second half of the year, testing that level three times ahead of a March 2017 uptick that has now reached ranged resistance. A breakout over $2 should draw strong buying interest favoring a high percentage rally back to its 3-year high.

The stock joined the Russell Microcap Index two months ago, when FTSE Russell reconstituted its U.S. and global equity indexes.

Membership in the Russell Microcap Index signifies automatic inclusion in the value style indexes. FTSE Russell determines membership for its Russell indexes primarily by objective, market-capitalization rankings and style attributes.

22nd Century Group focuses on genetic engineering and plant breeding that allows the increase or decrease of nicotine levels in tobacco plants and cannabinoids levels in cannabis plants. Its primary goal for tobacco is to lessen the harm caused by smoking. The primary goal for cannabis is to develop proprietary hemp/cannabis strains for new medicines and agricultural crops.

4. Ballard Power Systems, Inc. (BLDP)

Source: Investopedia

Ballard Power Systems, Inc. (BLDP), a provider of clean energy products that reduce customer costs and risks, and helps customers solve challenges in their fuel cell programs, rose from the number 10 spot in the July penny stocks to watch to the number four spot in August.

The stock reached an all-time high at $144.95 in 2000 before falling for more than 12 years, reaching an all-time low at 56 cents. A 2013 uptrend continued through 2014, reaching an 8-year high at $8.38, followed by a correction that returned to 2015 resistance at $3.10.

The recovery wave reached new resistance in April 2017, generating a 3-month symmetrical triangle pattern that could yield an uptrend into the prior high.

Total revenue was $22.7 million in the last quarter, an increase of 39% from growth in both power products and technology solutions.

Gross margin was 42% in the quarter, an improvement of 22 points due to a shift in product mix toward higher margin technology solutions and a heavy duty motive for the China market, including the establishment of a production line in Yunfu, China for the manufacture and assembly of FCvelocity-9SSL fuel cell stacks.

Cash operating costs were $10 million in the quarter, a 6% increase due to higher research and product development expenditures as well as a stronger Canadian dollar relative to the U.S. dollar, since a significant amount of cost is denominated in Canadian dollars.

Low-priced biotech stocks have risen following a long slumber, with steady buying interest likely to continue. This group should offer a variety of profitable penny stock plays during the quiet summer trading season, while low-priced stocks in other sectors move into narrow trading ranges.

5. Trilogy Metals, Inc. (TMQ)

Source: Investopedia

Trilogy Metals Inc., which engages in the development and exploration of mineral properties, joins the top penny stocks to watch list this month at number 5. The Vancouver, Canada-based company went public on the U.S. exchanges in April 2012 at $3.20, beginning an immediate downtrend to an all-time low at 15 cents in January 2016. A recovery wave mounted the 200-day EMA at 60 cents that stalled three months later, yielding a narrow basing pattern into a July 2017 recovery that has reached a 2-year high at $1.22.

A pullback to new support in the 80- to 85-cent price range should mark a low-risk buying opportunity, as the upside that could reach $2.

Trilogy Metals Inc. reported a strong working capital position of $20.1 million in the second quarter, with cash on hand of $14.5 million.

For the three months ending May 31, 2017, the company reported a net loss of $2.4 million compared to a net loss of $1.6 million for the corresponding period in 2016. This variance was primarily due to the size of the field programs at the Upper Kobuk Mineral Projects in 2017 as well as the timing of the program.

An increase of $840,000 of mineral property expenses occurred during the three months ended May 31, 2017 compared to the three months ended May 31, 2016. In 2017, the field program at Arctic and Bornite began with drilling by early June compared to 2016 where the field program kicked off in early July. This earlier start resulted in an increased mineral property expense during the second quarter of 2017. Additionally, an increased level of ongoing technical studies was occurring during the three months ended May 31, 2017 compared to the corresponding period in 2016.

The company announced a financial partnership with South32 Limited for an option to form a 50/50 joint venture for a minimum investment of $150 million. South32 is required to fund a minimum of $10 million per year for up to three years to keep the option in good standing. The first $10 million has been advanced to the company and will be spent on a 12,000-meter exploration drill program at the Bornite deposit, which is already underway.

6. Antares Pharma, Inc. (ATRS)

Source: Investopedia

Antares Pharma, Inc., which focuses on self-administered parenteral pharmaceutical products, caught fire after suffering an all-time low at 29 cents in January 2009, then delivering a strong uptrend continuing into the July 2012 all-time high at $5.58. The stock then fell in multiple selling waves that ended at a 6-year low in March 2016.

The subsequent recovery has now completed a round trip into the April 2015 high, retracing half of the multi-year decline. The price has consolidated above $3 for the past three months, establishing the final stage of a 2-year cup and handle pattern targeting the multi-year high.

The company recently reported operating and financial results for the second quarter ended June 30, 2017. The company reported revenue of $13.4 million and a net loss per share of $0.02 for the three months ended June 30, 2017.

Revenue for the three months ending June 30, 2017 was $13.4 million, compared to $12.2 million for the comparable period in 2016. For the six months ended June 30, 2017, total revenue was $25.4 million, versus total revenue of $24.5 million for the six months ended June 30, 2016.

Product sales were $7.3 million for the three months ended June 30, 2017, compared to $8.7 million for the comparable period in 2016, totaling $17.4 million for the six months ended June 30, 2017 compared to $19.5 million in the same period of 2016.

The decrease for the period was primarily driven by a reduction in sales of pre-launch auto injector devices for use with Teva’s generic epinephrine product and reduced sumatriptan product shipments to Teva partially offset by increased sales of OTREXUP.

The company also completed a non-dilutive, 5-year debt financing with Hercules Capital, providing Antares the ability to draw up to $35 million, with the first tranche of $25 million funded upon execution of the agreement.

7. Corindus Vascular Robotics, Inc. (CVRS)

Source: Investopedia

Corindus Vascular Robotics, Inc. topped out near $4.60 in 2015 and began a steep decline in January 2017 when it posted a multi-year low at 40 cents. The stock rebounded on strong volume one month later, marking an uptrend that reached an 18-month high at $2.25 in early July. The stock has been consolidating at new support for the last three weeks, settling on the 50-day EMA while its on-balance volume holds near the rally high. The bullish configuration favors continuing upside that could reach 2015 resistance at $3.

Second quarter revenue was $2.3 million compared to $0.5 million for the same period in the prior year. The increase is due mainly to CorPath GRX Systems and capital upgrade sales.

The company installed three new CorPath GRX Systems in the second quarter, increasing the installed base to 16 systems and the total installed base to 51 systems. The installed base of 16 systems accounted for almost 90% of all CorPath cassettes shipped for revenue in the second quarter.

Gross profit was $58,000 for the second quarter, compared to a loss of $0.6 million for the second quarter of 2016. The cost of revenues for the second quarter continued to include the effect of under-utilization of production facilities as well as the cost of CorPath GRX system upgrades installed pursuant to contractual service arrangements with no corresponding revenue in the period.

Selling, general and administrative expenses were $5.9 million, compared to $4.4 million in the second quarter of 2016. The increase is primarily due to higher compensation and travel expenses associated with incremental sales headcount, investment in medical education and international sales initiatives, and incremental non-cash stock-based compensation expense related to the CEO and commercial leadership transitions during 2016.

8. Medical Transcription Billing Corp. (MTBC)

Source: Investopedia

Medical Transcription Billing Corp., a healthcare information technology company that provides proprietary web-based solutions, together with related business services, to healthcare providers practicing in ambulatory care settings, went public at $4.28 in July 2014 and entered a downtrend that continued to the April 2017 all-time low at 29 cents. The stock recovered two sessions later in reaction to positive sales news and topped out at $3.84 in mid-May.

A subsequent pullback has now since reached support at the 200-day EMA near $1.20, with a rally from this level generating buying signals favoring ongoing upside into the second quarter high.

Revenues for second quarter 2017 were $7.8 million, an increase of 49% versus $5.2 million in the same period last year. The increase was mainly due to the MediGain acquisition.

The second quarter 2017 GAAP net loss was $1.7 million, or 22% of revenue, an improvement of $1 million compared to a net loss of $2.7 million in the first quarter 2017. The GAAP net loss in the second quarter 2017 was mostly a result of non-cash amortization and depreciation expenses of $1.5 million.

The second quarter 2017 GAAP operating loss was $1.4 million, or 18% of revenue, which represents an improvement of $1 million or 43% from the $2.4 million operating loss in the prior quarter.

As of June 30, 2017, the company had $5.8 million in cash and a working capital deficiency of approximately $4.1 million.

The company raised gross proceeds of $2.3 million from a registered direct offering of its common stock priced at the market on May 10, 2017. MTBC issued 1 million registered shares of common stock to a healthcare institutional investor at a purchase price of $2.30 per share. Concurrently in a private placement, MTBC issued warrants to purchase up to 2 million shares of its common stock, with an exercise price of $5 per share, which are exercisable through May 15, 2018, and would deliver potential gross proceeds of up to $10 million if exercised.

In addition, the company raised gross proceeds of $7.4 million from the sale of about 295,000 additional shares of its non-convertible Series A Preferred Stock on June 23, 2017.

9. Intrepid Potash, Inc. (IPI)

Source: Investopedia

Intrepid Potash, Inc., the only U.S. producer of muriate of potash, sold off to 2008 support at $13.80 in 2014. Two years later, the stock began a decline that reached an all-time low at 65 cents in March 2016. The stock rose above $1.50 in June before settling in a sideways pattern ahead of a December 2016 breakout that soon stalled at $3.04.

The stock spent the last eight months consolidating its gains and is now testing the rally high. A breakout could generate an uptrend reaching 200-week EMA resistance between $6 and $8.

Intrepid generated a second quarter net loss of $5.9 million, or $0.05 per share, delivering a first half net loss of $19.6 million, or $0.19 per share. This marked an improvement over the net losses of $13.4 million, or $0.18 per share, and $31.8 million or $0.42 per share, in the second quarter and the first half of 2016, respectively.
Improvements in year-over-year net loss per share were driven in part by a gain in outstanding shares from a March 2017 secondary offering.

Consolidated gross margin advanced to $3.7 million and $0.8 million in the second quarter and the first half of 2017, respectively, against the prior year. Improvements were due to lower cost solar potash production and higher average net realized potash pricing that offset lower average net realized sales prices for the product, Trio.

Cash provided by operating activities rose year-over-year to $9.7 million and $11.5 million for the second quarter and the first half of 2017, respectively. Increased cash flow was due to strong spring demand, increased potash prices, and the elimination of costlier conventionally mined potash from the production profile.

10. Tantech Holdings, Ltd. (TANH)

Source: Investopedia

Tantech Holdings, Ltd., a manufacturer bamboo-based charcoal products for industrial energy applications and household cooking, heating, purification, agricultural and cleaning uses, went public at $6.00 in March 2015 and began an uptrend that topped out at $33.97 five months later. In the next three months, the stock relinquished more than 90% of its value. Bears maintained control into the April 2017 all-time low at $1, followed by a recovery that reached a 10-month high in July.

Pricing has tested resistance at the September 2016 breakdown through the October 2015 low, with a buying surge setting the stage for upside in the $6 range.

For the six months ended December 31, 2016, revenues were $24.88 million and net earnings were $2.77 million, according to a June 2017 financial report.

Gross margins widened from 25.02% to 30.33% compared to the same period last year, with EBITDA operating margins 18.28% compared to 18.64% the prior year. Year-on-year change in operating cash flow was 32.02%, about the same as the change in earnings.

Penny stocks require investors to make some guesses about the future. Very few such stocks have a sufficient track record to indicate they will prosper. At the same time, the stocks on this list are in significant industries and have the potential to be vital players in those industries.

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Biotech

Biotech Dominates July Penny Stock Picks

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July brings new opportunities to trade penny stocks, according to the Investopedia top 10 penny stocks to watch. Biotechnology stocks in particular are poised for a breakout. Biotechnology funds broke out of the long-term basing pattern in June, forcing rotational buying pressure, which bodes well for the low-priced sub-sector, with many penny stocks ready to hit multi-year highs.

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At the same time, the tech sector is getting sold with equal force in a profit-taking exercise that could deliver a period of under-performance for the sector’s lower-priced issues.

June’s biotechnology picks drew strong buying interest, led by ImmunoGen, Inc.’s 48% advance to a 52-week high. Small China stocks also posted strength, as China Commercial Credit, Inc. gained close to 35%. China Commercial Credit and June’s three biotech picks return to the July top penny stock list, joined by six new penny stocks.

1. ImmunoGen Inc. (IMGN)

Source: Investopedia

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ImmunoGen, a provider of antibody-drug conjugates (ADCs) for the treatment of cancer, jumped from number four in June to the top spot in July.

The stock posted a 12-year high at $20.25 in 2013 and sold off to $5.34 in December 2014. A recovery in 2015 stalled less than a point below the prior peak, creating a decline that continued into an 18-year low at $1.51 in November 2016.

Buyers took over in 2017, generating an uptick that reversed at the 2014 resistance approximately three weeks ago. In June, the stock broke out and made the top 10 list for the first time. It could end up in the $8.00 to $10.00 price zone.

ImmunoGen creates targeted cancer therapeutics using its proprietary ADC technology. The company’s candidate, mirvetuximab soravtansine, is in a Phase 3 trial for an ovarian cancer, and is in Phase 1b/2 testing in combination regimens for earlier-stage disease.

The technology is used in Roche’s Kadcyla, in three other clinical-stage ImmunoGen product candidates, and in programs in development by Amgen, Bayer, Biotest, CytomX, Lilly, Novartis, Sanofi and Takeda.

2. China Commercial Credit, Inc. (CCCR)

Source: Investopedia

China Commercial Credit Inc. (CCCR), which provides business loans and loan guarantee services to small-to-medium enterprises (SMEs), farmers and individuals in China’s Jiangsu Province, jumped from number five in June to second place in July.

The company went public on the U.S. exchanges at $6.50 in August 2013.

The stock experienced a downtrend that bottomed out at 25 cents in February 2016 and began an upward trend that stalled at $3.20 in September. The stock hit a higher low in March 2017 before recovering, testing the 2016 high. A breakout should bring broad buying interest that could support a continued upside that could double the price by year’s end.

The company was founded in 2008 and provides business loans and loan guarantee services to small-to-medium enterprises, farmers and individuals in China’s Jiangsu Province.

3. CymaBay Therapeutics, Inc. (CBAY)

Source: Investopedia

CymaBay Therapeutics Inc. (CBAY), a clinical-stage biopharmaceutical company developing therapies to treat specialty and orphan diseases, returns from the June list, where it ranked number 9. The stock rallied to an all-time high at $13.78 in February 2015, then suffered a steep downtrend that continued into the first quarter of 2016. The stock then dropped to an all-time low at 82 cents before bouncing to $3.04 in April, a yearly high, ahead of a pullback that continued into the November low at $1.15.

The stock broke above the 2016 high in February 2017, reaching a two-year high at $4.81.

Net loss for the 2017 first quarter was $5.4 million, or ($0.20) per diluted share, compared to $6.8 million, or ($0.29) per diluted share in the first quarter of 2016. Net loss in the 2017 first quarter was $1.4 million lower compared to the prior year period, primarily due to the recognition of collaboration revenue in 2017.

The rally has now reached a two-year high, attracting buying interest that could move into double digits.

4. Peiris Pharmaceuticals, Inc. (PIRS)

Source: Investopedia

Pieris Pharmaceuticals Inc., a, clinical-stage biotechnology company committed to providing solutions for oncology, respiratory disease and other therapeutic areas, moved from June’s 7th spot to July’s 4th spot. The stock launched on the OTC market in 2014, trading between $2.00 and $4.25 before falling to $1.26 in January 2016. It ground sideways through November, then tested the first-quarter low ahead of a January 2017 breakaway gap that has drawn steady buying interest. The rally gathered momentum in early May after announcing a partnership with AstraZeneca PLC and is currently testing the 2015 high, the all-time high.

The company’s product includes immuno-oncology multi-specifics tailored for the tumor microenvironment, an inhaled Anticalin protein to treat uncontrolled asthma as well as a half-life-optimized Anticalin protein to treat anemia. Anticalin proteins, proprietary to Pieris, are a class of therapeutics validated in the clinic and partnerships with pharmaceutical companies. Anticalin is a registered trademark of Pieris.

5. 22nd Century Group, Inc. (XXII)

Source: Investopedia

22nd Century Group, Inc. (XXII), a plant biotechnology company that is a provider of tobacco harm reduction and development of proprietary hemp/cannabis strains, broke out above multi-year resistance near $1.50 in 2013, rallying to a record high a few months later at $6.36. The stock then began a persistent decline through August 2015 before finding support at 56 cents, followed by a bounce to $1.75.

The stock has traded within those boundaries for 22-months, bouncing at support three times and reversing at resistance in equal measure. The price returned to that level a fourth time, improving odds for a breakout that could double the price in the year’s second half.

22nd Century Group is a plant biotechnology company focused on genetic engineering and plant breeding that allows the increase or decrease of the level of nicotine in tobacco plants and the level of cannabinoids in cannabis plants. The company’s main goal in tobacco is to reduce the harm caused by smoking. The main goal in cannabis is to develop proprietary hemp/cannabis strains for new medicines and agricultural crops.

The stock last month joined the Russell Microcap Index, when FTSE Russell reconstituted its U.S. and global equity indexes. Membership in the Russell Microcap Index means automatic inclusion in the appropriate growth and value style indexes. FTSE Russell determines membership for its Russell indexes primarily by objective, market-capitalization rankings and style attributes.

6. Corindus Vascular Robotics, Inc. (CVRS)

Source: Investopedia

Corindus Vascular Robotics, Inc. (CVRS), a developer of precision vascular robotics, returned to the national market in 2015 following a trading halt, topping out around $4.50 and starting a decline that continued to reach new lows in January 2017 when it bottomed at around 40 cents. Since that time, the price activity has been constructive, with high volume rally bursts moving the stock into 2016 resistance at $1.75. The bullish behavior has created a cup and handle basing pattern that points to an uptrend into the 2015 high following a breakout.

Revenue for the first quarter of 2017 was $0.8 million compared to $1.1 million for the same period in the prior year. The decrease is due mainly to the deferral of system revenue associated with a future obligation to upgrade multiple customer units from the company’s CorPath 200 System to the CorPath GRX System.

The company installed three new CorPath Systems in the first quarter of 2017, increasing its total installed base to 48 CorPath Systems.

Gross loss was $1.1 million for the 2017 first quarter, compared to a gross profit of $0.03 million for the 2016 first quarter. The cost of revenues for the first 2017 quarter continued to include the effect of under-utilization of production facilities and the cost of CorPath GRX System upgrades that installed pursuant to pre-existing contractual arrangements.

The company continues to expect the full year 2017 revenue to be in the range of $13.

7. RADA Electronic Industries, Ltd. (RADA)

Source: Investopedia

RADA Electronic Industries, Ltd. (RADA), a defense electronics system of advanced electronic systems for airborne and land applications, fell into a multi-decade decline after it joined the Nasdaq in the 1990s. The stock ground out a series of lower highs and lows through January 2016’s all-time 54-cent low.

The stock spent 16 months moving sideways in a narrow basing pattern before turning higher in May 2017 and rallying back to 2016 resistance at $1.78. The bullish activity completed a cup and handle breakout pattern that could point to a fast rally into the August 2015 gap between $3.70 and $2.50.

Revenues totaled $4.7 million in the 2017 first quarter, up 91% compared to revenues of $2.5 million in the first quarter of 2016.

Gross profit totaled $1.7 million in the first 2017 quarter of 2017, a gross margin of 35.7%, compared to gross profit of $6,000 (gross margin of 0.2%) in the 2016 first quarter.

Operating income was $0.4 million in the first 2017 quarter compared to an operating loss of $1 million in the 2016 first quarter.

Net income attributable to RADA’s shareholders in the 2017 first quarter was $0.4 million, $0.02 per share, versus a net loss of $1.8 million, or $0.23 per share, in the 2016 first quarter.

8. ChromaDex, Corp. (CDXC)

Source: Investopedia

ChromaDex, Corp. (CDXC), a provider of proprietary health, wellness and nutritional ingredients, that creates science-based solutions to dietary supplement, food and beverage, skin care, sports nutrition and pharmaceutical products, went public in April 2016 at $4.70. The stock rallied to an all-time high at $6.18 in May, then fell one month later to $2.46 in a single session, eventually posting a lower December low. It tested that support level in April 2017, then turned sharply higher, now testing 2017 resistance at $3.80. A breakout could point to a significant upside, taking the stock back to last year’s high.

For the first quarter of 2017, ChromaDex reported net sales of $4.4 million, a decrease of 39% compared to the same period of 2016, due mainly to decreased sales in its ingredients business segment, as a result of dropping its largest customer for fiscal year 2016. The ingredients segment created net sales of $2.1 million for Q1 2017, a decline of 55%, compared to the same 2016 period.

The net loss attributable to common stock holders for Q1 2017 was $1.9 million or ($0.05) per share versus a net income of $0.3 million or $0.01 per share for Q1 2016.

In May, the company announced the closing of the $16.4 million second tranche of the strategic investment of up to $25 million led by Hong Kong business leader Li Ka-shing.

Li Ka-shing has invested in many innovative companies in the last decade, including Facebook, Spotify, DeepMind, Siri, Impossible Foods and Modern Meadow. The new investment will support future ChromaDex developments in the global marketplace.

The $16.4 million second tranche follows an initial $3.5 million tranche that closed on April 27, 2017.

9. Safe Bulkers, Inc. (SB)

Source: Investopedia

Safe Bulkers, Inc. (SB), a player in the hot and cold dry bulk shipping sector, topped out at $11.48 in March 2014, then entered a downtrend reaching an all-time low at 30 cents in January 2016. A recovery wave in November stalled at $2.38, followed by sideways action that has completed a small-scale cup and handle breakout pattern. A buying spike over $2.60 can be expected to set the upside into action, supporting a rally that could surpass $5.00.

The company declared a cash dividend of $0.50 per share on its 8.00% Series B, Series C and Series D Cumulative Redeemable Perpetual Preferred Shares for the period from April 30, 2017 to July 29, 2017.

This is the 16th consecutive cash dividend declared on the company’s Series B Preferred Shares, the 13th cash dividend declared on its Series C Preferred Shares and the 12th cash dividend declared on its Series D Preferred Shares since their respective commencement of trading on the New York Stock Exchange.

10. Ballard Power Systems, Inc. (BLDP)

Source: Investopedia

Ballard Power Systems, Inc. (BLDP) is a provider of clean energy products that reduce customer costs and risks, and helps customers solve challenges in their fuel cell programs. The stock reached an all-time high at $144.95 in 2000 before falling into a downtrend lasting more than 12 years, sending the stock to an all-time low at 56 cents. A 2013 upward trend continued through 2014, hitting an 8-year high at $8.38, followed by a correction that’s now returned to 2015 resistance at $3.10. A breakout could catch fire, pushing the stock to a test of its 2014 high.

Total revenue was $22.7 million in the quarter, an increase of 39% from growth in both power products and technology solutions.

Gross margin was 42% in the quarter, an improvement of 22 points due to a shift in product mix toward higher margin technology solutions and heavy duty motive for the China market, including the establishment of a production line in Yunfu, China for the manufacture and assembly of FCvelocity-9SSL fuel cell stacks.

Cash operating costs were $10 million in the quarter, a 6% increase due to higher research and product development expenditures as well as a stronger Canadian dollar relative to the U.S. dollar, since a significant amount of cost is denominated in Canadian dollars.

Low-priced biotech stocks have risen following a long slumber, with steady buying interest likely to continue. This group should offer a variety of profitable penny stock plays during the quiet summer trading season, while low-priced stocks in other sectors move into narrow trading ranges.

Featured image from Shutterstock.

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Penny Stocks

May’s Top 10 Penny Stocks

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Speculative buying increased in April, driving a number of penny stocks to 2017 highs, according to Investopedia. The penny stock list for May includes turnaround plays in biotech technology, chemicals, energy and China. Precious metals missed out in the bullish list, with junior and senior gold miners falling to multi-month lows due to higher U.S. interest rates. Leading benchmarks rallied off multi-week basing patterns in the month’s second half, boding well for small penny stock buying interest into early summer.

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Three stocks from April’s list took the first three spots on May’s top 10 list: Southcross Energy Partners, Castle Brand, Inc. and Valhi.

1. Valhi, Inc. (VHI)

Source: NYSE

Valhi, Inc., a holding company which engages in the manufacture and marketing of titanium dioxide pigments, witnessed a big double top pattern from 2011 to 2014, falling to $10.50. The stock hit a 13-year low in February 2016, then rallied in early November to a 52-week high of $4.10 by January 2017.

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The stock fell to $3.00 in February before rallying in the second half of April, where it now trades near a two-month high. The stock has to rally above $3.90 to prevent a bearish descending triangle. A triangle breakout will favor continuing strength.

The company operates in waste management, chemicals, component products, real estate management and development. The chemicals group produces and markets titanium dioxide pigments for plastics, paints, fiber, paper and ceramics. The component products group includes throttle controls, gauges, security products, stainless steel exhaust systems and trim tabs. The waste management group covers the processing, storage, treatment and disposal of hazardous, toxic and other wastes. The real estate management and development group develops land holdings for residential, commercial and industrial purposes.

2. Southcross Energy Partners LP (SXE)

Source: NYSE

Southcross Energy Partners LP, a provider of natural gas gathering, processing, treating, compression and transportation services, and natural gas liquids (NGL) fractionation and transportation services, gained more than 20% following the Trump administration’s comments about liquefied natural gas. The stock posted a 17-month high on account of the likelihood of continued gains.

The company went public in 2012 in the low 20s and reached an all-time high four months later at $26.49. The stock suffered when the bottom dropped out of the energy market, hitting an all-time low of 38 cents in February 2016.

The January rally pushed the stock to a 17-month high before reversing above $4.75 this month, and is currently trending at higher lows. A test at $4.00 should offer a low-risk buy opportunity, possibly giving way to a firmer barrier above $6.30.

The company also sources, purchases, transports and sells natural gas and NGLs to its power generation, industrial and utility customers mainly under fixed-spread contracts.

3. Castle Brands Inc. (ROX)

Source: NYSE

Castle Brands, Inc., which imports, markets and sells premium and super premium brands of whiskey, rum, whiskey, liqueur, vodka and tequila in the United States, Canada, Europe and Asia, fell from a record high of $9.15 in 2006 to 1 cent in 2009, then trading below 50 cents for four straight years. In 2013, the stock rallied to $2.03 in the fourth quarter of 2014, breaking support near $1.25 in January of 2016.

A downward trend took the stock to 65 cents in late December before rebounding to $1.45 in February. The April rally lifted the stock to a two-year high, and it now tests resistance at the 2014 high above $2.00.

4. Sequans Communications S.A. (SQNS)

Source: NYSE

Sequans Communications S.A., which builds chips for wireless broadband, rallied to a record high at $19.50 after listing on the Nasdaq exchange at $8 in 2011. In 2012, the stock fell to $1.30 before rebounding in 2014 to $3.40. The price began testing that high in January of 2017 and was at $3.86 in early May.

The company provides single-mode, 4G LTE semiconductor solutions for the Internet of Things and a range of broadband data devices. Founded in 2003, Sequans developed and delivered seven generations of 4G technology, and its chips are certified and shipping in 4G networks worldwide.

5. Pingtan Marine Enterprise, Ltd. (PME)

Source: NYSE

Pingtan Marine Enterprise, Ltd., a China-based ocean supplier of seafood staples and delicacies to local and world food markets, plunged from $10.10 to $1.31 in 2013 before testing deeper lows from 2014 to 2016. The stock rallied in November 2016, gaining momentum in January 2017.

The rally fizzled at $5.18 in March, giving way to a symmetrical triangle for seven weeks. Lows are tracking 50-day EMA support at $4.25, with a pair of breakout attempts facing selling pressure above $5.00. A breakout is possible with a tight stop loss.

The company engages in ocean fishing through its wholly-owned subsidiaries, Fujian Provincial Pingtan County Ocean Fishing Group Co., Ltd., or Pingtan Fishing. Pingtan Fishing primarily engages in ocean fishing with many of its own vessels operating within the Indian Exclusive Economic Zone and the Arafura Sea of Indonesia.

6. Office Depot Inc. (ODP)

Source: NYSE

The market was shocked in May 2016 when the U.S. Federal Trade Commission denied Office Depot, Inc. and Staples, Inc. a request to merge over monopoly concerns. Office Depot’s stock rebounded in April 2017 when it announced it is exploring a sale to prevent having to lose many of its stores due to the fallout in brick and mortar office product sales to e-commerce retailers. While the uptick did not compensate for the loss it suffered over the longer term, speculation could lift it past $9.00.

Office Depot is a leading provider of products, services, and solutions for every workplace.

7. Delta Technology Holdings Ltd. (DELT)

Source: NYSE

Delta Technology Holdings, Ltd., a China-based manufacturer of specialty chemicals, hit a record high at $38.25 in June 2015, then fell in the first quarter of 2016 to a low that carried into June before rebounding. The rally stalled just above $3.00, then doubled on Jan. 19, 2017 in one session. It spent the next three months consolidating its gains.

In April, the stock hit a 9-month high at $2.54, setting the stage to test the 2016 high.

Founded in 2007, the company provides its products for agrochemical, automotive, aerospace, pharmaceutical, food additive, dye and pigments, ceramics, coating-printing and clean energy applications. Its products include organic compounds, such as para-chlorotoluene, ortho-chlorotoluene, PCT/OCT downstream products, unsaturated polyester resins, maleic acid and other by-product chemicals.

8. CytRx Corp (CYTR)

Source: CytRx

CytRx Corp., a Los Angeles-based company developing compounds for cancer treatments, has been listed since the 1980s on national exchanges. It topped out at $329 in 1992 following a 2012 reverse split. The stock traded as high as the mid-40s from 2000 to 2010 before falling significantly to single digits where it has remained ever since.

The stock plummeted in July 2016 to 74 cents from $2.51 and remained there for the year. It rebounded in April, doubling in price in four sessions, and is now consolidating its gains. A rally over $1.00 will likely attract more interest.

9. Internap Corp. (INAP)

Source: NYSE

Internap Corp., a provider of Internet infrastructure services, saw a six-year growth trend lose steam at $10.75, leading to a fall that reached an all-time low of 80 cents in December 2016. The stock rebounded in January 2017, posting three rally waves to a 52-week high of $3.86 in March.

The stock has consolidated its first quarter gains for five weeks and recently hit the 50-day EMA, sitting at 25 cents over a rising trendline. Oversold technical readings indicates the current price zone will mark the low, leading to a recovery wave that could surpass last month’s high and find resistance at the January breakdown through the September 2015 low of $5.80.

The company provides Internet infrastructure through both colocation business and enterprise services (including network connectivity, IP, bandwidth, and managed hosting) and cloud services (including enterprise-grade AgileCLOUD 2.0, Bare-Metal Servers and SMB iWeb platforms).

INAP’s global network connects 15 company-controlled tier 3-type data centers in major markets in North America, 34 wholesale partnered facilities, and points of presence in 26 business districts worldwide.

10. Globalstar Inc. (GSAT)

Source: NYSE

Globalstar, Inc., a provider of satellite-based voice and data communication services, topped out around $15 in 2007 before falling to 15 cents in the bear market. The stock found its way to $4.53 in 2014 before falling again to 63 cents in June 2016. It rebounded to $2.31 just before the end of the year.

The stock spent the last four months consolidating its late 2016 gains and establishing support at $1.40 and the 200-day EMA. It has rallied within 25 cents of resistance near the previous high, raising a likelihood for a breakout reaching the 2016 $3.00 high. Such a gain would make a high percentage rally from the most recent closing price.

The company’s products include mobile and fixed satellite telephones, the Sat-Fi satellite hotspot, Simplex and Duplex satellite data modems, tracking devices and flexible service packages. Customers worldwide in industries such as government, emergency management, marine, logging, oil and gas and outdoor recreation rely on Globalstar. Its data solutions are suited for various asset and personal tracking, data monitoring, SCADA and IoT applications.

May’s top penny stock list points to turnaround plays in biotech technology and China. The list intentionally lacks a single junior mining play since that particular group looks weak heading into the summer months.

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