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