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September Penny Stocks To Watch

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Strong biotech activity drove penny stocks in August, lifting many to 2017 highs, according to Investopedia. Other low-priced stocks underperformed, held back by political dysfunction and late summer illiquidity that sidelined investment activity.

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Half of August’s penny stock picks returned in September, all to higher spots on the list. RADA Electronic Industries, Ltd. led the pack, gaining more than 40% for a two-year high. 22nd Century Group Inc. jumped 23% during the period, while Trilogy Metals Inc. racked up and additional 17%.

Large scale catalysts could drive fresh speculation. The iShares Nasdaq Biotechnology ETF, for instance, began the last week of August in a strong position shortly after Gilead Sciences Inc. announced its acquisition of Kite Pharma, Inc. Such events impact low-price issues that are easier for small traders to purchase and hold versus large pharma manufacturers.

1. RADA Electronic Industries, Ltd. (RADA)

Source: Investopedia

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RADA Electronic Industries, Ltd. (RADA), a defense electronics system of advanced electronic systems for airborne and land applications, moved from the number two spot in August to number one in September.

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 stock cleared major resistance at $2.25 in July 2017, entering an uptrend that’s now filling the July 2015 gap between $2.50 and $3.60. Buying pressure remains strong, raising odds it will test 2015 resistance near $4.00.

Following capital raising activity with institutional investors, the company converted loans to equity and increased its net cash position by $13.3 million while reducing ongoing annual interest payments by approximately $250,000.

On Aug. 21, RADA completed a $10 million capital raise under an existing shelf prospectus, issuing 4,604,500 shares. The investors included leading Israeli institutional investors, such as Yelin-Lapidot Investment House, More Investment House, Noked Capital, and The Phoenix Insurance Company.

From Aug. 17 until Sept. 5, DBSI, the company’s primary shareholder, exercised warrants and converted a loan to equity. It sold a portion of the shares gained to institutional investors such as Optimus Fund and others. On a net basis over the period, DBSI increased its shareholding in RADA by 1,168,782 shares to approximately 12.2 million shares, representing 35% of the company’s equity on a fully diluted basis.

2. 22nd Century Group, Inc. (XXII)

Source: Investopedia

22nd Century Group, Inc. (XXII), a biotechnology company that provides tobacco harm reduction and development of proprietary hemp/cannabis strains, rose from the number three spot in August to number two in September.

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 these 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 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 range resistance. A breakout over $2.00 should draw strong buying interest favoring a high percentage rally back to its three-year high.

The stock hit its highest high since 2014 on Aug. 7, 2017, and pulled back to the 20-day SMA, testing support around $2.00. This price level could offer a platform for continued upside that reaches longer-term resistance near $4.00.

The stock joined the Russell Microcap Index three 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.

3. Trilogy Metals, Inc. (TMQ)

Source: Investopedia

Trilogy Metals Inc., an exploration stage company which engages in the development and exploration of mineral properties, joined the list at number five in August and moved to the number three spot in September.

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 reached a two-year high at $1.22.

The rally hit a three-year high at $1.35 on Aug. 7, yielding a pullback that’s testing 50-day EMA support, with a bounce at or above 90 cents, setting the stage for a strong buying impulse.

The company 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.

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 under way.

4. Intrepid Potash, Inc. (IPI)

Source: Investopedia

Intrepid Potash, Inc., the only U.S. producer of muriate of potash, moved from the number nine spot in August to number four in September.

The company 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.

A stair step bounce reached a 21-month high at $3.93 on Aug. 3, giving way to rectangular consolidation with support near $3.15. The stock is now testing range resistance, with a breakout to more upside that could reach the 200-week EMA, now descending from $8.00.

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 the 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.

5. Tantech Holdings, Ltd. (TANH)

Source: Investopedia

Tantech Holdings, Ltd., a manufacturer of bamboo-based charcoal products for industrial energy applications and household cooking, heating, purification, agricultural and cleaning uses, moved from the number 10 spot in August to the number five spot in September.

The company 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 into the $6 range.

The stock hit an all-time low at $1.00 in April 2017. Bullish action since that time has reached 2016 resistance, with a breakout raising odds for a rally into the 2016 high at $6.00.

6. Cancer Genetics, Inc. (CGIX)

Source: Cancer Genetics

Cancer Genetics, Inc. (CGIX), a provider of personalized medicine, offers diagnostic products and services that enable precision medicine in the field of oncology.

The stock topped out at $23.25 in 2013 and ground sideways into a 2014 breakdown that accelerated into the second half of 2016. The stock dropped to an all-time low at $1.10, then turned higher in 2017, lifting above the 200-day EMA and reaching a 17-month high at $5.30 in March.

Price action since March has carved a long series of lower highs, generating a trendline with resistance at $3.90. A rally above the 2017 high would set the stage for rapid gains that could eventually reach double digits.

The company reported second quarter revenue of $6.6 million, with record biopharma demand with $7.1 million in new contract bookings for its biopharma services.

Clinical services revenue was up 20% in the quarter to $3 million over the same quarter in 2016. The company reduced its second quarter loss from operations by 22% compared to 2016.

The company is now supporting more than 170 clinical trials serving nine of the top 10 biopharma companies in the world.

7. Moleculin Biotech, Inc. (MBRX)

Source: Investopedia

Moleculin Biotech, Inc. (MBRX) went public in June 2016 at $8.99 and began a downtrend that continued to post new lows into May 2017 before it bottomed out at 71 cents. A June test held support ahead of an uptrend that completed a high volume base breakout which saw the stock rally to an 8-month high at $3.75 by the month’s end.

A pullback in July found support at the 50-day EMA, causing a bounce to range resistance, followed by a decline that could attract strong buying and continued upside toward $6.00.

The company recorded a net loss of $3.3 million in the second quarter of 2017 for the change in fair value on revaluation of its warrant liability associated with warrants issued in conjunction with its stock offering in February 2017.

The company recorded a gain in the second quarter of 2017 of $1.2 million related to the expiration of warrants issued as part of the February 2017 stock offering.

The net loss for the three months ended June 30, 2017 was $2.3 million, including non-cash income of $1.2 million related to a gain recognized on the expiration of warrants, which was offset by a non-cash expense of approximately $3.3 million on the change in fair value of the company’s warrant liability. The net loss also included additional noncash charges for $0.1 million for stock-based compensation and other stock-based expenses.

As of June 30, 2017, the company had $9.3 million in cash and cash equivalents compared to $5.0 million at Dec. 31, 2016. Through June 30, 2017, $3.2 million in cash was received from the exercise of warrants issued in the February public offering. Cash used in operations was $3.4 million for the period ending June 30, 2017.

8. Vivint Solar, Inc. (VSLR)

Source: Investopedia

Vivint Solar, Inc. (VSLR), which provides homeowners with simple and affordable clean energy, opened for trading in October 2014 at $17.01, ahead of a severe downtrend that bottomed out near $7.50 in December 2014. Lower lows in the second quarter of 2016 gave way to a basing pattern, followed by a June 2017 breakout that’s now testing 50-day EMA support. A bounce at this level could gain traction, testing the 2017 high ahead of additional gains into the $7.75 to $8.00 resistance zone.

Operating leases and incentives revenue was $43.4 million for the second quarter, up 45% from $30 million in the second quarter of the prior year. Total revenue for the quarter was $73 million, up 109% from $34.9 million in the same quarter of the prior year.

Cost of operating leases and incentives was $33.8 million for the quarter, down from $38.5 million in the same period of 2016.

Total operating expenses, including the cost of revenue, were $87.3 million, compared to $71.4 million in the same quarter of 2016.

Loss from operations was $14.3 million compared to $36.5 million in the same period of 2016.

As of June 30, 2017, Vivant Solar had $15 million in undrawn capacity in the working capital facility, and $308 million in undrawn capacity in the aggregation facility. The company also had approximately 109 MWs of installation capacity remaining in its tax equity funds.

9. China Information Technology Inc. (CNIT)

Source: Investopedia

China Information Technology Inc. (CNIT), a provider of Internet-based ad distribution and ad display terminal sharing systems in China, topped out at $16 in 2009 and broke down two years later, beginning a decline that continued into the 2012 low at 71 cents. A three-year bounce ended in a triple top reversal near $7.00 that gave way to November 2015 and March 2017 tests at the deep low.

Support held after a final washout, resulting in a two-legged recovery that has reached a 52-week high. Buying volume indicates the current pullback to 98 cents will mark an opportunity ahead of a rally that could reach the 200-week EMA over $2.00.

The company recently entered into a contract for the sale of 3,000 CNIT cloud-based ad terminals to be installed in office buildings, residential communities, shopping malls and outdoor locations throughout Tianjin Municipality, the primary industrial, commercial and economic center of North China.

The company has projected 2018 revenue of $30 million to $33 million and adjusted net income of $9 million to $11 million, with sales of 120,000 cloud-based ad terminals in 100 cities covering 200 million people throughout China.

10. Zynga, Inc. (ZNGA)

Source: Investopedia

Zynga, Inc., a company whose mission is to connect the world with games, became public in December of 2011. The FarmVille creator reached an all-time high at $15.91 in March 2012, then dropped in a straight line to $2.09 in November, ahead of a bounce that stalled near $6.00 in 2014.

The stock found support at the 2012 low in the first quarter of 2016, then turned higher, rallying to a three-year high in June 2017. Price action since then made a symmetrical triangle on top of the 200-week EMA.

The company achieved record mobile revenue and bookings in the second quarter, with revenue up 30% year-over-year and bookings up 33% year-over-year.

Mobile now represents 86% and 87% of total revenue and total bookings, respectively. Mobile online game revenue was up 39% year-over-year, and mobile user pay bookings were up 45% year-over-year. The company’s mobile audience reached 19 million average daily active users, up 28% year-over-year and the strongest since Q4 2014.

GAAP operating expenses for the quarter were 67% of revenue – down from 73% of revenue for the same period in Q2 2016, while non-GAAP operating expenses were 58% of bookings – down from 68% of bookings a year ago.

The company delivered its first quarter of GAAP pre-tax profit since Q4 2012, due in part to progress in improving operating leverage and the lowest quarter of stock-based compensation expense in more than three years.

The company generated operating cash flow of $37.8 million, which was its best quarterly performance in five years.

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 their respective industries.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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Stock Picks

Small Cap Trading Frenzy Drives Penny Stocks In October

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Speculative fervor took a boost in September trading as the Russell 2000 small cap index broke into a bull market, driving penny stocks, according to Investopedia. The top two performers in September’s penny stocks to watch list, RADA Electronics Industries, Ltd. and 22nd Century Group, Inc., sustained their top positions in October, an unusual occurrence.

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Three of the other top September stocks, Intrepid Potash, Inc., Moleculin Biotech, Inc. and Zynga, Inc., gained higher positions in October, reflecting the continued strength of biotech and technology.

The technical conditions supporting these equities should persist through the fourth quarter and into 2018, portending multi-year highs for many of these issues.

Source: Investopedia

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1. RADA Electronic Industries, Ltd. (RADA)

RADA Electronic Industries, Ltd. (RADA), a defense electronics system of advanced electronic systems for airborne and land applications, sustained its top spot for the second consecutive month.

RADA Electronics broke out to a 2-year high during the period.

After joining Nasdaq in the 1990s, the stock suffered a multi-decade decline. 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 stock cleared major resistance at $2.25 in July 2017, entering an uptrend that’s now filling the July 2015 gap between $2.50 and $3.60. Buying pressure remains strong, raising odds it will test 2015 resistance near $4.00.

Following capital raising activity with institutional investors, the company recently converted loans to equity and increased its net cash position by $13.3 million while reducing ongoing annual interest payments by approximately $250,000.

On Aug. 21, RADA completed a $10 million capital raise under an existing shelf prospectus, issuing 4,604,500 shares. The investors included leading Israeli institutional investors, such as Yelin-Lapidot Investment House, More Investment House, Noked Capital, and The Phoenix Insurance Company.

From Aug. 17 until Sept. 5, DBSI, the company’s primary shareholder, exercised warrants and converted a loan to equity. It sold a portion of the shares gained to institutional investors such as Optimus Fund and others. On a net basis over the period, DBSI increased its shareholding in RADA by 1,168,782 shares to approximately 12.2 million shares, representing 35% of the company’s equity on a fully diluted basis.

Source: Investopedia

2. 22nd Century Group, Inc. (XXII)

22nd Century Group, Inc. (XXII), a plant biotechnology company that provides tobacco harm reduction and development of proprietary hemp/cannabis strains, rose from the number three spot in August to number two in September. The stock posted its highest high since July 2014.

In 2013, the stock broke out above multi-year resistance near $1.50, 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 these 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 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 $2.00 should draw strong buying interest favoring a high percentage rally back to its three-year high.

The stock hit its highest high since 2014 on August 7, 2017, and pulled back to the 20-day SMA, testing support around $2.00. This price level could offer a platform for continued upside that reaches longer-term resistance near $4.00.

The stock joined the Russell Microcap Index four 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.

Source: Investopedia

3. Intrepid Potash, Inc. (IPI)

Intrepid Potash, Inc., the number four penny stock to watch in September, rallied 24% to a 23-month high, jumping to the number three spot in October, displacing Trilogy Metals, Inc.

The only U.S. producer of muriate of potash, Intrepid Potash moved from the number nine spot in August to number four in September.

In 2010 the stock suffered a decline that reached an all-time low at 65 cents in March 2016. The stock then rebounded above $1.50 in June before a December 2016 breakout that soon stalled at $3.04.

A stair step bounce reached a 21-month high at $3.93 on Aug. 3, 2017, giving way to a rectangular consolidation with support near $3.15.

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 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 the March 2017 secondary offering.

Consolidated gross margin advanced to $3.7 million and $0.8 million in the second quarter and 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 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.

Source: Investopedia

4. Moleculin Biotech, Inc. (MBRX)

Moleculin Biotech, Inc. (MBRX), the number seven penny stock to watch in September, moved to the number four spot in October,

The stock went public in June 2016 at $8.99 and began a downtrend that continued to post new lows into May 2017 before it bottomed out at 71 cents. A June test held support, ahead of an uptrend that completed a high volume base breakout which saw the stock rally to an 8-month high at $3.75 by the month’s end.

A pullback in July found support at the 50-day EMA, causing a bounce to range resistance, followed by a decline that could attract strong buying and continued upside toward $6.00.

The company recorded a net loss of $3.3 million in the second quarter of 2017 for the change in fair value on revaluation of its warrant liability associated with warrants issued in conjunction with its stock offering in February 2017.

The company recorded a gain in the second quarter of 2017 of $1.2 million related to expiration of warrants issued as part of the February 2017 stock offering.

The net loss for the three months ended June 30, 2017 was $2.3 million, including non-cash income of $1.2 million related to a gain recognized on the expiration of warrants, which was offset by a non-cash expense of approximately $3.3 million on the change in fair value of the company’s warrant liability. The net loss also included additional noncash charges for $0.1 million for stock based compensation and other stock based expenses.

As of June 30, 2017, the company had $9.3 million in cash and cash equivalents compared to $5.0 million at Dec. 31, 2016. Through June 30, 2017, $3.2 million in cash was received from the exercise of warrants issued in the February public offering. Cash used in operations was $3.4 million for the period ending June 30, 2017.

Source: Investopedia

5. Zynga, Inc. (ZNGA)

Zynga, Inc., the number 10 penny stock to watch in September, moved up to the number five spot in October.

A company whose mission is to connect the world with games, Zynga went public in December of 2011. The stock reached an all-time high at $15.91 in March 2012, then dropped in a straight line to $2.09 in November, ahead of a bounce that stalled near $6.00 in 2014.

The stock found support at the 2012 low in the first quarter of 2016, then turned higher, rallying to a three-year high in June 2017. Price action since then made a symmetrical triangle on top of the 200-week EMA.

The company achieved record mobile revenue of $179.9 million and bookings of $181.6 million in the second quarter, with revenue up 30% year-over-year and bookings up 33% year-over-year.

Mobile commerce now represents 86% of total revenue and 87% of total bookings, respectively. Mobile online game revenue was up 39% year-over-year, and mobile user pay bookings were up 45% year-over-year. The company’s mobile audience reached 19 million average daily active users, up 28% year-over-year and the strongest since Q4 2014.

GAAP operating expenses for the quarter were 67% of revenue – down from 73% of revenue for the same period in the second quarter of 2016, while non-GAAP operating expenses were 58% of bookings – down from 68% of bookings a year ago.

The company recently delivered its first quarter of GAAP pre-tax profit since Q4 2012, due in part to progress in improving operating leverage and the lowest quarter of stock-based compensation expense in more than three years.

The company generated operating cash flow of $37.8 million, which was the best quarterly performance in five years.

Source: Investopedia

6. Xplore Technologies, Corp. (XPLR)

Xplore Technologies, Corp., which manufactures tablet PCs, declined from a high at $100 in 2010 to $3.05 in 2013. The stock entered a recovery wave that stalled near $7.50 in 2014, before failing to test that level in 2015. The stock collapsed in June 2016 before finding support at an all-time low at $1.54 in June 2017.

The stock recovered above the 2013 low in August, then fell into a symmetrical triangle which could yield a vigorous rally up to 2015 resistance at $6.15 in the next few months. A buying spike above $3.70 could set that recovery into motion.

The company’s mobility solutions are designed for the energy, utilities, telecommunications, military, manufacturing, distribution, public safety, health care, government and field service sectors.

For fiscal quarter one for 2018, ending June 30, 2017, the company reported revenue of $20 million, a 21% gain year over year and a 30.9% gross margin. EBITDA was $839,000 compared to $1.1 million in the first quarter of 2017. GAAP net income was $239,000.

Source: Investopedia

7. Plug Power, Inc. (PLUG)

Plug Power, Inc., a manufacturer of fuel cells, sold off from a split-adjusted $1,565 in 2000 to an all-time low at 12-cents in 2013. The stock turned higher in March 2014, but stalled at $11.72 before falling to 83 cents in March 2017. In the last six months, the price spiked to $2.70, before suffering another fall. A breakout should target the May 2014 low at $3.65, which would mark a high percentage rally from the current level.

The Plug Power plant in Latham, N.Y. has ramped up manufacturing to deliver third quarter production, which will be the largest quarter in the company’s history, with an estimated 10 GenKey hydrogen fuel sites and nearly 3,000 GenDrive units to be deployed.

In addition to the ramp up, the second quarter 2017 saw continued efforts to improve he business model, boost margins and expand its customer base.

The company kicked off the second quarter signing a strategic GenKey agreement with Amazon, which will generate about $70 million in revenue for 2017. On July 21, the company announced an agreement with Walmart to provide GenKey hydrogen fuel cell energy solutions to 30 more sites in North America over the next three years. Ten of these sites were contracted and scheduled to be finished by the end of 2017.

Source: Investopedia

8. Durect, Corp. (DRRX)

Durect, Corp., a biopharmaceutical company developing therapeutics based on its epigenetic regulator program and proprietary drug delivery platforms, posted an all-time low of 61 cents in November 2012 before embarking on an uptrend that topped out at $3.42 in June 2015. A subsequent decline unfolded in multiple waves, ending at a 2-year low in April 2017 followed by a recovery that stalled at resistance near $2.00 in July.

The stock has since recovered, finding support at the 50-day EMA and challenging the second quarter high.

In mid October, the company reported that Persist, the Phase 3 clinical trial for its Posimir pharmaceutical, did not meet its primary efficacy endpoint of reduction in pain on movement over the first 48 hours after surgery as compared to standard bupivacaine HCl. While results trended in favor of Posimir versus the comparator, they did not achieve statistical significance. Posimir is an investigational drug candidate being developed for the treatment of post-surgical pain.

Posimir is an investigational extended-release depot utilizing Durect’s patented Saber technology intended to continuously deliver bupivacaine to the surgical site for 72 hours to provide up to three days of continuous pain relief after surgery. Posimir is a drug candidate under development and has not been approved for commercialization by the U.S. Food and Drug Administration or other health authorities.

Source: Investopedia

9. Microvision, Inc. (MVIS)

Microvision, Inc., a provider of ultra-miniature projection display and sensing technology, topped out at a split-adjusted $548 in 2000 before entering a downtrend that continued into a 2012 low at $1.11.

A 2013 bounce to $3.49 carved posted resistance, ahead of multiple reversals that have outlined a rectangular basing pattern. The stock rebounded in October 2016, entering an uptrend that’s has reached the upper half of its persistent trading range. The stock broke out to a 22-month high in September and has since settled near $2.75, signaling an upside that could reach the 2015 high at $4.23.

The company announced in August that it sold 1.5 million unregistered shares to a private investor who is also a current shareholder at a price of $2.10 per share, for aggregate consideration of $3.15 million. Microvision intends to use the proceeds from the issuance for general corporate purposes.

Microvision’s display and sensing solution can be adapted to an array of applications and form factors. MicroVision’s business model and product line offering includes display and sensing engines, licensing its patented technology and selling components to licensees for incorporation into their scanning engines.

In September, Microvision and WPG Holdings, a distributor of semiconductor components in Asia, entered into an agreement for distribution of Microvision’s line of PicoP scanning engines across Asia.

Source: Investopedia

10. BioDelivery Science International, Inc. (BDSI)

BioDelivery Science International, Inc., a pharmaceutical company with a focus on pain management, broke above 7-year resistance at $8.26 in 2014, then rallied to an all-time high at $18.48 a few months later. A pullback into 2015 triggered a failed breakout, delivering a decline that continued into a November 4-year low at $1.50.

The stock tested that level in April 2017 and turned higher, supporting an uptrend to a 52-week high at $3.60 in July. The stock fell in September, finding support at the 200-day EMA. It could bounce back to the third quarter high.

The company announced in September that Health Canada granted market authorization to formally transfer the Drug Identification Number (DIN) ownership of Belbuca (buprenorphine) buccal film in Canada to BDSI’s commercial partner, Purdue Pharma in Canada. This approval triggers a milestone payment to BDSI.

Belbua incorporates BDSI’s BioErodible MucoAdhesive (BEMA) drug delivery technology and is the only long-acting opioid that uses buccal film technology to deliver buprenorphine for patients living with chronic pain. Belbuca was approved in Canada in June 2017 for the management of pain severe enough to require daily, continuous, long-term treatment and that is opioid-responsive and for which alternative options are inadequate.

Technology and biotechnology highlight October’s penny stock list while the recent Russell-2000 breakout should benefit an assortment of low-priced stocks in the fourth quarter. Nevertheless, this group remains speculative, requiring aggressive risk management.

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 their industries.

Featured image courtesy of Shutterstock.

 

 

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Analysis

Buy FDS, PPC, BERY, and IIVI for the short-term

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The US tax reforms received a major boost on Thursday when a measure approved by the Senate, enabled the Republicans to proceed with the tax cuts, without the support of the Democratic party.  Suddenly, passage of the tax cuts looks more plausible.

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Key observations

  1. Positive news is flowing on the tax reforms front.
  2. Tax reforms are likely to boost the S&P’s earnings significantly
  3. The stocks are likely to remain buoyant in the final quarter of the year
  4. Buy FDS
  5. Buy PPC
  6. Buy BERY
  7. Buy IIVI

Goldman Sachs believes that if corporate tax rates are reduced from 35 percent to 20 percent, it will increase the annual per-share earnings of the S&P 500 by $15. Consequently, the stock market will look a lot less richly valued on a forward price to earnings basis.

With this bullish backdrop, the stock markets are likely to remain buoyant in the short-term. However, we don’t advise investing for the long-term at these levels. We believe that the markets will fall within the next few months, offering an opportunity to buy stocks at lower levels.

Therefore, we shall trade this market and attempt to ride the momentum. We have selected stocks that are making new 52-week highs because they have a favorable tailwind and are likely to participate in the rally, along with the S&P 500.

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So, without further ado, let’s check out the stocks.

FDS – Buy 185.76, Stop Loss (SL) 174, Target 204 and 216

Weekly chart

The stock’s history shows that it tends to rally for a few years and then enters into a shallow correction or consolidation. We find three such instances in the past decade. The stock has been in a consolidation since end-2015. Two attempts, one in September 2016 and the second in March 2017, failed to sustain the breakout.

However, the stock again broke out in end-September and extended the rally last week. It is likely to start a new uptrend now and we plan to hop along for a ride.

Daily chart

The stock broke out of the bullish ascending triangle formation on September 26. Thereafter, it faced resistance at the $184 levels, from where the bears attempted to sink the stock, back into the triangle.

However, the bulls provided support at the $176 levels and the stock broke out of the overhead resistance on Friday. It is now likely to rally towards its first target objective of $204. The pattern target on a breakout from the ascending triangle, however, is higher at $216.

Therefore, we recommend a buy on the stock at the current levels with a stop loss of $174. We don’t want to hang on to the stock if it falls back into the triangle once again. The stock has a risk to reward ratio of 1:1.5 at the first target objective and a ratio of about 1:2.5 at the second target objective.

PPC – Buy 31.04, SL 27, Target 37

Weekly chart

The stock rose sharply from end-2012 to end-2014. Thereafter, it corrected and entered into three-year long consolidation, during which, it remained range bound between $17 on the lower end and $27.5 on the upper end. PPC formed a double bottom at $17.3 levels and the pattern completed when the stock broke out of $27.5 in mid-August of this year. Subsequently, the stock completed a successful retest of the breakout levels of $27.5 and rose to multi-year highs last week. We, now, expect the stock to start a new uptrend.

Daily chart

The stock broke out of the overhead resistance on August 15. However, the stock faced considerable resistance following the breakout. It remained sandwiched between $28 and $30 for almost two months. Finally, on October 18, the stock broke out of the range and extended its rally on October 20.

It has a pattern target of $37, which is close to the lifetime highs. There is no significant resistance in between, therefore, we recommend a buy on PPC at the current levels of $31.04. The stop loss can be kept at $27, a level not seen for more than two months. The trade offers us a risk to reward ratio of about 1:1.5.

BERY – Buy 59.88, SL 56, Target 67

Weekly chart

BERY has been in a strong uptrend since 2016. It has a clear pattern. It rallies and then corrects towards the 20-week exponential moving average (EMA) and occasionally to the trendline drawn. On completion of the correction, it again resumes its uptrend.

Recently, the stock had again corrected to the trendline, from where it found support and broke out to new lifetime highs last week. We expect this trend to continue until the stock breaks and closes below the trendline support. We want to enter this stock as it has re-established its uptrend.

Daily chart

The stock broke out of the overhead resistance of $58.95 on October 06. Afterwards, it successfully retested the breakout levels and has resumed its uptrend. We can buy the stock at the current levels of $59.88 and keep a stop loss of $56. We shall close the position if the stock falls below the trendline. Our target objective is $67. The trade offers us a risk to reward ratio of about 1:2.

IIVI – Buy 43.3, SL 39, Target 52

Weekly chart

The stock bottomed out in October-2014 around the $10.78 mark. Thereafter, it started a new uptrend that continued till February of this year, after which, the stock entered a period of correction. $41.1 has acted as a stiff resistance on the way up. However, last week, the stock broke out to new highs and we expect it to continue higher.

Daily chart

On the daily chart, we find that the stock has formed a bullish inverse head and shoulders pattern. The pattern completed with a breakout of the neckline on September 27. Thereafter, the stock successfully completed a retest of the neckline. The stock has a pattern target of $52. We want to enter the stock at the current levels and keep a stop loss of $39, which is just below the low created on October 19. This gives us a risk to reward ratio of greater than 1:2.

 

 

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Stock Picks

Buy TRUP, NWBI and GRPN for the short-term

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While most traders, including us, have been waiting for a dip in the S&P 500, it has not materialized. Forget about a 10% correction, the index has not seen a 5% drawdown for more than 325 days, according to Goldman Sachs. Since the 1930s, there have been only two instances when the index has bettered the current performance.

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Key points

  1. The S&P continues to make new lifetime highs, which is a sign of strength
  2. Traders should continue to trade stocks with a suitable stop loss
  3. Buy TRUP
  4. Buy NWBI
  5. Buy GRPN

It has been particularly hard for traders who have been sitting on cash to invest at lower levels. The elusive dip is nowhere to be seen. While the possibility of a correction is real, it should not stop us from riding the next up move in the markets because it is impossible to predict the top in the markets.

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It is only in hindsight that we come to know that a top is in place. Therefore, we suggest traders to continue trading in stocks that show a reliable chart set up.

However, considering the risk of a correction, the allocation size should be reduced to half and stop losses should be strictly adhered to. Please don’t hold on to a losing position with hope that eventually it will come up.

Though it’s true that the markets have rebounded sharply after every fall in the past few years, one of those falls will break its back because nothing goes straight to the sky. And, whenever it falls, most stocks will be affected.

Therefore, please book the loss at the recommended levels if the markets turn against you. The first loss is always the best loss.

For the past few days, the intraday volatility in the S&P 500 has reduced drastically. The intraday range has also shrunk. This is unlikely to last long. The markets will expand its range, either to the upside or to the downside within the next few days.

Though it is difficult to predict which way the markets will breakout, we want to be a part of the rally, if the markets breakout to the upside. Therefore, we have chosen a few stocks that are likely to participate in the rally, if it happens.

TRUP – Buy 28.5, Stop loss 27, Target 31.5

Weekly chart

The stock has been in a strong uptrend, rallying over 80% returns year-to-date. This shows that the bulls have the momentum in their favor. In April of this year, the stock rallied for three weeks, followed by a two-week consolidation. Once the stock broke out of the consolidation, it ended up with two weeks of strong gains.

Currently, the stock is in a similar kind of a consolidation, after having risen from about $20.52 levels. If the stock can breakout of the consolidation, it is likely to resume its uptrend with vigor. Therefore, we like this stock. Let’s locate its buy and stop loss levels.

Daily chart

The stock has been in a tight consolidation for the past six days near the lifetime highs. An attempt by the bulls to breakout of the range on October 12 was unsuccessful. However, if the stock breaks out and closes above the overhead resistance of $28.3, it is likely to resume its uptrend.

As this is a momentum play, we don’t want to keep a deep stop loss. We want to buy at $28.5, which is a new high. The stop loss for the trade should be kept at $27. We don’t want to stick to the stock if it turns down after breaking out of the consolidation. The target objective is $31.5 and higher. This gives us a risk to reward ratio of 1:2.

NWBI – Buy 17.7, Stop loss 17.2, Target 18.6 and 19

Weekly chart

The stock has been an under performer in 2017. In fact, it has hardly participated in the bull run since 2010. However, in November of last year, the stock embarked on a strong run after the US election results. Thereafter, the stock entered a correction. However, the talks of tax reforms have again boosted the stock from the lows of about $15.5 to the current levels.

Daily chart

The stock rallied sharply from $15.06 to $17.61 within a few days. Since the beginning of October, the stock has been trading in a tight range. We expect a breakout of the range to carry the stock towards the highs of $19. Therefore, we want to enter the stock at $17.7 and our stop loss will be $17.2. This trade has a risk to reward ratio of greater than 1:2.

However, the stock has a resistance at $18.6. If TRUP struggles to breakout of this level, traders are requested to sell 50% of their positions at these levels and hold the rest with a stop loss at breakeven. Even if the stock stops at $18.6, the trade has a risk to reward ratio of about 1:1.5.

GRPN

Weekly chart

Groupon has lost a huge amount of money for its investors. Even after the recent rally from its lows, the stock is down about 84% from its lifetime highs. Hence, at every rally, the stock is likely to face selling pressure by the investors who have invested at higher levels. However, we have chosen this stock because it is showing signs of life. Let’s zoom to the daily time frame.

Daily chart

The stock has been rising in an ascending channel since mid-June of this year. Though the stock had broken out of the channel on September 29, it could not sustain above it and the bears pushed it back to the channel’s support line. However, the stock has risen from this support five times in this leg of the up move thereby cementing its strength.

We expect the stock to move back to the overhead resistance of $5.35 and attempt to breakout of it. Hence, we can buy it at the current levels and keep a stop loss of $4.55, just below the channel. Once the stock reaches the $5.35 levels, the traders should raise their stops to break-even and watch for a day or two. If the stock breaks out, please trail the stop higher with a target objective of $6. However, if the stock struggles at the resistance, please close the position. If the stock stops at $5.35, we get a risk to reward ratio of 1:1, however, if the stock reaches $6, the ratio improves to greater than 1:2.

Important: Never invest money you can't afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.



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