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Penny Stocks, How To Buy Them & Day Trading Basics For 2023

Penny stocks for beginners and how to make money trading cheap stocks in 2023
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What Are Penny Stocks?

The market for penny stocks has continued growing over the last few years. But what are these stocks in the first place? The general definition of penny stocks includes shares of companies trading below $5.

Making money with penny stocks can be challenging if you invest blindly and don’t take the time to learn how to trade. It may be simple to set up a trading account and start buying, but there is so much more involved when looking to make consistent profits.

Penny stocks are volatile and high-risk assets. So you want to learn how to day trade them while mitigating this risk the best way possible. It all starts with research. However, knowing the pitfalls of investing in these cheap stocks is essential to trading them. Many stocks under $5 can be prone to manipulation, most recently from things like private groups of retail traders on places like Reddit and other social media platforms.

How Do You Buy Penny Stocks?

One common question investors may have, “How do I buy penny stocks?

The goal when investing is obviously to make money. But there are a few things you need to know before putting your hard-earned dollars into these cheap stocks. Since penny stocks trade for less than $5, the slightest price change can connect with a significant percentage change. For example, if a penny stock moves up $0.50, it is a much more substantial percentage change than a large blue-chip stock trading for $100.

Let’s use this example: shares of the Latin American brewing company Ambev (NYSE: ABEV) only need to jump about 25 cents to return a roughly 10% gain. If Anheuser-Busch InBev (NYSE: BUD), which has a controlling interest in Ambev, recorded a similar increase, it would have to climb over $6 per share.

The chances of a 25-cent move happening sooner than a $6 move are much higher. Looking at the other side of this, a 25-cent move lower can happen more quickly than the same $6 move lower. So the risk goes hand-in-hand with the potential reward.

Should You Day Trade Penny Stocks Or Invest In Penny Stocks?

You can do two types of things when looking for penny stocks to buy. There is long-term investing, and there is short-term trading. When investors go long-term, they don’t bat an eye at small losses or short-term sell-offs. They hold onto the assets, planning to stay in the position for years.

On the other hand, many want to day trade penny stocks. Day trading can often be a difficult feat without proper education. The volatility of these assets can make them extremely risky. But thanks to this volatility, a trading strategy can often be better than an investment strategy early on.

Some traders will also take on a “starter position” to “trade around.” This usually entails taking a tiered approach to trading and buying and selling along the way, all while holding a core position. As long as the overall trend is going in your favor, buying at interim lows and selling portions at interim highs can allow for a way to benefit in both the short and long term.

Learning technical analysis can help identify things like strong uptrends. A “tiered approach,” in this case, might entail holding a core, then buying at the “higher low,” selling a piece of the position at the “higher high,” and continuing the process. Despite the higher risk of trading low-priced stocks, plenty of penny stock success stories exist.

Penny Stocks & Success Stories

There are so many examples of penny stock success stories that I could not fit them into one article. One company that we can talk about is Viking Therapeutics Inc. (NASDAQ: VKTX). Shares of VKTX stock were roughly $2 back in June of 2022. Now the company has a stock price of over $16 a share. This is a prime example of how penny stocks can skyrocket and exit penny stock territory. This particular company blew up initially because of the growing interest in companies developing obesity treatments.

You’ve also got other biotech stocks that skyrocketed over the last year. Provention Bio Inc. (NASDAQ: PRVB) traded below $4 per share in 2022. As of March 2023, the former penny stock had attracted the interest of Sanofi (NASDAQ: SNY), who agreed to buy the company in a deal worth $2.9 billion.

Read More: 5 Penny Stocks That Turned $500 Into As Much As $84,525 In 15 Months

Also, who can forget the epic rise of GameStop (NYSE: GME)? In 2020, the company was compared to Blockbuster Video. Many investors assumed the pandemic put the final nail in the coffin. Fast-forward about a year, and it has become one of the most notable Reddit penny stocks in history, rising to a high of $483 from levels below $3 one year earlier.

penny stocks to buy hit it big

With these penny stock success stories also come negative ones. As mentioned, these assets can quickly move up or down in percentages from small price changes. So it is important to know exactly how to day trade or invest in penny stocks.

Day Trading Penny Stocks: The Basics

Now you are wondering, where do you start day trading penny stocks? Before investing in any assets, you should probably learn the essentials. Knowing precisely what you are doing when investing will make this process much “easier.” The average trader entering the penny stock scene will lose more money than someone who conducts proper research.

Paper Trading

There are a few strategies that can help you. One of these is paper trading. Paper trading is a simulated trade that lets you buy and sell without using real money. While you won’t make the big bucks when you’re right, you won’t lose your hard-earned money when you’re wrong. Many services offer paper trading, which can be a great way to test your strategy before putting it to work in real-money settings.

Research

But what about the research part of trading or investing in penny stocks? Recent news and company filings are a great place to begin your research. Monitoring technical indicators can also be a part of research to help identify trends and whether a stock’s move is strong or weak. For example, the volume of these assets and the chart patterns can be helpful when looking for the best penny stocks to buy.

Protect Yourself With Stop-Losses

Using stop-loss targets is extremely important to remove some of the trading risks. If a stock falls below a specific value, shares will be automatically sold off with a stop-loss order. You wouldn’t want this stop loss to be near the entry price. You still want some room for a bit of volatility. But if you set your stop-loss (whether a physical or mental stop) at a critical technical level, you’ll also know your risk tolerance per trade. This is one of the things many traders forget.

It isn’t about how much you make. It’s about how much you avoid losing by taking on a defensive strategy. If your gains are wide-ranging (+10%, +60%, +20%, +6%), but you keep your losses consistently small (-$100, -$100, -$100, etc.), then you have a better chance of consistent profitability. Another way to look at this is limiting your losses can make someone with a low “win rate” profitable.

Read More: Penny Stocks & 16 Frequently Asked Questions For 2023

For instance, if you risk $1,000 and make $500, you’ve gained 50% on your money. But if the next three trades you make, risking $1,000, result in 3 losses of $100 apiece, you’re still profitable. Your “win rate” isn’t great, but your account is net positive with those four trades. It’s about making money with penny stocks, so keep this in mind.

Keep Your Penny Stock Basics In Mind

Day trading and investing in penny stocks are very different from investing in regular higher-priced assets. You will need to trust your strategy to succeed. The fear of losing too much can occur if you do not trust your process. So choosing companies properly is essential.

penny stocks to buy right now

Those with strong financial backing, solid market history, and more than one reason for increasing tend to be the best penny stocks to buy. Remember, there is no problem with selling your position after making a profit; you don’t need to buy and hold forever. There is also no issue with adjusting your strategy as the market, world, and companies change over time.

Many people have gotten rich with penny stocks. It is a matter of patience and market strategy that results in reaching that goal, not luck. All in all, it is important to remember how high-risk penny stocks are. Knowing how to invest in and how to day trade penny stocks is vital knowledge to have.

Nothing states that you need to sell immediately after seeing profits as a day trader. Nothing also says you must hold a stock for more than six months or a year as a long-term investment. You can make money with penny stocks, and it is your choice as to what your strategy will be to get there.

Penny Stocks For Beginners

This is where your trading journey begins. Hopefully, you learned something new today that’ll be helpful when you’re out there looking for the best penny stocks to buy. Below, I’ve also included a list of articles that are good as Stock Market For Beginners – style information:

Learn, Trade & Profit Today: True Trading Group is the fastest-growing & highest-rated trading educational community. Right now, they’re offering access to a brand new platform called TTGThree, teaching new traders how to become consistently profitable in the stock market. Click Here for More Info

The post Penny Stocks, How To Buy Them & Day Trading Basics For 2023 appeared first on Penny Stocks to Buy, Picks, News and Information | PennyStocks.com.

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Walmart Hits Record High After Earnings Beat, Despite Soft Guidance, Warning About “Choiceful” Consumers Spending Less

Walmart Hits Record High After Earnings Beat, Despite Soft Guidance, Warning About "Choiceful" Consumers Spending Less

Walmart shares hit…

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Walmart Hits Record High After Earnings Beat, Despite Soft Guidance, Warning About "Choiceful" Consumers Spending Less

Walmart shares hit a new all-time high after the largest bricks and mortar retailer reported earnings that beat expectations despite providing guidance that was marginally softer, as choosy shoppers nevertheless kept buying in its stores.

Here is what the company report for the final quarter of 2023:

  • Adjusted EPS $1.80 (excluding impact, net of tax, from a net gain of $0.23 on equity and other investments) vs. $1.71 y/y, beating estimate of $1.65
  • Revenue $173.39 billion, +5.7% y/y, beating estimate $170.66 billion
    • Total US comparable sales ex-gas +3.9%, estimate +3.2%
    • Walmart-only US stores comparable sales ex-gas +4%, estimate +3.12%
    • Sam's Club US comparable sales ex-gas +3.1%, estimate +2.99%
  • Change in US E-Commerce sales +17%, beating estimate +15.5%
  • Adjusted operating income $7.25 billion, beating estimate $6.79 billion

Of the metrics reported, however, the most important one is that Walmart’s same-store sales (ex fuel), rose 4% YoY for US stores (of which net sales was 3.% and eCommerce added 17%). Wall Street was expecting 3.1% so the number was clearly a beat and was driven by "strength in grocery, health and wellness, offset by softness in general merchandise", and was the result of higher transactions (+4.3%) offsetting average ticket prices, which dropped 0.3% YoY. Still, the number is a far cry from the 8.3% comp sales a year ago.

In keeping with the noted softness in general merchandise, the world’s largest retailer delivered softer guidance for the current fiscal year, as it expects consumers to be selective in their spending:

  • For full-year 2025, WMT sees
    • Net sales +3% to +4%, slower than growth from the prior year, and adjusted EPS $6.70 to $7.12, slightly disappointing vs the median consensus estimate of $7.09
    • Capital expenditures approximately 3.0% to 3.5% of net sales
  • For Q1, 2025, WMT sees sees adjusted EPS $1.48 to $1.56.

Discussing the quarter, CEO Doug McMillan said that "we crossed $100 billion in eCommerce sales and drove share gains as our customer experience metrics improved, evenduring our highest volume days leading up to the holidays"

Commenting on customer "selectivity", CFO John Rainey said that “they are being choiceful" as consumers continue to spend less per trip but have been shopping frequently, adding that the company expects some resilience to continue for the rest of the year.

There was more good news: Walmart is gaining share in nearly every category, according to Rainey, with e-commerce among the factors driving growth as the company trims losses associated with handling online orders. Furthermore, while deflation is still a possibility, the company expects it to be less likely based on what it observed during the latest quarter.

That said, while grabbing more spending with low-priced groceries and other basics, Walmart has been cautious in recent months about the health of the consumer amid persistent inflation and higher interest rates. As noted above, US consumers have been buying cheaper products and seeking value, as they pull back from discretionary products like general merchandise. That has resulted in softer sales for some retailers, including Target Corp. and Home Depot Inc. Other big-box retailers are set to report their quarterly earnings in the coming weeks.

As Bloomberg notes, the recent moderation in inflation is another challenge for Walmart and other retail operators that have passed down price increases to consumers over the past few years. This has contributed to higher dollar sales for companies, followed by an uptick in revenue during the pandemic when people bought more groceries and home goods. Such increases are slowing overall, though inflation remains stubborn in some areas like groceries and shelter.

Similar to all of its major competitors, Walmart has been beefing up automation in warehouses and stores in recent years, while remodeling locations to make them more modern. Pickup and delivery businesses continue to expand, driving share gains among upper-income households and fueling growth of the Walmart+ membership program.

Separately, Walmart said it agreed to buy smart-TV maker Vizio Holding Corp. for about $2.3 billion. The deal would accelerate the retailer’s advertising business, called Walmart Connect, and help Walmart and its advertisers engage more with customers. Walmart has been expanding Walmart Connect and other nonretail businesses that have faster growth and better margins. The deal announcement confirmed a Wall Street Journal report from last week. Vizio shares soared 15% in Tuesday premarket trading.

As for WMT, the Bentonville, after the stock gained 16% over the past year, it jumped another 5.7% on Tuesday rising to a new all time high as investors were clearly satisfied with what they saw.

Full investor presentation below (pdf link)

Tyler Durden Tue, 02/20/2024 - 10:17

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Estimating US Recession Risk Using Economic Data For States

What are the choices for monitoring and estimating recession risk? Slightly lower than the number of stars in the universe. Ok, I’m exaggerating, but…

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What are the choices for monitoring and estimating recession risk? Slightly lower than the number of stars in the universe. Ok, I’m exaggerating, but not much. The good news: the search for robust, relatively reliable indicators narrows the field dramatically. But there’s always more to learn, in part because the supply of data sets is vast, increasingly so. Which brings me to another indicator that looks promising: state coincident indexes.

Every state’s economy is, in some degree, unique, although the gravitational pull of the national economy casts a long shadow. Tracking each state economy separately, and then aggregating the results, provides a different spin on the US business cycle compared with national indicators. Think of it as a bottom-up model vs. the standard top-down approach via US retail sales, industrial production, etc.

Conveniently, the Philly Fed publishes monthly coincident indicators for each state. Aggregating the 50 signals into a composite index provides a somewhat different view of the US business cycle vs. traditional top-down metrics. There are several ways to process the numbers – my preference, shown in the chart below, is a 3-month-change model. If a state’s 3-month change is negative (positive), the signal is negative (positive). Summing the negatives and positives provides a national profile. The current reading is 0.48 — in other words, 48% of the states are posting negative 3-month changes for their respective coincident indicator. As shown below, the composite reading maps fairly closely with NBER-defined downturns, and so the current signal is issuing a warning, albeit a warning that has yet to provide what might be thought of as passing the point of no return. But it’s close.

The readings vary from 0 (no negative 3-month changes) to 1.0 (all 50 states are reporting negative 3-month changes). A quick review of the historical record suggests that the US is on the verge of slipping into recession.

But before we ring the alarm bell, there are some caveats to consider. First, a similarly high reading 20-plus years ago turned out to be a false signal. The next couple of months will likely determine if a repeat performance is brewing, or not.

Second, no one indicator is flawless, as we’ve learned over the last couple of years – especially in recent history, when pandemic-related events have created no shortage of macro surprises.

Another reason to reserve judgment, at least for now: a range of other business cycle indicators tracked in The US Business Cycle Risk Report (a sister publication of CapitalSpectator.com) continue to show a clear growth bias. But as reported in this week’s issue, there are some nascent signs of softer economic activity and so it’s possible that the coincident state indicators are an early warning that the tide is shifting.

The most reliable methodology for estimating recession risk in real time is building an ensemble model that combines various modeling applications that are complimentary. Although any one model will excel at a given point in time, quite often the best-performing indicator changes through time. To minimize the risk that’s inherent in any one signal, The US Business Cycle Risk Report crunches the numbers on multiple indicators, which has proven to be close to optimal for balancing the need for timely signals that minimize false signaling.

Despite the caveats, the coincident state model adds another dimension to the mix and provides some complimentary input to The US Business Cycle Risk Report’s existing suite of indicators. Accordingly, I’ll be adding the composite state coincident data to the newsletter’s weekly updates.

The next batch of coincident state updates for January is scheduled for later this month. Meantime, I’ll be carefully reviewing the incoming data for fresh clues that support or reject the suggestion that trouble’s brewing via the state coincident indicators.


How is recession risk evolving? Monitor the outlook with a subscription to:
The US Business Cycle Risk Report


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Air Canada Says Freight Demand Beginning To Improve

Air Canada Says Freight Demand Beginning To Improve

By Eric Kulisch of FreightWaves

Air Canada expects the slow recovery in cargo volume…

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Air Canada Says Freight Demand Beginning To Improve

By Eric Kulisch of FreightWaves

Air Canada expects the slow recovery in cargo volume that began in the fourth quarter to quicken in 2024, aided by the addition of two more freighter aircraft, but doesn’t anticipate gains in pricing power, Mark Galardo, executive vice president for network planning and revenue management, said Friday.

The cargo division within Air Canada (TSX: AC) currently operates five converted and two factory-built Boeing 767-300 freighters. It is scheduled this year to receive two cargo jets converted from passenger configuration, but delivery of a third plane has been delayed until 2025 because of lingering supply chain and labor challenges faced by aerospace manufacturing companies, said Galardo on the company’s fourth-quarter earnings call.

The company nonetheless expects cargo capacity to increase 6% to 8% this year with the addition of the two freighters and more passenger aircraft that also carry cargo. The converted freighters are retired Air Canada passenger jets that are being retrofitted by aftermarket aerospace firms for carrying large containers in the main cabin area.

Cargo revenue fell 15% year over year in the fourth quarter to US$181 million on soft demand and lower yields, Air Canada reported. The three-month period represented an improvement from prior months as the downturn in freight transportation that gripped the air logistics industry for nearly 18 months began to ease. Full-year cargo revenue fell 27% to $253.7 million.

At the end of 2023, Canada’s flag carrier operated four more 767 freighters than at the end of 2022. Freighters were reintroduced at the company two years ago. Increased freighter operations to Central and South America and to Europe partially offset the year-over-year decline. Air Canada also enhanced its interline cooperation with Emirates SkyCargo, which allows customers to book interline cargo shipments through the Emirates SkyCargo flights, including between the Americas and Southeast Asia and India, through key European hubs. 

“We had a bit of a slower start in January, but as we look into February and beyond we’re starting to see volumes pick up and yields also pick up. And our 2024 assumption on cargo is more volume-driven than yield-driven. So we’re starting to see some positive indicators,” Galardo told analysts. “We’ve taken all the necessary measures to position ourselves to take advantage of the recovery. This includes strategically adjusting our freighter plan so that we can keep focusing on proven overall results for the long term and on maximizing cargo network value for our entire fleet.”

Air Canada in late September canceled an order with Boeing for two 777-200 production freighters because of the reversal in airfreight demand following the pandemic-fueled boom for air transport that lasted until early 2022. It then ordered 18 787-10 Dreamliners, including two that were swapped for the 777 freighters. Management, at the time, reiterated its commitment to operating freighters, saying that it needed to take a more measured approach to fleet expenditures and keep more cash available for other purposes.

Air Canada expects another leap in cargo business when the 787-10s begin entering the fleet in late 2025. But ongoing safety and manufacturing problems at Boeing could upset the delivery schedule. Production flaws have previously prevented customers from receiving Dreamliners on time.

“As we eventually receive the larger 787-10s, taking advantage of global cargo flows through our hubs will become an important lever for further diversifying revenue streams,” said Galardo. 

Air Canada performed well on cargo against its peers during the fourth quarter. Delta Air Lines and American Airlines saw cargo revenue slide 24% during the period, and Korean Air said its cargo sales fell nearly 29%. The percentage change in revenue at Air Canada was on par with the 14.8% decline at United Airlines. On a total dollar basis, Air Canada cargo revenue was less than that of the other carriers. The three major U.S. airlines are much larger than Air Canada but also do not have a dedicated cargo fleet. Delta was the closest to Air Canada at $188 million in revenue.

Overall, Air Canada generated $3.9 billion in revenue, up 11% from the prior year, during the final three months of 2023. But earnings before interest, taxes, depreciation and amortization of $386.4 million came in below expectations. On an adjusted basis, the company lost $32.6 million versus a loss of $162 million the year before. Higher wages, maintenance costs and flying volumes pushed expenses up 8%. Inflation is expected to increase costs another 4.5% to 5% in 2024, offset in part by productivity gains.

Tyler Durden Tue, 02/20/2024 - 06:30

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