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Trading Penny Stocks? 7 Things to Know For Beginners

Want to trade penny stocks in 2023? Check out these 7 things to know before investing
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What Beginners Need to Know About Buying Penny Stocks in 2023

Trading penny stocks in 2023 is about understanding what to look for when buying small caps. While this may seem self-explanatory, there are a few nuances that many investors don’t consider when making a penny stocks watchlist. These factors are especially true when considering the investing environment in 2023. 

As we all know, we are living in extraordinary times. With the pandemic, the rise of cryptocurrency, fears of long-term inflation,n and so much more, being an investor this year and last has not been easy. But, the key to making a profit with penny stocks is understanding the various events going on and how to use them to your advantage. 

[Read More] Fed Meeting Live: 10 Takeaways From 1st 2023 FOMC Meeting & Statement

In the past few years, we’ve seen the rise of meme stocks and penny stocks on Reddit, Twitte,r and more, having a significant influence on the stock market. This includes companies you may know o,f like AMC Entertainment Holdings Inc. (NYSE: AMC), BlackBerry Ltd (NYSE: BB), GameStop Corp. (NYSE: GME), and more. But, it also includes companies you may not have heard of. 

And while we’ve already covered ‘Penny Stocks for Beginner,’ there are some other aspects to consider right now. So, whether you’re a seasoned investor or just starting on your penny stocks journey, these tips and tricks may be a benefit. 

7 Things All Penny Stocks Investors Should Know 

  1. How to Make a Penny Stocks Watchlist 
  2. Entering and Exiting Positions 
  3. Long Term Vs. Swing Trading 
  4. Speculation Vs. Fundamentals 
  5. Current Market Trends 
  6. Meme Stocks and the Impact of Social Media 
  7. Research and Trading Education

1. How to Make a Penny Stocks Watchlist 

Making a penny stocks watchlist is something that we’ve covered numerous times. However, the strategy can change oevery week. Right now, we have to consider that industries like Biotech, tech, and EVs are on fire, among others. When forming a watchlist, investors need to consider both the ongoing trends and potential future trends.

The first step in this process is research. Put together a very broad list of a few dozen stocks you’re interested in. From there, the process of dwindling can begin. The best way to start is by looking at which penny stocks are the most volatile and which are not. Then, identify you’re own tolerance for risk. 

2. Entering and Exiting Positions 

buying and selling penny stocks

Learning how to enter and exit positions is one of the best things you can do for your portfolio. While it may seem straightforward, this is a step that many investors take for granted. One of the most popular strategies that investors tend to use is a gradual selling strategy. This involves buying a stock at a target price, and selling in different increments along the way. 

For example, let’s say shares are trading at $1 and your target price is $2. At $1.40, you’d sell 10% of your shares; at $1.60, you’d sell another 20%, at $1.80 you’d sell another 20%, and then at $2, you’d sell the remaining 50%. These are by no means concrete numbers, but the basic idea of this strategy allows investors to make every trade a potential winner. While there are plenty of other strategies to use, this is a relatively easy and accessible one for all traders to consider. 

3. Long Term Vs. Swing Trading 

Long-term trading and swing trading are two of the most popular methods of buying and selling penny stocks. These two categories cover almost all strategies that traders use. With penny stocks, swing trading or short-term trading tends to be a favored strategy. This is because stocks under $5 move extremely quickl, and can push up or down substantially in a given trading day. For this reason, many choose to buy when a stock is low and sell if it pushes up in a day or over a few days.

[Read More] 3 ‘Must Haves’ For Penny Stocks to Be Worth Investing In

On the other hand, we have long-term trading. This is less common with penny stocks but something we see regularly. Long-term trading with penny stocks tends to start with an investor identifying a company that could have long-term potential. This could be due toadoptingf a product over several months or years, or a company moving out of penny stock territory. The term penny stocks simply means any stock trading under $5. Because of this, the options to find long-term value are almost limitless. 

4. Speculation Vs. Fundamentals

Speculation and fundamentals are two identifiers that can help to track movement. These are both witnessed as major cause of price fluctuations with penny stocks and all stocks. Speculation is any news or outside events that are causing a price to move. This could be the announcement of a new balance sheet, a company update, or even a rumor spread on social media. 

penny stocks

With penny stocks, we tend to see speculation as the root cause of many price movements. But, we also see this with higher priced stocks like Tesla Inc. (NASDAQ: TSLA). Because speculation is the main impact on most fluctuations, staying up to date with the news is extremely important. 

Fundamentals, on the other hand, are all of the raw numbers that go into making a price move. This could be what’s in a balance sheet, any new financing deals, dilutive share measures, and more. While fundamental moves can lead to speculation, a stock can trade purely off of a fundamental reason. Again, this means constantly searching for the newest and most impactful events going on right now. 

5. Current Market Trends 

Right now, there are plenty of trends at play in the stock market. This includes everything from Covid to the ups and downs of cryptocurrency and more. To keep it concise, let’s talk about these two factors in particular. As we all know, the pandemic was one of the largest events in the market over the last few years. 

While at first, it was relatively detrimental to prices, quickly it resulted in a large uptick in the market. As cases hit the lowest levels in months, many investors are looking for penny stocks to watch that will benefit. This includes biotech stocks, energy stocks, tech stocks, and more. With this trend, investors need to think outside of the box to understand what the end of the pandemic could do to certain industries. For example, with energy, many believe that the consumption of fossil fuels will rise dramatically as people begin to travel and commute once more. 

The next aspect to consider is the ups and downs of cryptocurrency. While crypto and penny stocks are two very different assets, because they tend to be relatively cheap (except for Bitcoin and Ethereum among others), they can trade in tandem with one another. And, there are also plenty of penny stocks that work in the cryptocurrency or blockchain industry, adding an even more volatile layer to their pricing. Considering these two factors, we see just how intensely the market can move depending on what is going on in the world. 

6. Meme Stocks and the Impact of Social Media

Meme stocks and the impact of social media on penny stocks is a trend that is impacting the market right now. Beginning with the GameStop fiasco a few months back, retail traders quickly saw just how much of an impact they have on the stock market. This is driven mostly by accessible trading platforms like Robinhood and WeBull. However, we also see the impact of social media such as Reddit and Twitter in the market

While it is nearly impossible to stay up to date on every stock being talked about online, investors can do their best. It is also important to consider that highly talked-about penny stocks on Reddit or other online websites, can be extremely volatile. If you are not 100% sure of your strategy, it may be worthwhile to sit back and spend some more time learning before inviting in meme stocks. 

7. Research and Trading Education 

Research and trading educations are two of the best things you can do to achieve a higher chance of profitability. On one hand, thoroughly researching the ins and outs of a company will help to ensure that you know everything about a given penny stock. This means fewer surprises in both price movement and your portfolio. 

research penny stocks

Hand in hand with this is having a trading education. While strategies and learning how to trade can be done online, there are plenty of educational services out there. These services condense this into an easy-to-follow curriculum. While prices can be high, the knowledge is invaluable, and thus a crucial part of trading penny stocks. 

Many investors think that it is easy to throw a dart on a board and make profits with small caps. However, most will end up losing for some time until they learn that it is quite difficult. While having a trading education is not 100% crucial, it will always be a major benefit to you and your portfolio. 

What Do You Think About Investing in Penny Stocks in 2023?

Finding the best penny stocks to buy in 2023 can be challenging. But, with dedication and hard work, making a watchlist and seeing profits can be easier than previously imagined. With so much going on in the stock market right now, it can be a daunting task to stay up to date.

However, with the tips and tricks mentioned above, buying and selling penny stocks this year can be a major benefit to your wallet. With that in mind, what do you think about investing in penny stocks in 2023?

The post Trading Penny Stocks? 7 Things to Know For Beginners appeared first on Penny Stocks to Buy, Picks, News and Information | PennyStocks.com.

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Shipping company files surprise Chapter 7 bankruptcy, liquidation

While demand for trucking has increased, so have costs and competition, which have forced a number of players to close.

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The U.S. economy is built on trucks.

As a nation we have relatively limited train assets, and while in recent years planes have played an expanded role in moving goods, trucks still represent the backbone of how everything — food, gasoline, commodities, and pretty much anything else — moves around the country.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

"Trucks moved 61.1% of the tonnage and 64.9% of the value of these shipments. The average shipment by truck was 63 miles compared to an average of 640 miles by rail," according to the U.S. Bureau of Transportation Statistics 2023 numbers.

But running a trucking company has been tricky because the largest players have economies of scale that smaller operators don't. That puts any trucking company that's not a massive player very sensitive to increases in gas prices or drops in freight rates.

And that in turn has led a number of trucking companies, including Yellow Freight, the third-largest less-than-truckload operator; J.J. & Sons Logistics, Meadow Lark, and Boateng Logistics, to close while freight brokerage Convoy shut down in October.

Aside from Convoy, none of these brands are household names. but with the demand for trucking increasing, every company that goes out of business puts more pressure on those that remain, which contributes to increased prices.

Demand for trucking has continued to increase.

Image source: Shutterstock

Another freight company closes and plans to liquidate

Not every bankruptcy filing explains why a company has gone out of business. In the trucking industry, multiple recent Chapter 7 bankruptcies have been tied to lawsuits that pushed otherwise successful companies into insolvency.

In the case of TBL Logistics, a Virginia-based national freight company, its Feb. 29 bankruptcy filing in U.S. Bankruptcy Court for the Western District of Virginia appears to be death by too much debt.

"In its filing, TBL Logistics listed its assets and liabilities as between $1 million and $10 million. The company stated that it has up to 49 creditors and maintains that no funds will be available for unsecured creditors once it pays administrative fees," Freightwaves reported.

The company's owners, Christopher and Melinda Bradner, did not respond to the website's request for comment.

Before it closed, TBL Logistics specialized in refrigerated and oversized loads. The company described its business on its website.

"TBL Logistics is a non-asset-based third-party logistics freight broker company providing reliable and efficient transportation solutions, management, and storage for businesses of all sizes. With our extensive network of carriers and industry expertise, we streamline the shipping process, ensuring your goods reach their destination safely and on time."

The world has a truck-driver shortage

The covid pandemic forced companies to consider their supply chain in ways they never had to before. Increased demand showed the weakness in the trucking industry and drew attention to how difficult life for truck drivers can be.

That was an issue HBO's John Oliver highlighted on his "Last Week Tonight" show in October 2022. In the episode, the host suggested that the U.S. would basically start to starve if the trucking industry shut down for three days.

"Sorry, three days, every produce department in America would go from a fully stocked market to an all-you-can-eat raccoon buffet," he said. "So it’s no wonder trucking’s a huge industry, with more than 3.5 million people in America working as drivers, from port truckers who bring goods off ships to railyards and warehouses, to long-haul truckers who move them across the country, to 'last-mile' drivers, who take care of local delivery." 

The show highlighted how many truck drivers face low pay, difficult working conditions and, in many cases, crushing debt.

"Hundreds of thousands of people become truck drivers every year. But hundreds of thousands also quit. Job turnover for truckers averages over 100%, and at some companies it’s as high as 300%, meaning they’re hiring three people for a single job over the course of a year. And when a field this important has a level of job satisfaction that low, it sure seems like there’s a huge problem," Oliver shared.

The truck-driver shortage is not just a U.S. problem; it's a global issue, according to IRU.org.

"IRU’s 2023 driver shortage report has found that over three million truck driver jobs are unfilled, or 7% of total positions, in 36 countries studied," the global transportation trade association reported. 

"With the huge gap between young and old drivers growing, it will get much worse over the next five years without significant action."

Related: Veteran fund manager picks favorite stocks for 2024

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Wendy’s has a new deal for daylight savings time haters

The Daylight Savings Time promotion slashes prices on breakfast.

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Daylight Savings Time, or the practice of advancing clocks an hour in the spring to maximize natural daylight, is a controversial practice because of the way it leaves many feeling off-sync and tired on the second Sunday in March when the change is made and one has one less hour to sleep in.

Despite annual "Abolish Daylight Savings Time" think pieces and online arguments that crop up with unwavering regularity, Daylight Savings in North America begins on March 10 this year.

Related: Coca-Cola has a new soda for Diet Coke fans

Tapping into some people's very vocal dislike of Daylight Savings Time, fast-food chain Wendy's  (WEN)  is launching a daylight savings promotion that is jokingly designed to make losing an hour of sleep less painful and encourage fans to order breakfast anyway.

Wendy's has recently made a big push to expand its breakfast menu.

Image source: Wendy's.

Promotion wants you to compensate for lost sleep with cheaper breakfast

As it is also meant to drive traffic to the Wendy's app, the promotion allows anyone who makes a purchase of $3 or more through the platform to get a free hot coffee, cold coffee or Frosty Cream Cold Brew.

More Food + Dining:

Available during the Wendy's breakfast hours of 6 a.m. and 10:30 a.m. (which, naturally, will feel even earlier due to Daylight Savings), the deal also allows customers to buy any of its breakfast sandwiches for $3. Items like the Sausage, Egg and Cheese Biscuit, Breakfast Baconator and Maple Bacon Chicken Croissant normally range in price between $4.50 and $7.

The choice of the latter is quite wide since, in the years following the pandemic, Wendy's has made a concerted effort to expand its breakfast menu with a range of new sandwiches with egg in them and sweet items such as the French Toast Sticks. The goal was both to stand out from competitors with a wider breakfast menu and increase traffic to its stores during early-morning hours.

Wendy's deal comes after controversy over 'dynamic pricing'

But last month, the chain known for the square shape of its burger patties ignited controversy after saying that it wanted to introduce "dynamic pricing" in which the cost of many of the items on its menu will vary depending on the time of day. In an earnings call, chief executive Kirk Tanner said that electronic billboards would allow restaurants to display various deals and promotions during slower times in the early morning and late at night.

Outcry was swift and Wendy's ended up walking back its plans with words that they were "misconstrued" as an intent to surge prices during its most popular periods.

While the company issued a statement saying that any changes were meant as "discounts and value offers" during quiet periods rather than raised prices during busy ones, the reputational damage was already done since many saw the clarification as another way to obfuscate its pricing model.

"We said these menuboards would give us more flexibility to change the display of featured items," Wendy's said in its statement. "This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants."

The Daylight Savings Time promotion, in turn, is also a way to demonstrate the kinds of deals Wendy's wants to promote in its stores without putting up full-sized advertising or posters for what is only relevant for a few days.

Related: Veteran fund manager picks favorite stocks for 2024

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Comments on February Employment Report

The headline jobs number in the February employment report was above expectations; however, December and January payrolls were revised down by 167,000 combined.   The participation rate was unchanged, the employment population ratio decreased, and the …

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The headline jobs number in the February employment report was above expectations; however, December and January payrolls were revised down by 167,000 combined.   The participation rate was unchanged, the employment population ratio decreased, and the unemployment rate was increased to 3.9%.

Leisure and hospitality gained 58 thousand jobs in February.  At the beginning of the pandemic, in March and April of 2020, leisure and hospitality lost 8.2 million jobs, and are now down 17 thousand jobs since February 2020.  So, leisure and hospitality has now essentially added back all of the jobs lost in March and April 2020. 

Construction employment increased 23 thousand and is now 547 thousand above the pre-pandemic level. 

Manufacturing employment decreased 4 thousand jobs and is now 184 thousand above the pre-pandemic level.


Prime (25 to 54 Years Old) Participation

Since the overall participation rate is impacted by both cyclical (recession) and demographic (aging population, younger people staying in school) reasons, here is the employment-population ratio for the key working age group: 25 to 54 years old.

The 25 to 54 years old participation rate increased in February to 83.5% from 83.3% in January, and the 25 to 54 employment population ratio increased to 80.7% from 80.6% the previous month.

Both are above pre-pandemic levels.

Average Hourly Wages

WagesThe graph shows the nominal year-over-year change in "Average Hourly Earnings" for all private employees from the Current Employment Statistics (CES).  

There was a huge increase at the beginning of the pandemic as lower paid employees were let go, and then the pandemic related spike reversed a year later.

Wage growth has trended down after peaking at 5.9% YoY in March 2022 and was at 4.3% YoY in February.   

Part Time for Economic Reasons

Part Time WorkersFrom the BLS report:
"The number of people employed part time for economic reasons, at 4.4 million, changed little in February. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs."
The number of persons working part time for economic reasons decreased in February to 4.36 million from 4.42 million in February. This is slightly above pre-pandemic levels.

These workers are included in the alternate measure of labor underutilization (U-6) that increased to 7.3% from 7.2% in the previous month. This is down from the record high in April 2020 of 23.0% and up from the lowest level on record (seasonally adjusted) in December 2022 (6.5%). (This series started in 1994). This measure is above the 7.0% level in February 2020 (pre-pandemic).

Unemployed over 26 Weeks

Unemployed Over 26 WeeksThis graph shows the number of workers unemployed for 27 weeks or more.

According to the BLS, there are 1.203 million workers who have been unemployed for more than 26 weeks and still want a job, down from 1.277 million the previous month.

This is down from post-pandemic high of 4.174 million, and up from the recent low of 1.050 million.

This is close to pre-pandemic levels.

Job Streak

Through February 2024, the employment report indicated positive job growth for 38 consecutive months, putting the current streak in 5th place of the longest job streaks in US history (since 1939).

Headline Jobs, Top 10 Streaks
Year EndedStreak, Months
12019100
2199048
3200746
4197945
52024138
6 tie194333
6 tie198633
6 tie200033
9196729
10199525
1Currrent Streak

Summary:

The headline monthly jobs number was above consensus expectations; however, December and January payrolls were revised down by 167,000 combined.  The participation rate was unchanged, the employment population ratio decreased, and the unemployment rate was increased to 3.9%.  Another solid report.

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