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Some Penny Stocks Are Down Today, Is This A Buying Opportunity or Not?
Penny stocks have had a great 2021 so far. Throughout the year, we’ve witnessed numerous trends continue to popularize stocks under $5. This includes the influx of Reddit penny stocks, IPOs like COIN stock, and plenty of others.
Before we go any further, let’s give a quick overview of penny stocks and how they work. This could be considered, a brief “Penny Stocks for Dummies” if you will.
For starters, the term itself means any stocks trading under $5 per share. Within this, there are thousands of companies to choose from. While some investors like to stick to blue chips, others prefer cheap stocks. And there are some good reasons for this.
First, it’s much more likely to see a stock go from $0.10 to $0.20 in a day than it is to see one go from $100 to $200. This means that the chances to find a big winner can be much larger than with big-name companies. While volatility can be high, investors understand this and trade accordingly.[Read More] Tech Penny Stocks To Buy Now? New Progress Is Worth Considering
So as we hit the halfway point in April, penny stocks are down. And while this may seem disheartening, this is the natural ebb and flow of the stock market; and can be viewed as a small correction. Additionally, any time a stock or area of the market is down, it presents a potential buying opportunity. Considering this, are these some of the best penny stocks to watch in 2021?
3 Penny Stocks to Watch in 2021
- Waitr Holdings Inc. (NASDAQ: WTRH)
- LAIX Inc. (NYSE: LAIX)
- Ballantyne Strong Inc. (NYSEAMERICAN: BTN)
1. Waitr Holdings Inc.
Waitr Holdings is a penny stock that we’ve been covering for several months now. Why have we written about it so many times? Well, besides shares of WTRH jumping up by over 140% in the past twelve months, the company has a lot of interesting business propositions. For some context, Waitr operates a food ordering and delivery platform.
Based in Louisiana, Waitr Holdings competes with other big-name ordering applications like Doordash Inc. (NYSE: DASH) and Ubereats among others. Waitr and its subsidiary, Bite Squad (acquired for $321 million in 2019), offer food ordering in over 700 cities in the U.S. This includes both small and medium-sized markets. While larger food delivery services focus on big markets, Waitr capitalizes on smaller, underserved areas of the U.S. This allows it to differentiate itself from others.
Last week, the company announced that it added several more Marco’s Pizza locations. This brings the total of Marco’s Pizza restaurants to over 100 locations in 92 cities around the country. Regarding this announcement, CEO Carl Grimstad stated that “Marco’s Pizza is dedicated to producing the best-delivered pizza for its customers, and we’re dedicated to make the best delivery experience, which makes it an ideal brand for the Waitr platform.”
This announcement is only one of several similar restaurant additions it has made in the past few months. This includes adding Chuck E. Cheese restaurants, as well as joining forces with PDQ Restaurants at the end of March. Because of the pandemic, customers have increasingly turned to online food ordering in higher numbers than ever. Considering this, is WTRH a penny stock to watch?
2. LAIX Inc.
LAIX is an AI-tech company based in China. It works on the creation of products and services used to make English learning more accessible in China. This includes the utilization of its Liulishuo platform, which offers learning services to consumers. The company aims to keep its platform low in cost, which helps to make it more popular than the competitors.
This is done through the use of its AI teacher, and the various self-running capabilities on the app. Within it, users can hear, understand, interact and evaluate the performance of others users. Because of this, it acts as a social media platform. A few months ago, LAIX released its Q3 2020 financial results.
In the report, it posted net revenue north of $35.3 million. While this is a decrease of around 11% over the previous quarter, this makes sense given the effects of Covid on all businesses including LAIX. Despite this, it managed to grow its gross margins by a few points to 72.9%. While it did bring in a net loss of $10.4 million, it posted an operating cash flow of $7.8 million.
“Total net revenues in the quarter were…in line with our guidance. Our primary focus area remains on the optimization of our product mix and improving the learning experience. By continually upgrading our content offering, we hope to drive further improvement in conversion and retention rates.”
The CEO of LAIX, Dr. Yi Wang
These results show that LAIX could be growing as more users wish to use its services. Investors should wait to see its next quarterly results to see what type of progress it makes. Considering this, LAIX could be worth keeping an eye on moving forward.
3. Ballantyne Strong Inc.
When we first discussed Ballantyne Strong earlier in the week, shares were trading well under the $3 mark. On April 15th, BTN stock shot up once again by more than 14% to over $4.61 per share. This is a great example of how speculation and fundamentals can work in tandem to support a price increase. Because we’ve talked about BTN stock twice this week, we’ll keep it simple for today.
One of the main reasons that Ballantyne is seeing so much momentum is a deal it announced only a few days ago. As a holdings company, Ballantyne invests in companies that it sees potential value in. Primarily, this is entertainment and media. However, it recently signed into an agreement to acquire the assets of Forest and Paper Products for $214 million from Rayonier Advanced Materials Inc. This acquisition offers Ballantyne exposure to the paper and building materials sector.[Read More] 3 Penny Stocks To Watch In April That Top Analysts Are Bullish On
During the pandemic, the cost of both of these assets has driven up substantially. This is due to the return of commerce and the heightened industrialization occurring in the past few months. With this order, Ballantyne will have a strong position as a top ten lumber producer in all of Canada. While no one knows if BTN stock will continue to rise, it remains very popular right now. Whether it should be on your watchlist is up to you.