2020 is going to be an interesting year for the stock market. The stock market performance in presidential election years generally yield positive returns. Furthermore, over the last 23 election years, 4 of them have recorded a loss in the stock market (1932, 1940, 2000, & 2008). However, history has also shown that with big runs, comes pullbacks. The S&P 500 in 2019 was up +29.25%, the NASDAQ in 2019 was up +35.74%, & the DOW was up +22.80%. The overall market is not too important when trying to get big returns from penny stocks. Penny stocks have the ability to run 100%+ in a day. Penny stocks are very advantageous with price per share and there isn’t a need to have a large account to be able to trade these stocks. The 10 penny stocks listed below we believe will have a big 2020 year.
The Definition of Penny Stocks
- According to Investopedia, a penny stock refers to a small company’s stock that usually trades for $5 per share or less. But, to the general public anything under $1 USD is a penny stock. Some penny stocks can be found on a large exchanges, such as the New York Stock Exchange (NYSE), or the NASDAQ but the majority of penny stocks trade Over the Counter or the OTC markets. Penny stock companies are mainly small, sometimes growing companies with limited cash and resources. If you want to learn more about penny stocks, CLICK HERE.
Before we provide the top 10 lists of penny stocks, we want to offer a disclaimer. Although it is highly possible to make a lot of money off of penny stocks, it is also just as likely to lose a lot of money. Generally, penny stocks are high risk, high reward “investments”. Some risks that come with investing in penny stocks are listed below:
- Low level of liquidity. What is liquidity of a stock? It describes how quickly an asset or stock can be bought or sold in the market. In simpler terms, if you bought a stock at $1.19 and the stock is illiquid, or not very many buyers or sellers, it may be difficult for you to get in and out of a stock.
- High level of volatility. What is the volatility of a stock? The volatility of a stock describes big swings in either way in a stock. This is where the “high risk, high reward” comes in. Normally large cap stocks, have 5% moves intraday, unless there is huge news, then you could see 20%+ moves. However, with penny stocks, you can see 100%+ moves almost every trading day.
- Lack of History
- Lack of Public Information
PLEASE NOTE: WE DO NOT ADVISE HOLDING THESE STOCKS FOR THE WHOLE YEAR. What we are giving you here are stocks that have a potential to make a move this upcoming 2020 year. We will write CLOSED by the stocks and add more throughout the year, you don’t want to miss these!
The 10 Best Penny Stock Picks in 2020 are:
1. $SITO – $0.2247 (1/31)
Suggested Stop Loss: $.20
Possible merger coming in Q1 of 2020. As of writing this, the 50 day MA is at $.4791, which would result in an 80% move to the upside. There is a gap to fill as well, up to $1.90, which again would result in a 600%+ move.
2. $IGC – $0.63 (1/31) CLOSED +52.54%
Suggested Stop Loss: $.42
India Globalization Capital Inc. (IGC) – There’s some good accumulation going on here going into the new year. The low level of RSI indicates a short term potential run up, plus the 50 day MA is sitting around $.80, or a 30% move. This stock can move quick and it looks like we are getting close to support levels. We’re watching on this one to get near $.56 for a run to $.80 (50 day MA) then $1.20 (200 day MA).
3. $TORC – $1.36 (1/31)
Suggested Stop Loss: $.92
ReSTORbio Inc. (TORC) – Insider ownership is 28% with institutional ownership sitting at 55%. This name has little debt, and a lot of cash on hand ($3.37/share). The 50 day MA is sitting around $3.90, which would result in a 195% move, and the 200 day MA is sitting around $7.56, which would result in a 472% move. Plus there’s a big gap to fill up to $7.82, which would result in a 487% move. Our price targets for 2020 are as followed: PT1 – $1.49 | PT2 – $1.90 | PT3 – $3.37
4. $CXDC – $1.81 (1/31)
Suggested Stop Loss: $1.39
China XD Plastics Company (CXDC) – This name had a huge run up last January. The RSI is neutral, but not oversold. The CEO bought 555k shares at $2.05, so certainly something is up. They wouldn’t flip for pennies on the dime. Our price targets for 2020 are as followed: PT1 – $2.30 | PT2 – $2.50 | PT3 – $3.00.
5. $RAIL – $1.61 (1/31) CLOSED -22.62%
Suggested Stop Loss: $1.71 (Hit on 1/10)
FreightCar America, Inc (RAIL) – Has been beat down for majority of 2019, in 2020 we see a short term upside. The stock has a low float, $4.58 cash/share, and looks prime for a reversal. Our price targets for 2020 are as followed: PT1 – $2.70 | PT2 – $4.00 | PT3 – $4.78
6. $SYBX – $2.68 (1/31)
Suggested Stop Loss: $1.89
Synlogic, Inc (SYBX) – Got beat down hard at the end of 2019. There was a gap down in July, which is where our 3rd Price Target is, which would result in an 80% move. The cash/share is $3.74. Our price targets for 2020 are as followed: PT1 – $3.00 | PT2 – $3.55 | PT3 – $4.50
7. $ARTL – $2.09 (1/31) CLOSED +111.48%!
Suggested Stop Loss: $1.80 (Hit $4.42 on Feb 3rd)
Artelo Biosciences, Inc. (ARTL) – Has been in a consolidation period since Mid may. We foresee the stock drifting towards the 50 day MA and bouncing to fill the gap to $8.41, which would result in a 193% move. Has some news in the pipeline as well. Our price targets for 2020 are as followed: PT1 – $3.00 | PT2 – $3.50 | PT3 – $5.00 | PT4 – $8.41.
8. $WEI – $2.4067 (1/31)
Suggested Stop Loss: $2.00
Weidai Ltd. (WEI) – This is a stock that has been pretty beat down for 3/4 of 2019 and makes big intraday moves. Once over $3, this could run quick. Better early, than chase later. Our price targets for 2020 are as followed: PT1 – $4.00 | PT2 – $5.17 | PT3 – $6.00
9. $MITO – $2.52 (1/31)
Suggested Stop Loss: $2.00
Stealth BioTherapeutics Corp (MITO) – Right before 2020 started we saw a huge gap down and the stock hit record lows. This could be a falling knife and you obviously don’t want to chase it, but when stocks get beat down hard they generally bounce short term. This is amongst the riskiest plays of the 10 listed. Our price targets for 2020 are as followed: PT1 – $4.97 | PT2 – $5.69 | PT3 – $8.11 (Longer Term Play)
10. $LIFE – $5.08 (1/31) CLOSED +72%
Suggested Stop Loss: $2.90
aTyr Pharma, Inc. (LIFE) – We’ve liked this one for a while. There is a lot of news and data coming out early 2020 that could send this name for a multi-day run. With cash/share sitting at $9.90, they’ve got plenty of cash to run the operations. Our price targets for 2020 are as followed: PT1 – $5.00 | PT2 – $5.50 | PT3 – $6.00
This goes without saying again, penny stocks are risky assets to play with, but with practice you can be a profitable day trader. Things to look out for when trading penny stocks:
- Liquidity – We highly suggest trading stocks with 500,000 or more shares traded per day.
- Volatility – If you are looking to get into penny stock trading, it is more than likely because you are looking for stocks that make big moves intraday.
- News – Penny stocks make BIG moves in either direction off of news. We’ve seen 500%+ moves from penny stocks before based off of news.
Stay tuned as we break down some strategies for penny stock trading in a future post.