The market looks promising for the best penny stocks to trade this week.
Investors are gearing up for a new week, and the bulls are out in force. All the major indices up in pre-session futures trading. Gold, silver, and crude oil are also currently in the green. Last Friday’s job report seems to have convinced the market that the economy is in shape. The concerns over October’s economic data seem to have been dispelled, for the moment, and there are strong indications that the China trade deal – Part I – will be signed before the end of the month.
All signals point to a strong performance from stocks to close out the year. Let’s take a look at the best penny stocks to trade this week.
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IVERIC Bio, Inc. (NASDAQ: ISEE)
Biotech stock pops are a regular event, but IVERIC’s performance over the last week is worth noting. This stock doubled after the company released clinical data for one of its key therapies. As you may have gathered from the price action, the market liked the news. The news sent the stock on an epic rally that doubled share prices in only three days.
The treatment at the center of the story is Zimura, a drug designed to treat Dry AMD – a macular degeneration disorder that affects the eyes. Patients responded to doses of Zimura across multiple treatment groups, proving that Zimura is an effective treatment. The results confirm the commercial potential of the drug, and the market seems to think that IVERIC is onto something with this drug.
Granted, this stock is coming off a huge rally, but moves work both ways. This could be an interesting opportunity for a short play or a momentum trade, depending on your perspective.
Fitbit Inc. (NYSE: FIT)
For years, Wall Street hang-arounds have been saying the same thing, “Buy the rumor, sell the news.” If you followed that advice last week, you’re sitting on 60% gains right now.
Early last week, rumors began circulating that Google was shopping Fitbit. This type of talk wasn’t unusual, buyout whispers have been following Fitbit’s stock for months. However, this story has an air of undefinable legitimacy to it that the previous rumors didn’t have. Turns out, it was a great chance to make a buy.
Days later, Google pulled the trigger on an all-cash, $2.1 billion deal to acquire the smart-watch maker for $7.35 per share. That’s a pretty good come-up for a stock that opened the week trading for $4.50. By the time it was all said and done, Fitbit was up 60% for the week. The deal indicates that Google is making a push into wearables, which seems natural a step forward for its Wear OS software. Now, Google has both hardware and software assets in the wearable category, and it could be a worrisome sign for Apple shareholders. Google has its work cut out for it if it wants to go after the iWatch, but the search-engine behemoth is likely to snatch at least some market share away from Apple.
Catching a buyout deal by the tail isn’t easy, but last week’s Fitbit deal was the literal personification of ‘buy the rumor, sell the news.’ Shares of Fitbit are still 20 cents below Google’s purchasing price.
Technically, Fitbit is no longer a penny stock because its price topped $5, so this might be the last time it makes our top penny stocks lineup.
O2Micro International Ltd. (NASD: OIIM)
This micro-cap, diversified electronics firm jumped over 30% following its earnings report last week. The company’s third-quarter revenues came in on the high side of its internal forecasts. Revenues were up over 12% from last quarter but were down 4.7% from the same time last year. However, margins were up for the quarter and the company is getting close to achieving profitability. O2Micro reported a narrow operating loss of only 1-cent per share, amounting to GAAP net losses of only $200,000. The company ended the quarter with $38.5 million in short-term assets and cash.
Management says it’s continuing to focus its efforts on its lithium batteries and consumer products. “The third quarter of 2019 saw strong growth in consumer products as our newer solutions ramp-up in production while we continued to design and provide timely, reliable and quality products,” said O2Micro Chairman and CEO Sterling Du, “Our battery product lines offer expanding solutions for all lithium battery types and we have seen continuing growth in our TV/Monitor product lines as we further expand into more territory.” Du added that management plans to “provide ongoing growth in a dynamic market and lead O2Micro into long term profitability.”
This company came very close to profitability this quarter, and management appears to be on the right track. However, the report wasn’t terrific and there could be a pullback this week if a lot of shareholders start cashing in on last week’s 30% pop.
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