With the broader stock market making a habit of setting new records of late, equities are in style, including penny stocks. If you’re unsure, just take a look at the performance of some of these lesser known names this month, with some posting gains in the triple-digit percentage range, including the trio of stocks we’ll look at today.
While intriguing, it’s also important to understand that they’re called penny stocks for a reason, as they are extremely cheap even compared with small-cap stocks, often trading for less than a dollar. As a result, it doesn’t take a big investment to own entire shares of these companies, which investors may hope will turn into the next Nvidia (Nasdaq: NVDA) or Microsoft (Nasdaq: MSFT).
However, there’s a reason penny stocks might not be on your radar, and it’s due to their speculative nature. Many investors will avoid them altogether, owing in part to low liquidity compared with mainstream companies. Often times, penny stock companies have yet to become profitable or even at times they can be outright scams, similar to many internet plays during the dot-com bubble, which adds to the risk for investors. Nevertheless, it’s always possible to find a needle in the haystack, so let’s explore a few of the penny stocks that are winners so far in the month of June.
Actelis Networks: Internet-of-Things
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Actelis Networks (NasdaqCM: ASNS) provides networking solutions for internet-of-things (IoT) applications, specializing in federal agencies. The stock entered the month of June trading at $0.48 per share. Since then, it has rallied 273% to graduate from penny stock to dollar stock, where it currently hovers at $1.79 per share. In fact, the stock crossed the $2 threshold in recent days but couldn’t hold onto that level.
You may be wondering what the catalysts might be, other than the bullish sentiment surrounding the broader stock market. Actelis has had a few of them, not least the securing of orders to supply a trio of U.S. military basis with its IoT solutions. Actelis caught their eye after it received the green light from the Department of Defense’s Information Network as an approved provider. The company also received a couple of cyber-related government certifications from the Joint Interoperability Test Command (JITC) and the U.S. Department of Commerce National Institute of Standards and Technology, both of which pave the way for Actelis to secure more military contracts.
Last month, the company scored $2.3 million in orders from Washington, D.C.’s Department of Transportation for its networking solutions to support smart-city upgrades.
In its fiscal Q1, Actelis reported revenue of $0.73 million compared with $1.85 million year-over-year, owing to delays in deliveries to customers. There was an improvement in operating expenses, while the company’s net loss expanded to $1.8 million vs. $1.6 million in the year-ago period.
Vapotherm: M&A Target
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Pharmaceutical stock Vapotherm (OTC Markets: VAPO) similarly entered the month of June trading under at $1 at $0.80 per share before more than doubling to $2.11 per share at last check. Biotech stocks tend to be volatile in nature, as their profitability is directly tied to regulatory approvals and clinical trials, all of which can be unpredictable. But this stock is soaring as the target of an M&A deal.
Vapotherm, which currently trades in the over-the-counter markets, recently announced a merger with an affiliate of healthcare investment firm Perceptive Advisors, the Perceptive Discovery Fund. As a result of the deal, a lender is converting Vapotherm’s debt into preferred equity. Meanwhile, Vapotherm will receive a $50 million capital injection by Perceptive in preferred equity capital.
The Perceptive management team said they’re excited about expanding their partnership with Vapotherm as the healthcare-tech company continues on its “path to profitability.” Vapotherm investors will receive $2.18 in cash for each share of common stock, representing an 166% premium over the share price at the time of the merger announcement. The deal is scheduled to close in H2 2024.
Mobile Global Esports: True Penny Stock
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Mobile Global Esports (Nasdaq: MGAM), or MOGO, is a penny stock in the true sense of the word, with the share price hovering at $0.0348. MGAM shares have rallied just over 100% in the month of June so far, owing in part to excitement around the signing of a new team. But the stock is coming from a low base, as it’s shaved off 88% from its value year-to-date. The company has a dual headquarters in Westport, CT and Mumbai, India.
Mobile Global Esports has signed a championship team to its brand for the 2024 season. The team, which is India’s reigning Battlegrounds Mobile India Series (BGIS) and BGMI Master Series (BGMS) champions, is led by captain Ammar Khan, aka Destro, and successful coach Robin Singh, as well as a roster of highly talented players. MOGO will lend its high-tech training facilities, equipment and further expert coaching to the team.
This eSports company, which has a market cap of under $1 million, narrowed its Q1 net loss to $618,627 from $812,084 in the year-ago period. MOGO had its IPO in 2022, raising almost $7 million, followed by a PIPE deal in which it attracted another $5 million to its coffers. As of 2023, the company has $6.1 million in cash and zero debt.
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