4 Penny Stocks with High Potential in August 2020

Penny stocks may be tempting but are they worth the risk? After all, there is a reason why these stocks are under $5. If you want to tap into penny stocks before the end of this month, we take a look at four of them that show potential.

4 Top Penny Stocks in August 2020

Before you decide to buy shares in penny stocks, it will be well worth your time to understand the risks. What is so special about penny stocks outside the fact they trade under $5 per share?

These stocks are delegated to over-the-counter (OTC) trading, which means they are not supervised by an exchange. Despite this, you’ll still be able to trade penny stocks with the most popular brokers on the market.

Remember, penny stocks are penny stocks because they have low valuations. This is due to a couple of reasons:

• The company in question is in an early stage of development.
• The banks/venture capitalists (VC) have not deemed the company worthy of investing. Sometimes, this is valid. However, other times, this can be agenda-driven, or investors are already tapped out in ventures in the same niche.

Of course, black swan events, like the coronavirus pandemic, can push well-established, large companies into the penny stock range. This had happened to numerous companies in the real estate, utilities, and tourism market, with J.C. Penney (JCP) being the most notable example.

Accordingly, due to a less regulated market and large fluctuations, penny stocks tend to suffer from volatility and fraud. More often than not, companies with penny stocks fizzle out. If you are interested in a more detailed insight, take a look at our fundamental analysis guide on stock trading.

Upsides to Penny Stocks

Outside of rare occasions when penny stocks companies turn into a huge success, penny stock trading is not without its benefits:

• Low barrier to entry – not only the small amount of money needed to invest but you also don’t need to have a brokerage account beyond the default one.
• Needle in a haystack – being dime a dozen commodity, penny stocks are easily overlooked. However, if you do your diligence in evaluating their worth, you will be greatly rewarded.
• Volatility can be helpful if you are short selling penny stocks. This simply means that you are betting on the stocks to depreciate, so the exact opposite to the traditional notion of stock investing.

In the end, you have to approach penny stocks with a cautious mindset and be prepared to act accordingly. While stocks differ significantly from mutual funds, stocks and penny stocks also feature many differences — especially in terms of trading strategies.

With that said, take a look at these top penny stocks today.

Outlook Therapeutics Inc. (NASDAQ:OTLK)

On July 22, this biopharmaceutical company for clinical-stage trials kept falling to $1.60 and has been fluctuating since. Today, it stands at $1.46, following the August 14th earnings report. Inside the report, the company reported it successfully achieved enrollment for the NORSE 2 clinical trial, related to assessing drugs for retinal conditions.

At the end of August, Outlook is preparing to issue a report from that trial. They seem confident in the upcoming report as they plan for the NORSE 3 trial for the second half of next year. Also, these trials should be sufficient grounds for Biologics License Application (BLA) filing to the FDA, all according to Outlook Therapeutics Inc.

Sypris Solutions Inc. (NASDAQ:SYPR)

Servicing the oil and gas industry in the form of specially engineered enclosures for high-pressure machinery, Sypris is in quite a niche but profitable market. The company reported a number of upcoming deals for its specialized products:

• Tube Turns® at the end of July for gas operations in Canada in Brazil.
• Leonardo DRS Naval Electronics contract on August 11th, for assembling shipboard electronics, although without more details.
• Tube Turns® Tool-less® for Alberta XPress Project this week, estimated to be worth $300 million.

Sypris seems to be particularly busy in the second half of this year. Its stock price is rising accordingly, but still at the low end of $1.27.

Acasti Pharma Inc. (NASDAQ:ACST)

For a long time, this pharmaceutical company was hanging at the low end of $0.25 per share. More specifically, for 52 weeks. That all changed this week as Acasti rallied by 232%.

The cause of that recovery is the company’s TRILOGY clinical trials regarding its testing of CaPre drug for hypertriglyceridemia (associated with cardiovascular conditions and atherosclerosis).

At the end of this month, on August 31st, Acasti is set to publish its TRILOGY 2 data. Specifically, its so-called certain data. Only Acasti is privy to is, so depending on the market response, settle in until the rest of the month. ACST’s current price is $1.04.

AutoWeb Inc. (NASDAQ:AUTO)

Also known as Autobytel to older automotive enthusiasts, this American company specialized in providing marketing and sales funnels services to auto-dealers and manufacturers. Despite reporting lower revenues in 2020 compared to 2019, it achieved higher gross profit and gross margin, at above 35%.

As a result, AutoWeb generated positive cash flow and higher adjusted EBITDA in July, compared to the second quarter. Put into numbers, Wall Street analysts projected $17.86 million in sales, but AutoWeb came short by $860,000.

However, it overperformed in terms of EPS loss at only $0.10 compared to the projected EPS loss of $0.30. AutoWeb is on the upward trajectory at $3.15.

Disclosure: Tim Fries has no positions in any of the stocks mentioned, and has no plans to initiate any positions within the 72 hours following the publishing of this article. This article expresses the opinions of Tim Fries. Tokenist Media LLC has no position in any of the stocks mentioned, and does not plan to initiate any positions within 72 hours of the publishing of this article. Please consult our website policy for more information.