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It’s nice to be proven right – and it’s even nicer when being right means pocketing gains.
I’m talking about our focus on clean energy and some of the outstanding penny stocks found in that sector.
After some “irrational exuberance” took hold at the end of 2020, the sector, as tracked by the iShares Global Clean Energy ETF (NASDAQ: ICLN), blasted more than 57% higher… only to fall back just as far by early March 2021 in a textbook correction.
But since then, we’ve seen healthy, “sustainable” (pun absolutely intended) growth in clean energy, with the ICLN up 15% or so since its lows last month.
This action has me more convinced than ever that clean energy has to be a part of every investor’s holdings. That means everything from mega-caps and exchange-traded funds (ETFs) to hold over the long haul to tiny, fast-moving microcaps that can double virtually overnight.
And that brings me right to today’s penny stock recommendation…
The Stock Poised to Hand Out “Carbon Copy” Profits
So the long-term trends favor clean energy, and the short-term trends favor this tiny, Santa Clarita, Calif.-based energy tech firm.
NewHydrogen Inc. (OTC: NEWH) is a relatively recent subsidiary of BioSolar, and it’s 100% focused on the production of “green” hydrogen. Hydrogen is essential for producing fuel cell electric vehicles (EVs). NewHydrogen uses electrolysis to extract hydrogen from regular old water – ripping apart the “H” and “O” in “H20” to use the remaining hydrogen to power fuel cells.
Hydrogen fuel cell tech is, at the moment, a kind of compliment to rare-earth battery-powered EVs, but ultimately, it’s very possible the two technologies will compete in a kind of clean energy version of the – dating myself here – “VHS vs. Betamax” war some of us remember from the 1980s. It’s really too early to even think about handicapping a winner in that matchup, but fuel cells may very well hold the edge there, because they can be made using renewable, sustainable means with elements that are abundant all over the planet – as opposed to rare rare-earths.
But about those short-term trends…
NEWH is checking the right boxes.
Its Bollinger bands are sitting near their smallest ratio since late August. The shares actually took off in September once they broke the top Bollinger band; gains topped 85%.
Its 50-day moving average (MA50) is bullish; its “trader’s trendline,” the 20-day moving average (MA20), is bullish, too. The stock is above both right now. Interestingly, the MA20 is below the MA50, which was bullish for the stock over the summer. That’s not something I usually look for in my technical analysis, but that big past performance is undeniable.
All the signs point to a situation where NewHydrogen stock could be setting up for a “carbon copy” of the scorching late-summer run that sent it around 85% higher.
Given its extremely low price right now, below $0.03, I think it makes sense to give this small stock plenty of room to run here. Buy this stock up to $0.03, and add a 7% trailing stop to protect your principal and your profits. Rather than pull the ripcord at $0.035 or $0.04, let this one go up to a nickel, or $0.05, before reevaluating.
There are a ton of small stocks out there, far beyond the clean energy sector. Take the new field of psychedelics, for instance. I know of 23 stocks (you read that right: twenty-three), each one trading for under $5 a share, with the potential to 1,000X over the next year. I think this sector is on the way to becoming a $400 billion giant, and, for the moment, you don’t have to be a millionaire to get in. Take a look at the details here.
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About the Author
Chris Johnson is a highly regarded equity and options analyst who has spent much of his nearly 30-year market career designing and interpreting complex models to help investment firms transform millions of data points into impressive gains for clients.
At heart Chris is a quant - like the "rocket scientists" of investing - with a specialty in applying advanced mathematics like stochastic calculus, linear algebra, differential equations, and statistics to Wall Street's data-rich environment.
He began building his proprietary models in 1998, analyzing about 2,000 records per day. Today, that database, which Chris designed and coded from scratch, analyzes a staggering 700,000 records per day. It's the secret behind his track record.
Chris holds degrees in finance, statistics, and accounting. He worked as a licensed broker for 11 years before taking on the role of Director of Quantitative Analysis at a big-name equity and options research firm for eight years. He recently served as Director of Research of a Cleveland-based investment firm responsible for hundreds of millions in AUM. He is also the Founder/CIO of ETF Advisory Research Partners since 2007, noted for its groundbreaking work in Behavioral Valuation systems. Their research is widely read by leaders in the RIA business.
Chris is ranked in the top 99.3% of financial bloggers and top 98.6% of overall experts by TipRanks, the track record registry of financial analysts dating back to January 2009.
He is a frequent commentator on financial markets for CNBC, Fox, Bloomberg TV, and CBS Radio and has been featured in Barron's, USA Today, Newsweek, and The Wall Street Journal, and numerous books.
Today, Chris is the editor of Night Trader and Penny Hawk. He also contributes to Money Morning as the Quant Analysis Specialist.