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I hear this over and over again in my Money Morning LIVE streams. Investors are sweating two things: minimizing their volatility risk and getting as much bang for buck as they can while spending as little as possible.
This is why I think trading penny stocks is probably the best strategy for 2022, with everything going on.
For starters, it's a way to make volatility work for you. When penny stocks move, they blast off and can deliver explosive profits much faster than trading the big names. If you got into Amazon.com Inc. (NASDAQ: AMZN) at the start of 2021, by the end of the year you'd have made about 73% gains. Not bad for 12 months, right?
It's impressive until you consider that one of the stocks I'm about to share with you made 258% gains in the first three weeks of 2021, and spiked 655% by September.
The way I see it, there's no question which one was the better place to have parked your cash.
Here are five penny stocks that I think have real potential for similar, huge profit spikes in 2022...
Volatility and Volume - the Key to Blasting Off
One of the key indicators I look for when judging a penny stock is rising volume during a dip in volatility. You want things to be volatile overall, but those moments of calm are the best times to move in, because they tend to precipitate a spike.
With that in mind, here are five I'm watching now.
Vinco Ventures Inc. (NASDAQ: BBIG) is an acquisitions and holdings company focusing on digital properties and digital content. In its Q3 2021 financials report, it revealed that it had completed the acquisition of the Lomotif social media platform and was preparing to launch a blockchain-focused entertainment marketing venture called Cryptide Inc. - any big wins here will push the stock up.
Sundial Growers Inc. (NASDAQ: SNDL), a company out of Alberta, Canada, is a licensed cannabis producer that focuses on sustainable growing practices and consistency of output. With cannabis reform continuing to make the rounds in the federal government, even the notion that we could be heading toward greater legalization could send this one through the roof.
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Citius Pharmaceuticals Inc. (NASDAQ: CTXR) mostly develops oncology-related treatments, and has several projects in the pipeline moving toward commercialization. Though some are worried about their delay in getting products to market, they've got very strong cash flow - $65.4 million as of last quarter and no debt. Its volume is unusually high, given its relatively small market cap, one of the main things putting them on my radar.
Progenity Inc. (NASDAQ: PROG) is another biotech firm currently developing an innovative early detection system for preeclampsia, among other things. After going public in 2020, its shares dropped from $15 into penny stock territory, but a sudden popularity among retail investors bolstered it toward the end of last year. That interest, combined with their continued progress toward commercialization, could push this one into big moves.
Skillz Inc. (NYSE: SKLZ) provides a platform for competitions between players of online mobile games. Its tech has made it into games from around 13,000 iOS and Android developers. With a continuing increase in paying users and generally strong revenue (69% YoY growth in a Q1 to Q3 comparison between 2020 and 2021), we're expecting a strong earnings report later in the month, and the stock will respond accordingly.
All five of these have great potential, but I've got plenty more picks for you.
I found all these after trying out a new technique for making plays on sub-$5 stocks, and I have to tell you - the returns have been amazing. Four hundred and thirty-five percent in seven months... 280% in 11 days... 311% in 29 weeks... even 788% in a year in some of my best plays.
My new service teaches people how to take advantage of these "penny rockets" for the chance to make boatloads of money on these heavily discounted stocks. You can get all the details here...
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.