A quick look at any financial headlines this week makes it clear that there’s a buying frenzy kicking off in the world of meme stocks once again. They grabbed both Wall Street’s and Main Street’s attention for a couple of weeks in January as double and triple percentage daily moves became the norm but then they seemed to fade away almost as quickly as they appeared
But as equity markets, in general, turn higher after a sluggish few months in the meantime, it looks like there’s a fresh fire being lit underneath stocks that have above average short interest. Here are three that are worth keeping a close eye on.
AMC Entertainment Holdings (NYSE: AMC)
With as much as a 500% pop in the past week, AMC is currently the hottest of them all. It has a ways to go before it can top the 800% rally it posted in January, but what’s interesting here is that the share price is already three times higher than that previous high.
There’s an argument to be made that as we approach a complete economic reopening and recovery that the likes of AMC and their cinema business stand to do very well, but that certainly can’t claim all the glory for this most recent run. The stock’s short interest has kept it at the forefront of the minds of retail traders, many of whom crowd source their buying strategies on online forums.
AMC’s management must be thanking their lucky stars as they take advantage of the higher share price to raise some much needed fresh capital. But for all the excitement it’s important to remember that there are no fundamentals justifying this move.
Though shares of GameStop gave back 90% of their value after the January mania died down, they surprised many by refusing to return to their pre-short squeeze levels. Instead, they stubbornly insisted on trending upwards to the point where they’ve now spent much of the past four months trading more than 800% higher than their December 2020 average.
Like with AMC, the risk-on sentiment that has returned to equities in recent weeks has brought fresh optimism to GME, and their stock has more than doubled since the middle of May. Just as it was looking like it was going to mature and trade a normal daily range indefinitely, that’s been blown right open and we could be looking at a repeat of what happened on January 28th.
One thing is for sure, the fiscal Q3 earnings report from headphone manufacturer Koss isn’t the reason behind the 150% move seen in their shares over the past week. EPS was firmly in the red while revenue was 17% on the year, but still that hasn’t stopped them becoming a darling of the meme stock traders who have been piling into shares in recent sessions.
Daily traded volume numbers have yet to match those from the start of the year but they could be on the horizon if the narrative gathers some momentum. Shares have broken through resistance and are now at their highest levels since January. Back then, there were days when the stock ran up as much as 600% in a single session. So while there’s little to find attractive about them for the long term, maybe there’s an argument to be had for putting some fun money into them.
That’s probably the name of the game for any of the stocks on this list and their peers. The experts have been out in force this week urging caution, and all three of these stocks feature high up in former fund manager Whitney Tilson’s "Short Term Bubble Basket" list.
He recently went so far as to say, “mark my words: these stocks will fall 25% within a month (probably much sooner), 50% within three months, and 75% within a year". This may well turn out to be the case, but that doesn't mean there isn’t some fun to be had
in the meantime.
Featured Article: Stock Market - What is a circuit breaker?7 Penny Stocks That Don’t Care About Robinhood
By the time you read this Vladimir Tenev, the CEO of the trading app Robinhood, will be testifying in front of Congress. The company’s role in the GameStop (NYSE:GME) short squeeze will be called into question.
However, the real issue at stake is the right of traders to buy and sell the equities of their choice. In the case of Robinhood, some traders are buying a lot of penny stocks. While definitions vary, penny stocks are generally considered stocks that are trading for less than $10 per share. These stocks are largely ignored by the investment community.
One reason is that many of these stocks are cheap for a reason. For example, the company may have a business model that is out of date. In other cases, they operate in a very small, niche market that doesn’t drive a lot of revenue.
And most of these stocks are ignored by the investment community. They simply aren’t considered significant enough to spend time debating.
But some penny stocks do have the attention of Wall Street. And they’re being largely ignored by the day trading community. The focus of this special presentation is to direct you to penny stocks that have a story that the “smart money” thinks will eventually be trading at much higher prices.
And that’s why you should be looking at them now.
View the "7 Penny Stocks That Don’t Care About Robinhood"
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