June
3, 2021
8 min read
This story originally appeared on PennyStocks
4 Penny Stocks That Hit It Big In the Past Year
As penny stocks investors, we love to see a company go from the under $5 mark to well beyond that number. While this is a rare occurrence, it does happen. And when it does, investors take note.
Most of the time, those trading penny stocks tend to do so for short-term gains. This is known as swing trading. But, some investors choose to ride the long wave, hoping that a long time frame will result in major gains. There are a few ways that a penny stock can break out of small-cap territory. And before going into them, we must note that the term penny stock simply means any stocks trading under $5.
One reason that a company could pass this threshold is through a new product or major demand increases for a current one. This is the most common and tends to be a combination of speculation and fundamentals.
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Additionally, this method can result in long-term, sustainable gains, rather than a company falling back to penny stocks territory. The next reason that a stock could move beyond $5 is pure speculation. This could be in relation to a news event, or the potential of a future happening.
An event like this is common as well, but, it can lead to short-term gains, and a stock eventually falling back to under $5. When searching for a penny stock that has taken off, it is important to consider why, and what made it move. Is the trend a lasting one, and can it maintain this higher price? These are questions that every trader should ask themselves before pulling the trigger. Considering this, let’s take a look at former penny stocks that exploded in value.
4 Penny Stocks That Went Big
- Novavax Inc. (NASDAQ: NVAX)
- Microvision Inc. (NASDAQ: MVIS)
- MiMedx Group Inc. (NASDAQ: MDXG)
- Plug Power Inc. (NASDAQ: PLUG)
Novavax Inc. (NASDAQ: NVAX)
Last Time It Was a Penny Stock: January 17th, 2020
Gain Since to June 3rd, 2021: +3,290%
Adding almost 20% in value alone in the past two days, Novavax is arguably one of the largest gaining former penny stocks we’ve seen. In February of this year, shares hit a high of over $290. This is a more than 5,900% gain from the $5 mark. While the NVAX stock story is a rarity, it is a great example of a penny stock that pushed up big due to both speculation and fundamentals.
For some context, Novavax is a biotech company, working in many different areas of the sector. When the pandemic hit last year, investors scrambled to find biotech penny stocks that had a role in treating or vaccinating against the pandemic. And, Novavax became a top choice for many. With its Covid-19 vaccine known as NVX-CoV2373 coming out with data from a Phase 3 study shortly, many investors bet on the long-term potential of Novavax.
And, if you’d have invested $5 in NVAX stock back then, you would have made an over 3,200% gain as of June 3rd. Novavax was one of the first companies to come out with a vaccine candidate, while albeit it is still in trials. However, it became a big name in all things related to the pandemic. And because of that alongside its other work, shares have skyrocketed in the past year and a half. So, while Novavax is a rare case study, it is a prime example of a penny stock that hit it big.
Microvision Inc. (NASDAQ: MVIS)
Last Time it Was a Penny Stock: December 21st, 2020
Gain Since to June 3rd, 2021: +268%
Microvision is another great example of a former penny stock that struck gold. While its gain over the past year and a half or so is not comparable with NVAX stock, an over 260% gain is nothing to complain about. There are a few reasons for the massive spike in MVIS stock over that time frame. One of those is its work on LiDAR sensors as well as microchips and various computer-related products.
Right now, there is a major shortage of microprocessors. If we consider basic supply and demand principles, we see that a massive gain for MVIS stock makes sense. However, its LiDAR sensors are also used in self-driving cars, which have become a major focus for Reddit stock investors in the past year or so. The focus from Reddit investors on MVIS is another example of retail traders pushing a stock with a high institutional short interest.
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This is something we saw with GameStop Corp. (NYSE: GME) as well as AMC Entertainment Holdings Inc. (NYSE: AMC). A result of the famed WallStreetBets subreddit is the rise of many penny stocks into post-penny stock territory. And, while MVIS shares still sit at a rather affordable $18 or so, autonomous vehicles have only just begun to take off. Considering this, will MVIS be on your penny stocks watchlist?
MiMedx Group Inc. (NASDAQ: MDXG)
Last Time it Was a Penny Stock: July 6th, 2020
Gain Since to June 3rd, 2021: +114%
MDXG stock is arguably the lowest gainer on this list, while still pulling in over 110% in gains since July of last year. For some context, MiMedx Group is a leader in regenerative medicine. This includes utilizing amniotic tissue for grafting. Its core business is on those with acute and chronic non-healing wounds. Its Purion process is a proprietary platform that uses human placental tissue as a way to more effectively complete skin grafting.
The company states that it has supplied over 2 million allografts through both direct and consignment orders. Now, because this gain is arguably not as large as the others and occurred over a long time frame, we can’t say for certain if there is one major reason for it occurring. However, MDXG is a leader in the biotech industry and its specific sector of allografts.
In its latest financial report, the company brought in around $61 million in net sales with revenue of $59.7 million. This is greater than the same period of the previous year. While it did pull in a net loss of around $8.4 million, this is mostly due to $7.2 million in costs associated with investigation and restatement activities. So, while there isn’t one specific reason for this solid gain, 114% in over a year is definitely worth paying attention to. Whether this makes MDXG worth watching it up to you.
Plug Power Inc. (NASDAQ: PLUG)
Last Time it Was a Penny Stock: June 15th, 2020
Gain Since to June 3rd, 2021: +519%
PLUG stock is one of the major gainers of the past year and a half, pulling in over 500% for investors. Although shares of PLUG hit a 52 wk high of over $75, PLUG sits comfortably at around the $30 mark right now. For those unfamiliar, Plug Power is at the forefront of the hydrogen fuel cell market.
Shares were given a major boost after Biden announced his high favorability for the potential of hydrogen power. And, because it is a leader in this regard, it could benefit greatly from Biden’s most recent infrastructure plan. It’s also worth noting that it holds a major cash balance of more than $5 billion, alongside some encouraging financials. This year, many investors have hedged their bets on the renewable energy revolution. And hydrogen presents a major opportunity for an economic, and already existing method of power.
The only roadblock that PLUG stock has is the economic and infrastructure barriers. This is due to the massive investment it would take to make hydrogen power as popular as fossil fuels. Regardless, the world is changing and President Biden wishes to make this change as fast as possible. So, whether a short or long-term play, PLUG stock remains a major gainer that left penny stock territory.
Finding Penny Stocks to Buy Can be Challenging
There is no doubt that finding a penny stock that could leave the $5 range is difficult. The majority of the time, investors are looking for penny stocks that will make decent gains throughout a short time frame. But, there is the occasional oddball small-cap that jumps well beyond the penny stock cap.
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The best course of action for stumbling upon one of these is to do as much research as possible. Those with the most information are advantageously positioned in the stock market no matter what. Considering this, which penny stocks are you watching?