What Are the Top Penny Stocks to Watch in 2021?

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What Are the Top Penny Stocks to Watch in 2021?

Penny stocks, which are low-priced and often volatile securities issued by small companies, have long captured the interest and imagination of investors seeking high potential returns. Whilepenny stocksalso carry significant risks, including liquidity, fraud, and poor financial performance, some traders believe that careful research and timing can lead to outsized gains. In 2021, the penny stock market has been influenced by various factors, such as the COVID-19 pandemic, the global economic recovery, the political environment, and the technological innovation. Here are some of the top penny stocks to watch this year, along with their recent performance, key drivers, and potential risks.

Healthcare Penny Stocks

The healthcare sector has been one of the most active and promising areas for penny stocks, as the pandemic has created demand for diagnostic tests, vaccines, and treatments. Some of thehealthcare penny stocksthat have gained attention recently include:

- Aytu BioScience Inc. (AYTU): a specialty pharmaceutical company that focuses on commercializing products in the field of urology and related conditions, such as COVID-19 testing kits. AYTU has surged from under $0.50 in November 2020 to over $10 in February 2021, driven by the increasing demand for its COVID-19 Rapid Test and the distribution partnership with Apollo Med Innovations. However, AYTU has also faced criticism and scrutiny over its financial reporting and marketing practices, which could affect its credibility and valuation.

- Ocugen Inc. (OCGN): a biopharmaceutical company that develops gene therapies for various eye diseases, such as retinitis pigmentosa, as well as vaccines for COVID-19 and other infectious diseases. OCGN has risen from around $0.50 in December 2020 to over $18 in February 2021, fueled by the announcement of a collaboration with Bharat Biotech to co-develop and market COVAXIN, an Indian-made COVID-19 vaccine. However, OCGN has also received warnings from the FDA regarding the clinical trial data and the manufacturing process of COVAXIN, which could delay or jeopardize its approval and commercialization.

Technology Penny Stocks

The technology sector has been another hot spot for penny stocks, as the digital transformation and the remote work trend have accelerated during the pandemic. Some of thetechnology penny stocksthat have attracted attention recently include:

- Zomedica Corp. (ZOM): a veterinary diagnostic and pharmaceutical company that develops point-of-care products for pets, such as TRUFORMA, a diagnostic platform for thyroid and adrenal disorders. ZOM has surged from under $0.20 in December 2020 to over $2 in February 2021, driven by the launch of TRUFORMA and the expansion of its distribution network. However, ZOM has also faced criticism and skepticism over its financial viability and market potential, as well as the competitive landscape and regulatory challenges of the animal health industry.

- Sunworks Inc. (SUNW): a solar energy solutions provider that designs, installs, and maintains photovoltaic systems for residential, commercial, and agricultural customers. SUNW has risen from around $0.30 in November 2020 to over $30 in February 2021, propelled by the strong demand for renewable energy and the favorable policy environment under the Biden administration. However, SUNW has also experienced volatility and uncertainty due to the cyclicality and seasonality of the solar industry, as well as the competition and consolidation among solar companies.

Investing in Penny Stocks

Investing in penny stocks can be a risky and speculative endeavor, as the low liquidity and high volatility of these securities can lead to significant losses or gains in a short period of time. To minimize the risks and maximize the rewards of penny stock trading, investors should consider the following tips and strategies:

- Do your research: Before buying any penny stock, make sure to investigate the company's financial statements, management team, industry trends, competitors, and potential catalysts or risks. Use reliable sources of information, such as SEC filings, press releases, news articles, and expert opinions.

- Diversify your portfolio: Don't put all your money into a single penny stock, as it could expose you to excessive risk and reduce your chances of success. Instead, spread your investments across multiple penny stocks, preferably in different sectors and markets, to increase your chances of finding winners and losers.

- Set realistic goals and limits: Don't expect to get rich overnight or to double your money every week by trading penny stocks. Instead, set realistic goals and limits for your returns and losses, based on your risk tolerance, investment horizon, and financial objectives. Use stop-loss orders or trailing stops to protect your gains and limit your losses.

- Stay disciplined and patient: Don't let emotions or rumors drive your penny stock trading decisions. Instead, follow your investment plan and stick to your analysis, even if the market or the stock price fluctuates. Be patient and persistent, as penny stock trading requires a lot of time, effort, and learning.

Conclusion

Penny stocks can offer high potential returns but also high risks for investors. The healthcare and technology sectors have been among the most active and promising areas for penny stocks in 2021, driven by the COVID-19 pandemic and the digital transformation. Aytu BioScience, Ocugen, Zomedica, and Sunworks are some of the top penny stocks to watch this year, but investors should do their research and diversify their portfolios to minimize the risks and maximize the rewards of penny stock trading. By setting realistic goals and limits, staying disciplined and patient, and following the best practices of investing, investors can navigate the penny stock market with more confidence and success.