With trade tiffs, earnings reports, and politics largely dominating the more visible areas of the stock market, it’s important for investors to divert their attention to the smaller, often overlooked companies every once in a while. When it comes to overlooked companies, no type of equity falls more into that category than penny stocks.
So far this year, penny stocks trading on the Nasdaq – which provides more leniency to firms with low market value – have posted gains as high as 298%. That provides some much-needed perspective for the mainstream investors who focus heavily on the blue-chip oriented Dow Jones, whose 9% gain so far this year pales in comparison to the triple-digit explosions often seen by penny stocks.
Here’s a ranking of the five best-performing penny stocks listed on the Nasdaq this year – as well as an overview of the news driving each company’s buying frenzy…
No. 5: Titan Medical Inc. (TMDI)
Shares of this medical technology company have more than tripled in value this year, soaring 203% from their Dec. 31 close of $1.22 to their $3.70 close on Wednesday. The stock experienced peak gains of 246% during the first four weeks of January when it shot up to $4.22 a share by Jan. 24.
Titan, which designs robotic devices meant for minimally invasive surgery, began to skyrocket following the Jan. 3 announcement that it made a breakthrough in the development of its new single-port robotic surgery system. The breakthrough involved the completion of the device’s “new camera system along with the design enhancements of both the surgeon workstation and the patient cart,” which Titan says are the surgery system’s two primary components. Investors likely saw this as indicative of future profits once the system is complete and for sale on the medical market.
No. 4: CBAK Energy Technology Inc. (CBAT)
CBAT stock is up 210.5% so far in 2019, climbing from $0.38 a share at the Dec. 31 close to $1.18 on Wednesday. Shares vaulted 213% in January alone to a peak price of $1.19, the highest level since May 2018.
The rally behind this Chinese supplier of lithium batteries stems from CEO Yunfei Li’s purchase of 1.67 million CBAT shares on Jan. 7. According to Li’s filing with the SEC, which is required when insiders make such large purchases, the shares were bought at $1.02 for a total value of about $1.7 million. A CEO investing this much money in their company can mean he or she has faith in the stock’s long-term performance, which in turn leads to bullish sentiment among everyday retail investors.
No. 3: Trevena Inc. (TRVN)
Shares of Trevena, a Pennsylvania-based biotech, have vaulted 237% this year from $0.43 to $1.49 during the Dec. 31 – Feb. 13 period. Investors who bought and sold on Jan. 25 and Feb. 6, respectively, enjoyed an enormous 181% return in that less than two-week period.
The surge came on the back of a Jan. 28 press release noting that the Food and Drug Administration (FDA) responded positively during one of the company’s meetings on the new drug application (NDA) for oliceridine, an opioid drug currently engaged in FDA trials. The positive response assured investors that the drug’s approval process is moving along smoothly, despite the broad negative sentiment surrounding opioids amid the ongoing U.S. opioid crisis.
No. 2: SPI Energy Co. Ltd. (SPI)
SPI Energy has skyrocketed 285% year-to-date from $0.88 a share to $3.26. The stock’s most notable gains happened when shares roared 228% higher from $0.99 to $3.25 in just two trading sessions (Jan. 22 – Jan. 23).
The Chinese solar company sparked a rally following a Jan. 17 announcement that it would enter into a $7.6 million private placement deal, purchasing 6.6 million shares at a $1.16 stock price. The gains continued after the firm announced on Feb. 8 that the Nasdaq Hearings Panel accepted its application for continued listing on the Nasdaq exchange as long as the company maintains a “minimum $15 million market value of publicly held shares for 10 consecutive trading days on or before May 17, 2019.”
No. 1: Pernix Therapeutics Holdings Inc. (PTX)
The leading penny stock on the Nasdaq this year is Pernix, a New Jersey-based pharma company whose stock has exploded 298% this year from $0.42 to $1.82. The bulk of Pernix’s rally has occurred this month, with shares up a whopping 279% from $0.48 at the Jan. 31 close to $1.82 at Wednesday’s close.
Even more impressive than PTX’s performance is the fact that the gains don’t seem to stem from any particular news story. Analysts assert that the rally is purely technical, with the explosive returns likely coming from a short squeeze. During the Feb. 7 – Feb. 13 period, short interest on the stock climbed steadily from 49% to 58.5%. This high volume of short positions set the stage for a short squeeze since short sellers tend to abandon ship once they see how crowded the trade is, which inevitably leads to reverse-buying behavior that props up the stock price.