Do you know what low float penny stocks are? If you’re newer to trading stocks under $5, you might not know and that’s ok. Let me start by first explaining a few things. We all know penny stocks are highly volatile. But what if I were to tell you that there’s actually a sub-class of these cheap stocks that’s even more volatile? What if SPI Energy (SPI Stock Report), Eastman Kodak Company (KODK Stock Report), and countless others were part of a special class of penny stocks? Well, they are and they’re called low float penny stocks.
When it comes to understanding this market, you should understand things like momentum, of course. But you should also have a handle on other things like share structure. In that share structure, you’ve got things like authorized shares, outstanding shares, and the float. Authorized shares refers to the total number of shares a company can issue altogether.
Outstanding accounts for shares that’ve been issued, which also accounts for restricted stock that isn’t deposited. The float, however, is specific to the total number of shares publicly available for trading in the retail market. Float won’t ever be larger than outstanding shares and outstanding won’t be larger than authorized.What Are Low Float Penny Stocks & How Can You Find Them?
So now that we have the basics. Float, in particular, isn’t always accurately depicted on finance sites. The simple fact is the float can change whenever shares hit the market. So if you’re looking for low float penny stocks, looking for a low outstanding share count is a quick way to identify lower float penny stocks.
Needless to say, why low float stocks are so volatile is based on the limited supply of tradeable shares in the market. Basic laws of supply and demand say that low supply and high demand equate to higher prices. This is where we see penny stocks like KODK and SPI breakout out hugely in light of larger trading volumes. We saw a clear example of this today as well with the (former) penny stock, Kaixin Auto (KXIN Stock Report). Shares were trading at $3.30 at the opening bell and managed to jump as high as $13.40 during Monday’s session. A mix of short squeezes and generally above-average trading activity contributed to this move.
- What Are The Best Penny Stocks To Buy Right Now? 5 To Watch In Tech
- 5 Hot Penny Stocks To Watch Ahead Of A Stimulus Decision
It’s important to understand that just as quickly as these low float penny stocks rise, they can also fall. Again, take a look at the KODK and SPI charts. You’ll see what I’m talking about. Despite this being the case, many traders will look to capitalize on penny stocks like these in a very short time frame. So keep that in mind if you’re looking to start trading low floats. In light of this, would you put these on your list of penny stocks to buy or avoid right now?Low Float Penny Stocks To Buy [or avoid]: Farmmi, Inc.
Farmmi, Inc. (FAMI Stock Report) is likely one of the higher float, “low-float penny stocks” on this list. It’s outstanding share count is just over 20 million shares. When you talk about lower floats, you’re really looking at something far less than 20m. But in many cases, we’ll see stocks with relatively lower floats experience higher levels of volatility.
In FAMI stock’s case, shares have moved higher, extending a 3-day move in price over the last few sessions. Overall, the penny stock has maintained a consistently strong uptrend ever since the start of September. It was one of the popular penny stocks to buy under $1 at the time. Shares were trading around $0.85 and the market was focused on Chinese penny stocks. The company itself focuses on processing and selling various categories of agricultural products. Some of its main products include various kinds of mushrooms. It generates a vast majority of the revenues from the Shiitake mushrooms segment within China.
Last week, Farmmi announced that its subsidiary Zhejiang Forest Food Co., Ltd. received a follow-on customer order for its popular dried whole and sliced mushrooms, and dried black fungus. The customer is a trading company supplying to major global hotel and supermarket chains. The company said that it includes the STANFORD hotel chain and the H-MART supermarket chain. It will export Farmmi’s products to Canada.
Aside from this, there haven’t been any new updates. However, FAMI stock could be moving in sympathy with other China-based penny stocks this week.Low Float Penny Stocks To Buy [or avoid]: Hexindai Inc.
Another one of the low-float Chinese penny stocks to watch today is Hexindai Inc. (HX Stock Report). The penny stock has been very volatile during the last few sessions. Last Monday, HX stock ran up from $1.67 to highs of $2.65. It immediately came back down during the sessions to follow. This week began just as last week did, with HX shares jumping yet again. The penny stock moved from $1.77 to highs of $2.59.
The crazy part is, Hexindai isn’t a stranger to moves like this. If you look all the way back to May, you’ll see what I’m talking about. HX has a history of big moves and that goes for both directions too.
The company facilitates loans to meet the increasing consumption needs of underserved prime borrowers in China. So here we could have another case of sympathy trading in light of recent breakouts from other Chinese penny stocks. The company launched a social eCommerce platform called Xiaobai Maimai, earlier this year. The membership-based social platform is mobile ready and offers products. Late last month, Hexindai announced that an Elite Influencers Program on Xiaobai Maimai has made good progress and delivered “impressive results”.
Obviously, for anyone looking at HX stock right now, follow-through is important. The penny stock has a clear history of breaking out big and breaking down just as big. Keep this in mind if it’s on your list.Low Float Penny Stocks To Buy [or avoid]: Moxian Inc.
Moxian Inc. (MOXC Stock Report) has an outstanding share count of less than 17 million shares. It’s also a China-based company handling online-to-offline business. Essentially, Moxian services small and medium businesses with physical stores to do business online and interact with their customer bases on multiple platforms.
Similar to the other companies on this list, Moxian hasn’t put out any recent news. The last update came after the company announced it was in compliance with NASDAQ listing requirements in September. In any case, MOXC stock extended a now 3-day rally in price. Monday also marked one of the highest single-day, share volumes the penny stock had all month.
On a technical side, MOXC shares have approached its 200 day moving average this week. This level has historically acted as a point of support and resistance. However, recently it’s been more resistance than anything else. Since late September, the 200DMA level started becoming resistance. In light of the recent momentum and potential sympathy trading alongside other Chinese penny stocks, will MOXC finally manage to push up and above this technical level?Low Float Penny Stocks To Buy [or avoid]: Dunxin Financial Holdings Limited
Dunxin Financial Holdings Limited (DXF Stock Report) is another one of the penny stocks on the higher end of the “low float” spectrum. However, shares have been climbing significantly over the last few weeks. In fact, since the start of October, DXF stock has climbed as much as 191% after reaching highs of $2.20 so far this week. I also bet you couldn’t guess where the company is based, right? If you said, China, though, you are correct. Wuhan, China to be exact.
The company provides loan facilities to micro, small and medium-sized businesses in Hubei province of the People’s Republic of China. But if you’re looking for any fundamental information on the company, you’re likely to have a difficult time doing so. Dunxin hasn’t filed anything since July and there hasn’t been a news release in months. Again, this could be an instance where sympathy momentum has played a role. However, unlike some of the others on this list of penny stocks, DXF shares have been in an uptrend for longer than just a few days.
A key focus if DXF is on your list right now is what type of follow through will there be? When it comes to low float penny stocks, volume plays an important role. High volume is great but when or if it starts dying down, it could make for a higher risk situation.