Investors might face the problem of plenty when choosing from the countless number of penny stocks, and the multiple factors impacting the market might compound the problem. Despite feeling overwhelmed at times, the task is not impossible only if you understand the method of buying penny stocks in 2022. The crucial factor that makes the difference between profit and loss when buying penny stocks is to determine the value of the stocks regardless of their price. The biggest problem is the speculative nature of penny stocks, and to deal with it, you must have a complete understanding of the current dynamics of the stock market. Knowing what is going on in the stock market should give you some advantage in targeting penny stocks to add to your portfolio.
Factors to focus upon in 2022 to make decisions about penny stocks
Investors have a lot of things to keep track of in 2022. The pandemic’s impact on the economy remains the biggest concern. The sharp rise in cases due to the Omicron dominant wave sweeping worldwide and steeply increasing the number of cases is causing fresh uncertainty. For those keen to buy penny stocks, this is one of the crucial factors to consider. The other areas of concern are the impact of the pandemic on the economy that now witnesses unprecedented inflation, job reports that are less than stellar, and the continued supply chain constraints resulting in goods shortages. It does not mean that all bad things will happen in 2022, but investors must consider the fast-changing market scenario that helps them make the right decisions.
Trading tips
Investors must be familiar with the penny stocks tricks to decide about the buying method by choosing between swing and long-term trading. The swing trading technique consists of buying some penny stocks tricks and holding on to it briefly with the hope that the price would rise considerably within the span of holding. Since the rate of movement of penny stocks is very sharp, this trading method is extremely popular. However, the risks of losing money fast are also high because of the high volatility of the stocks. To mitigate the risk, you must set your portfolio goals first and have a clear idea about the kind of movement that matches your expectations.
Long-term trading needs no explanation, but the technique is one of the less popular tricks to penny stocks. However, since penny stocks can cross the $5 threshold, many investors rely on the buy and hold strategy for some time, hoping to gain from it.
Stocks to buy now
It is advisable to pick from the best penny stocks list according to the current market conditions to decide which penny stocks to buy now. According to the Reddit list, the first choice is Kosmos Energy Ltd (KOS – NYSE). Amid the sell-off spree in the stock market in the last week of January, the energy sector gained bullish momentum. During this time, the KOS stock bounced back in a big way after on the back of selling a few days earlier. The shares jumped 15% during the week from $3.89 to $4.54 between Monday and Tuesday during the last week of January. Besides the market movements, the company’s recent activities contributed to the stock price increase. Goldman Sachs increased their target price of the stocks from $5 to $7.5 and maintained a Buy rating.
Stocks to watch
Two years ago, in 2020, Amyris, Inc. (AMRS) was on the list of penny stocks to watch when its value soared past $20 and maintained the level through 2021. Concerns about manufacturing issues in China and shipping delays have impacted the company’s earnings. Other worrisome signs are the company’s quick ratio (0.40) and current ratio (0.60). The possibility of dilution is making shareholders skeptical about the future of the stocks, which slid back to $4.07 by the end of January.
However, considering that the company is addressing the shipping issues by bringing the factories in Nevada and Brazil online and that the company’s EPS is still double-digit, gross margin of 66.4%, and return on equity 337.40%, the signs are positive.
It could help AMRS move from the watch list of penny stocks to the buy list.
