3 Penny Stocks Under $4 To Watch Before The End Of January 2021

Can These Hot Penny Stocks Continue Bringing in the Bulls?

Investors & traders are always searching for the best penny stocks to buy. In the past year, trading these cheap stocks has become extremely popular. There are a few reasons why this is the case. For one, based on the definition of penny stocks – any security trading under $5 – traders can leverage smaller sums in hopes of larger percentage gains.

Second, new trading platforms like Robinhood and Webull have made trading penny stocks easier than ever before. These stocks present opportunities that could have much more upside than certain blue-chip stocks. Obviously, if you’ve got stocks trading under $1, for instance, a 20 cent move is equal to 20% or more. That can’t be said for stocks like Apple AAPL or Tesla TSLA. With all of these pros, there are also some cons.

First of all, since they are stocks under $5, they are subject to greater volatility. Second, penny stocks are usually much more speculative. This means that trends can be sharply influenced by current events, press releases, or even rumors. With all of these factors considered, it's up to you to find which penny stocks are worth watching given your own unique trading style. In 2021, many analysts are hopeful of a post-pandemic economic recovery. With that in mind, here are 3 penny stocks to watch for the second half of January.

Penny Stocks to Watch Next Week

1. Digital Ally Inc. DGLY
2. Contango Oil and Gas Co MCF
3. KushCo Holdings Inc. KSHB

Digital Ally Inc.

One of the gainers of the week ending January 15th was Digital Ally Inc. Shares of DGLY stock closed up over 15% for the week. The company is a tech business, specializing in the production of digital video and storage products. These are used by law enforcement and security companies among other commercial uses.

One of the things that make Digital Ally so interesting is how broad its portfolio is. As opposed to specializing in only a few items, Digital Ally has a wide variety of products including digital rearview mirrors, in-car and on-body surveillance devices, and software to help connect its devices.

More recently, the company has been developing a temperature screening device known as ThermoVu. This could be a major asset for live events during the pandemic. Digital Ally has already signed contracts with certain major league sports teams. Something to also take into account is that Digital Ally tends to react to the presence of certain events. Mainly, these events are threats, unrest, or instances where heavy police presence is involved. Considering the recent string of events in Washington and the upcoming inauguration day, will DGLY once again be in the spotlight heading into next week?

Contango Oil and Gas Co.

This week, companies like Contango Oil and Gas Co. have been in focus. This is due to the increased bullish sentiment surrounding energy penny stocks in 2021. Many investors believe that as the pandemic lessens in severity, demand for energy will rise. With a vaccine being distributed as we speak, the hopes are that the pandemic can come to a swift end.

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Since September, shares of MCF stock have shot up by over 170%, and since March, by over 200%. The MCF stock chart seems to convey a high degree of correlation to the energy sector itself during the pandemic. As case numbers went up, shares of Contango trended downward.

The company operates as a large energy producer with operations around the U.S. This includes the states of Texas, Oklahoma, Louisiana, and Wyoming. A few weeks ago, the company announced that it would be moving forward in a merger with Mid-Con Energy Partners. The pair state that this merger should close on January 21st of this year. This something to keep in mind especially heading into the new week. In light of this deal and the rebound in energy stocks, will MCF be on your list of penny stocks to watch?

KushCo Holdings Inc.

KushCo Holdings is an interesting penny stock for a few reasons. For one, it is classified as a marijuana stock due to its role in the cannabis industry. But rather than growing cannabis, KushCo works in the ancillary market, providing everything from packaging to vaporizer products and marketing services. Investors have shown a lot of bullish sentiment for KushCo given that it has exposure to cannabis without being a pure-play pot stock. And as Biden gets ready to take office, investors believe that the U.S. could become a much friendlier place for marijuana. This notion would have obvious positive effects on companies in this arena. As a result of this bullish sentiment, shares of pot stocks like KSHB have been pushing higher in recent trading sessions.

At $1.36 per share as of January 15th, KSHB stock is still relatively low-priced compared to some of the market leaders. Furthermore, since the end of September, shares of the company’s stock are up by over 215%. But, there's no doubting the impact of the upcoming presidency on cannabis.

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What’s more, is that the company appears optimistic on 2021. In its most recent earnings call, CEO Nicholas Kovacevich, said, “If we remain completely flat for the next eight months, we would be generating at least $120 million for all of fiscal 2021. For that reason, we are increasing our full fiscal year revenue guidance to be between $130 million and $160 million up from the $120 million to $150 million range we had previously disclosed.”

Will Penny Stocks Remain Hot Next Week?

The increasing momentum behind stocks under $5 is undeniable. Last week, we saw the list of most active stocks, in general, include more than just a handful of penny stocks. If you look at the broader NASDAQ and NYSE, on Friday, 7 out of the top 10 most active stocks on Friday were ones trading below $5. Additionally, when it came to the 100 most active NYSE and NASDAQ penny stocks on Friday, we saw roughly 1/3 of those as stocks under $5. With major benchmark ETF’s like the Russell 2000 Small Cap (IWM) continuing to trade near all-time highs, penny stocks are likely to be in focus this coming week.