Want to jump straight to the best? Most of our users prefer Interactive Brokers for stock trading.
The most important innovation of the 1990s was the internet — today, it would be a vaccine for COVID-19. If these times have anything to say about it, the next Microsoft is coming from the biotech sector. Investors are moving in looking for profits, even putting companies without products on the map.
Companies like Novavax (NASDAQ: NVAX), Co-Diagnostics (NASDAQ: CODX) and Inovio (NASDAQ: INO) have capitalized on media attention surrounding their clinical trials and PR statements about a coronavirus vaccine. Plus, pharmaceutical firms like Moderna (NASDAQ: MRNA), Pfizer (NYSE: PFE) and Johnson & Johnson (NYSE: JNJ) have capitalized on their COVID-19 vaccines and related technology. While these are not penny stocks, they show the massive potential in the biotech industry, and larger companies often inspire smaller firms to grow quickly, IPO and raise more funding. Does all of the new research and development (R&D) money mean new investment opportunities, or are we in the middle of a vaccine bubble?
Now that you have a real-time update, let’s give some context to the industry that should help to inform your investment process.
Overview: Biotech Penny Stocks
Modern biotechnology began in 1973 when scientists used recombination to genetically engineer an antibiotic-resistant strain of Escherichia coli bacteria. This began a revolution in molecule production that culminated in the founding of Genentech, the first publicly-owned biotech company, in 1976. Like many biotech startups today, Genentech started as a research initiative without any marketable products. However, it was able to produce a human-based form of insulin that dramatically increased the effectiveness of the drug in treatments.
The founders of Genentech started with an investment of $1,729. In 1980, they went public, raising $35 million. In 2009, Roche bought Genentech for $46.3 billion.
Investors have seriously recognized biotechnology as a distinct market sector since 1993. The Biotechnology Innovation Organization (BIO) was formed that year and now stands as the largest biotech trade organization in the world. BIO has spent millions lobbying the U.S. for small business inclusivity and intellectual property rights. Many of the issues they address directly affect small-cap and penny stocks, allowing more room for startups to perform speculative R&D and retain the fruits of their study.
The history of biotech is based around building something from nothing and giving the little guy a chance to change the world. This is the perfect space for speculative investors who want to hit stock trading home runs.
Penny stocks are notoriously volatile, and so is the biotech industry. Put the two together and you have a recipe for headlines. But if you’re looking for an industry of possibilities, this is the one to be in.
Best Online Brokers for Biotech Penny Stock
You will need a trading platform with lightning-fast execution, real-time news feeds and other features to compete in the biotech penny stock market. Compare the feature sets of the online brokers below to get an idea of the best choice for you.
Webull, founded in 2017, is a mobile app-based brokerage that features commission-free stock and exchange-traded fund (ETF) trading. It’s regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Webull offers active traders technical indicators, economic calendars, ratings from research agencies, margin trading and short-selling. Webull’s trading platform is designed for intermediate and experienced traders, although beginning traders can also benefit.
Webull is widely considered one of the best Robinhood alternatives.
- Active traders
- Intermediate traders
- Advanced traders
- No account maintenance fees or software platform fees
- No charges to open and maintain an account
- Intuitive trading platform with technical and fundamental analysis tools
- Does not support trading in mutual funds, bonds or OTC stocks
SoFi’s mission is simple: to help reach clients like you reach their financial independence and realize their ambitions. SoFi knows that this independence comes from making decisions that help your money start to work for you in the long run. The brand helps individuals make these decisions through personal financial products such as personal loans, student loans and automated and active investing.
The brand additionally provides in-person experiences such as educational and networking events, personalized guidance from experienced financial planners and one-on-one advising with professional career coaches. SoFi’s services have been highlighted in outlets such as Forbes, Medium, and CNBC’s Make It.
- IPO Investing
- Mobile Investing
- U.S.-based customer service
- Highly-rated mobile app for iPhone and Android
- Only available in the U.S.
Moomoo is a commission-free mobile trading app available on Apple, Google and Windows devices. A subsidiary of Futu Holdings Ltd., it’s backed by venture capital affiliates of Matrix, Sequoia, and Tencent (NASDAQ: FUTU). Securities offered by Futu Inc., regulated by the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA).
Moomoo is another great alternative for Robinhood. This is an outstanding trading platform if you want to dive deep into smart trading. It offers impressive trading tools and opportunities for both new and advanced traders, including advanced charting, pre and post-market trading, international trading, research and analysis tools, and most popular of all, free Level 2 quotes.
Get started right away by downloading Moomoo to your phone, tablet or another mobile device.
- Cost-conscious traders
- Active and Advanced traders
- Over 8,000 different stocks that can be sold short
- Access trading and quotes in pre-market (4 a.m. to 9:30 a.m. ET) and post-market hours (4 p.m. to 8 p.m. ET)
- No minimum deposit to open an account.
- No chat support
eToro is a broker that offers access to over 25 of the world’s most popular cryptocurrencies, forex and over 1600 stocks. They have a few unique education and useability tools. Traders can begin buying and selling in as little as 10 minutes.
eToro’s unique CopyTrader feature allows new investors to “copy” the buy and sell orders of professional investors, while the company’s eToro Club feature provides investors with a range of additional education tools and resources.
- Traders looking for an easy-to-use platform
- Traders who want to practice their trades using a virtual account before entering the market
- Simple platform that is easy to master
- CopyTrader feature that allows new traders to copy the same strategies used by professionals
- Virtual dummy account that gives you $100,000 to practice trades
- High non-trading fees
E*TRADE is an online discount trading house that offers brokerage and banking services to individuals and businesses. One of the first brokers to embrace online trading, E*TRADE not only survived both the dot-com bubble and Recession — it thrived. You can choose from two different platforms (one basic, one advanced). E*TRADE is a suitable broker for traders of most skill levels, whether you want to buy mutual funds and hold them for decades or dabble in options swing trading. E*TRADE offers a library of research and education materials to help you out.
- Active traders
- Derivatives traders
- Retirement savers
- Sophisticated trading platforms
- Wide range of tradable assets
- Exceptional customer service
- Limited currency trading
- Higher margin rates than competitors
- No paper trading on its standard platform
This latest groundbreaking technology is IBKR GlobalAnalyst, a new trading tool that helps investors compare the rate of PEG or price-earnings growth valuations and provide more immediate and comprehensive financial metrics of stocks, globally.
Recognizing that stock selection can be challenging for investors to compare the valuations of domestic and international stocks, Interactive Brokers created GlobalAnalyst to offer investors a simple, yet powerful tool to easily evaluate investment opportunities around the world.
Using GlobalAnalyst, investors can search for stocks by region, country, industry, market capitalization and currency to uncover undervalued stocks worldwide. The resulting table displays the current market and financial metrics, including the PEG Ratio. The PEG Ratio is the PE ratio divided by the three-year compound earnings growth rate, and smaller PEG Ratios typically indicate undervalued companies.
- Price earnings growth valuations
- Easily evaluate investment opportunities
Finding the Next Amazon
As you wade through biotech penny stocks, you are sure to find rampant speculation over COVID-19 treatments. Companies know they can quickly boost stock prices with little more than a press release. If you’re fast on the draw and your account is big enough, you might be able to scalp a few day trading profits from these gimmicks.
If you want to find the next Amazon, you have to do a bit more digging. Not every company is a winner — in fact, the vast majority of them are not. But, our understanding of biology and technology is moving forward in leaps and bounds. It’s definitely an exciting time for an industry that combines these 2 things. Look past the coronavirus headlines into a company’s management team and research process for the best results.
As you look past the COVID-19 headlines, remember that companies can move outside their COVID-19 vaccines or treatments to grow in other areas. In fact, some smaller companies like had quite a lot of potential before the COVID-19 pandemic, and they can capitalize on that potential as COVID subsides.
Continue reading: BEST PHARMACEUTICAL STOCKS
Benzinga's #1 Breakout Stock Every Month
Looking for stocks that are about to breakout for gains of 10%, 15%, even 20% potentially or more? The only problem is finding these stocks takes hours per day. Fortunately, Benzinga's Breakout Opportunity Newsletter that could potentially break out each and every month. You can today with this special offer: