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If you are looking for a speculative growth play with tentacles in all of pop culture’s leading industries, Applied DNA Sciences may be for you. The young company has partnerships and R&D projects in cannabis, blockchain and biomedicine.
How to Buy Applied DNA Sciences (NASDAQ: APDN) Stock
Although there are many biotech stocks under $20, some investors still consider Applied DNA Sciences a bargain at its current price. Let’s take a look at what you need to know to buy this stock.
- Pick a Brokerage
You might not expect a company with its hands in so much to be on your stocks under $5 list, but that’s where APDN spent the latter part of 2019 and the early part of 2020. Fortunately for traders, the stock popped above $5 over the last few months, creating leverage for it to be included in mainstream brokerages.
Online brokers charge higher commissions to facilitate trades on penny stocks. Once a stock shows that it can stay above that range with good liquidity (ease of trade), it becomes less of a hassle for brokers to locate and trade. Right now, you should be able to find APDN traded on multiple brokers at no commission.
Consider a broker that will allow free trades on Applied DNA Sciences regardless of its movement into penny stock territory. The stock is in a volatile industry but it has proven that it can maintain a level of liquidity that reputable brokers can easily access.
You don’t have to worry about trading options on APDN; the company does not trade on the options exchange. As a result, no broker will have an options chain for the company.
- Choose Limit Price
Because of the volatility of the biomedical industry, you should always buy shares of APDN with a limit order. Limit orders allow you to set the highest price you will consider buying.
Your other choice, the market order, leaves it up to the broker to fill your order at the market’s first available price. Market orders sometimes fill more quickly, but they may contain slippage. Slippage occurs when your order fills at a price that is different from the one you intended. Depending on how large your order is, slippage can cost you quite a bit of money.
When you set your limit price, you will see APDN’s current bid-ask spread in the execution window. The ask is the buy price that market makers are forced to execute at any given time. If you put in a buy limit order at the ask price and execute instantly, that order will be filled. The bid is the highest price an investor will pay for a share at any given time.
In volatile markets, the bid-ask spread may be wider. Trades become more difficult to execute at a good price. Novice investors may want to wait until the market calms down and the spread condenses before making a trade.
You are under no obligation to choose a limit price between the bid-ask spread. Buy limit orders that are well below the bid price may not be executed immediately, but you should choose a price that you’re comfortable with based on your research and budget.
- Decide How Many Shares
After choosing your limit price, choose the number of APDN shares you will purchase. This number can be as high as your budget affords. Make sure to choose a broker that allows you to review your order before execution. Once you send it, your broker is not responsible if you put in an extra 0 and bought 10,000 shares instead of 1,000.
- Watch Stock Price
Your broker will have stock charts where you can watch the price movement of your Applied Sciences DNA stock. Your broker will also inform you if those price quotes are delayed or real time. Most brokers default to delayed quotes. You must request real time quotes by asserting your status as a professional or nonprofessional user. Nonprofessional users can access real time quotes for free.
Reputable brokers will also allow you to watch premarket movers before the market opens each day. You can use these charts to get a handle on how APDN might perform that day and make a decision about whether to buy or hold. Keep in mind that the movement of the stock in premarket hours may not match its movement in regular hours. The premarket tends to be more volatile because less traders are participating.
Always have an exit strategy before executing a buy on your APDN stock. The volatility of the biotech market can cause you to lose gains very quickly if you are not careful.
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Applied DNA Sciences Stock History
Applied DNA Sciences was founded in 1983 in Stony Brook, New York, under the name Datalink Systems. Datalink became Applied DNA Sciences Inc. in 2002 to more closely match its brand with its more successful initiatives. To date, some of the company’s most promising work is closely associated with DNA diagnostics. These initiatives include SigNature, molecular tags for use in source compliance and brand protection programs; SmartDNA, a property and auto asset marking solution; and Beacon optical markers, a high value asset screening tool.
The company’s technology is currently used in the music, fashion, electronics and beverage industries to help identify counterfeits. APDN’s products have been vetted by the Defense Logistics Agency of the U.S. Department of Defense, which found that APDN-tagging technology was successful in identifying fake microchips 100% of the time.
Pros to Buying Applied DNA Sciences Stock
Here are a few important reasons you may want to consider investing in Applied DNA Sciences:
- Diversified commercial utility: APDN products have penetrated the industries of cannabis and blockchain as well as those mentioned above. Partnerships and consumers in such a wide variety of businesses certainly speak to the utility of the products APDN is developing.
- Branding: APDN is becoming singularly associated with tagging, DNA authentication and supply chain technologies for luxury industries. It isn’t every day that you run across a biotech company that understands the importance of branding itself.
- Regulatory goodwill: APDN seems to have a positive relationship with the U.S. Food and Drug Administration (FDA) and other regulators. Staying in the good graces of regulators is essential to keeping product testing and releases on schedule.
Cons to Buying Applied DNA Sciences Stock
For all of the potential upside, there is an argument against buying APDN stock:
- Low analyst coverage: Compared to its more established peers in the biotech industry, Applied DNA Sciences has not attracted the attention of major analysts. This may put a limit on its growth or signal that institutional investors are not confident in the company’s ability to fulfill its promise.
- High cash burn rate: Applied DNA Sciences never keeps a large amount of cash on hand. If the company runs into a cash flow hiccup and cannot call on investors, it may throw its research and development efforts off schedule.
- Too much PR: A big reason that APDN is always in the news is that it puts itself there. Some investors criticize the company saying that it publicizes contracts and initiatives that have not produced any tangible results.
Apply Your DNA to the Science of the Market
APDN is currently one of the most exciting stocks under $10 to watch. If you are looking for a promising company in growth industries, Applied DNA Sciences should certainly be on your list. High growth stocks carry a great deal of risk, so be sure to separate news from PR when assessing the company’s potential.