Penny stocks are well-known for their multi-bagger potential. This year, there were few days where we didn’t see at least one 100%+ mover. But with the volatility comes plenty of risks. In the blink of an eye, that massive move higher can turn into a crushing sell-off. For that reason, these cheap stocks aren’t for the timid by any means. However, that doesn’t mean they’re not worth your time!
Penny Stocks TL;DR 30-Second Overview:
Penny stocks tend to produce gains quickly and then fadeDay traders have been attracted to these cheap stocks all year for that reasonDespite the general trend, some penny stock are able to sustain significant gainsThe 5 penny stocks in this article were among the select few that not only experienced explosive moves in 2021 but they also sustained those gainsAmong these stocks, a hypothetical $500 buy at the start of the year could have turned into a massive windfall
The beauty about finding penny stocks to buy is that low prices open up the potential for even the smallest trading accounts. Today, we’ll see what a hypothetical $500 buy at the start of the year looks like today. Yes, that means someone would have had to hold on for dear life through one of the wildest years in stock market history. I think you’ll be surprised by what we found.
Top Penny Stocks To Buy In 2021
Vertex Energy Inc (NASDAQ: VTNR)
You might assume that the companies on this list wouldn’t be penny stocks at this point. But you’d be forgetting that we’re talking about some that started the year at some of the lowest penny stock levels in the market. Vertex Energy is one of these companies. A strong mix of industry momentum thanks to reopening efforts and management working to reach milestones helped give things a jolt in 2021.
As a specialty refiner of alternative feedstocks, mainly used motor oil, the company supplies Group II+ Base Oils to lubricant manufacturers across North America. Following its latest earnings report, analysts at Credit Suisse initiated coverage on the company with an Outperform rating and a $13 price target. Citing a pivot to renewable diesel, Credit Suisse explained that the prospects for early 2022 could be favorable for the company.
VTNR Stock Performance
Despite still trading in penny stock territory, 2021 has been a banner year for VTNR. In fact, at one point, shares had reached highs of $14.32. That’s a night and day difference from where the penny stock kicked things off on January 4th. It opened the year trading at just $0.76, which means that as of the close on December 23, VTNR stock was up 621% YTD. That hypothetical $500 on January 4 would now be worth around $3,105.
Aehr Test Systems (NASDAQ: AEHR)
The semiconductor space has been red hot this year, and the last few months have been some of the best for sector stocks. Big dogs like Nvidia and AMD have both surged to fresh all-time highs this quarter. That momentum has worked its way through the industry, which also sparked some bullish moves by smaller companies.
Aehr supplies semiconductor test and reliability equipment to clients, including semiconductor manufacturers. Last week, the company received its latest order for test & burn-in systems. Specifically, Aehr’s FOX-NP platform will support the characterization and product qualification of photonics-based devices. The devices could be things like laser diodes, solar and photovoltaic cells, displays, etc.
Gayn Erickson, President and CEO of Aehr Test Systems, explained that the customer is one of the world’s largest semiconductor manufacturers.
“This customer is expected to purchase new sets of WaferPaks to be used with these systems. As the applications and market for silicon photonics-based devices continue to grow, we expect this customer to continue to increase their capacity in the future.”
AEHR Stock Performance
AEHR stock started the year at $2.50. Strong revenue growth and continued expansion through deals like its latest helped bring much more attention to the company this year. At one point, the former penny stock traded as high as $27.09. As of last week’s close, AEHR stock was right around $20.50. That puts the hypothetical $500 position on January 4 at something closer to $3,700 going into year-end.
AMC Entertainment Holdings Inc. (NYSE: AMC)
I’m sure if you’re at least a little familiar with the stock market this year, you’ve heard of AMC Entertainment. Prior to the rise of the Apes, however, it was just another one of the penny stocks to watch. Pandemic lockdowns and an already struggling business model had weighed heavily on AMC stock. However, the stay-at-home trend also acted as one of the biggest catalysts for the famous meme stock.
Retail traders banded together in a demonstration of retaliation against Wall Street fat cats. This ultimately resulted in one of the most epic short squeezes of the year as AMC went on to scream to highs of $72.62, a record for the former penny stock.
AMC Stock Performance
AMC is one of the clearest examples of how certain stocks have staying power by resonating so well with investors. Although shares have significantly retreated from those all-time highs, the year-to-date percentage increase is still impressive. AMC stock began the year trading at $2.20. As of the end of last week, shares were sitting around $28.50. That would put the hypothetical $500 in January at something closer to $5,980. The crazy part is that 1,196% gain isn’t the largest on this list by a long shot.
Lightwave Logic Inc. (NASDAQ: LWLG)
Lightwave Logic has recently come back into the spotlight of retail traders. Levels of high daily volume can be seen on the LWLG stock chart over the last few weeks as it climbed to fresh 52 week highs this month.
Much of the attention has centered around technology platforms. In particular, Lightwave’s electro-optic polymers are used to transmit data faster and use less power compared to other standard-use technologies. Late last quarter, the company and Polariton Technologies demonstrated how quickly this data transfer could happen.
The combo set a world record using Lightwave’s Perkinamine platform and Polariton’s silicon-photonics-based plasmonic racetrack modulator. Dr. Wolfgang Heni, Co-CTO at Polariton, explained that based on the results, he hopes to “revolutionize the future of the internet through adoption of next-generation electro-optic polymer platforms.”
LWLG Stock Performance
Despite a recent pullback for LWLG stock, shares are trading significantly higher than nearly one year ago. At the start of 2021, this former penny stock opened in January at just $0.93. As of last week’s close, LWLG stock was at $16.67. Thanks to the 1,692% year-to-date move, our hypothetical $500 would now be worth around $8,460.
Destination XL Group Inc. (NASDAQ: DXLG)
Rounding out this list of penny stocks is Destination XL Group. Similar to Lightwave, Destination has experienced a dip. Regardless, DXLG stock is still trading much higher than in January. Executing operational strategies and positive growth have helped give this former penny stock a substantial boost in 2021. In its last earnings update, the big and tall clothing retailer even lifted its full-year guidance.
Not only did it beat estimates, but Destination XL also expects to do more than $500 million in sales. That compares to its previous guidance of $490 million on the lower end.
“With our strong balance sheet, we believe we are well-positioned to pursue an aggressive growth strategy. At the end of the third quarter, we were debt-free and had cash on hand of $6.9 million. During the quarter, we entered into a new $125.0 million revolving credit facility, which extends our facility to October 2026 at more favorable rates.”
Harvey Kanter, President and Chief Executive Officer
DXLG Stock Performance
Shares of DXLG stock are trading just outside of the penny stock range. Last week the company’s shares closed at $5.61, but when you compare it to where things began in January, you’ll see much different levels. DXLG opened on January 4th at $0.26, which means the hypothetical $500 back then would be worth around $10,285 right now.
Final Thoughts About Penny Stocks
These are just a handful of penny stocks that turned out to become huge movers in 2021. In our $500 exercise, adding everything up, $2,500 at the start of the year would be worth around $31,530. Does this mean all penny stocks perform like this? No, and many have experienced a more significant percentage move but in a much shorter timeframe. That is why it’s always essential to have a trading strategy in mind, understand how to manage risk, and get educated on how to successfully trade penny stocks for profit.
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