Many stocks, including some penny stocks, soared on news of President-elect Biden’s victory back in November. But, the party may not be over just yet. The strongest names in the cannabis, electric vehicle and solar spaces have seen epic moves since Nov. 3. Yet, for some smaller, lesser-known names, things may still be just getting warmed up.
How so? For starters, while pot stocks have seen a big rally as of late, many remain far below their 2019 price levels. As the new administration, and the Democrat-controlled Congress, push for a liberalization of America’s marijuana laws, more upside could be in the cards. Admittedly, with EV stocks, the ship may have already sailed. With the bubble propping this sector higher getting bubblier, many smaller electric vehicle plays have moved out of “penny stock status.”
But, with EV-adjacent stocks, like lithium suppliers, the story may be different. Investors have only started to dive into such plays. Finally, with solar stocks, again, the major names have posted epic gains in the past two months. However, there are scores of early stage names with plenty of room to run. Further news regarding President-elect Biden’s $2 trillion dollar clean energy platform could send this sector to even greater highs.
So, which penny stocks should you consider, ahead of the new President’s inauguration? These seven come to mind:
- Charlotte’s Web Holdings (OTCMKTS:CWBHF)
- Galaxy Resources Limited (OTCMKTS:GALXF)
- Gevo Inc (NASDAQ:GEVO)
- Hexo (NYSE:HEXO)
- OrganiGram Holdings (NASDAQ:OGI)
- Platinum Group Metals (NYSEAMERICAN:PLG)
- Sundial Growers (NASDAQ:SNDL)
Penny Stocks to Consider: Charlotte’s Web Holdings (CWBHF)
Source: Kevin McGovern / Shutterstock.com
The recent election results bode well for many industries. But, it may be a shot-in-the-arm for the budding cannabis sector. Recreational/medicinal use of marijuana is legal in many U.S. states. But, on the federal level, it remains a controlled substance.
Yet, with the Democratic party in full control of the U.S. federal government, some big changes could be happening in the next few years. How does this relate to CWBHF stock, which admittedly is more of a play on CBD rather than full-on cannabis?
CBD is already available for legal use in the United States. But, as InvestorPlace’s Tom Taulli discussed Dec. 7, the incoming administration could further loosen CBD regulations. Yes, this won’t be as a big of a game-changer for this stock as full legalization could be for recreational pot plays like Hexo (more below). But, it would be a positive. Shares sold off due to the novel coronavirus pandemic, and so far have only partially recovered.
Those looking for high-risk, high-return pot legalization plays should look elsewhere. Yet, this remains a stock that could see a boost during the Biden years.
Galaxy Resources (GALXF)
A Biden victory is good news for many sectors. But, it has had the most impact on EV stocks. Investors are banking on the Biden administration accelerating the shift to electric vehicles. As a result, the sector has already produced tremendous gains for those who bought in before election day. And, it’s not only electric vehicle makers that have benefited from the “Biden boost.” Adjacent sectors have benefited as well. That brings us to GALXF stock.
Galaxy Resources extracts lithium concentrate. With lithium a key material used in EV batteries, shares in this small basic materials company have soared from around $1 per share, up to around $2 per share. But, things could just be getting warmed up.
As the electrification of vehicles continues, lithium demand is set to rise. In prior years, the lithium industry got ahead of itself. Prices tumbled, as supply outpaced demand due to slower-than-expected EV battery growth. But now, things are back in the lithium mining industry’s favor.
The Biden years could see demand for EVs in America continue to climb. Coupled with the accelerated adoption of EVs in China and Europe, prospects look very bright for small lithium mining plays like Galaxy Resources stock.
Gevo Inc (GEVO)
At $6 per share, GEVO stock has just broken out of penny stock territory. But, while it’s no longer under $5 per share, this bio-fuel play may have more room to run from here.
Why? While it’s up 262% in the past month, and up more than 1,687% in the past six months, Biden’s victory isn’t the only thing driving investor interest. As our Louis Navellier discussed back in December, the company’s deal with commodities giant Trafigura was its biggest game-changer in 2020.
Agreeing to supply 25 million gallons of bio-fuels per year, this supply deal could produce billions in revenue for this small company in the coming years. But, that’s not all! The company’s recent announcement on its “Net-Zero Projects” has spurred even more interest in this stock.
Granted, with its parabolic moves as of late, it may be best to be cautious here. But, with Biden pushing hard for a zero-carbon future, further upside could be in the cards for GEVO stock in the coming years.
Boosted by both Biden’s victory, and the “blue wave” Senate election results from Georgia, investors have climbed back into pot stock Hexo. Given a Democrat-controlled U.S. government paves the way for full-on legalization, that’s no surprise.
But, even after the 71% rally in HEXO stock in the past month, shares could continue climbing back towards their 2019 price levels. Marijuana reform may not be the most urgent political issue. And, based on statements from the President-elect and Vice-President-elect, decriminalization rather than legalization seemed to be what was the greater concern.
That being said, more positive news is likely on the horizon. Congress already has the MORE Act and STATES Act. We could see either (or both) bill get fast-tracked, and signed into law, sooner rather than later.
Yet, legalization isn’t the only catalyst on the table. Improvements with the company’s infused beverage business could help move the needle as well. As the Motley Fool’s David Jagielski discussed, it has its work cut out for it. But, if the company delivers better-than-expected results in 2021, we could see the shares continue to move higher. Even if U.S. legalization fails to come about this year.
OrganiGram Holdings (OGI)
Source: Yarygin / Shutterstock.com
As with the other pot stocks, OGI stock has rallied thanks to the “blue wave” catalyst. But, in a much tougher spot than stronger cannabis plays like Canopy Growth (NASDAQ:CGC), it’s going to take quite a bit to move the needle further for this stock, which is firmly within penny stock territory.
One of the many pot stocks with precarious financials, OrganiGram is trying to pivot its business towards the higher-margin branded recreational market. This could help pare down its losses. And possibly, bring it to the point of profitability.
Missing earnings by a wide margin, it’s clear its turnaround remains a work-in-progress. Its remains questionable whether it can get its house in order over the next year.
But, with the company’s announced $47 million capital raise, it has plenty of dry power to fund its turnaround. Uncertainty continues to weigh down on shares as well. As a result, any sort of improvement could produce outsized returns for OGI stock. As a high-risk/high-return play with potential Biden-related tailwinds, there may be opportunity here at today’s prices.
Platinum Group Metals (PLG)
Like with Galaxy Resources, PLG stock is another indirect play on the rise of electric vehicles. But this time, the focus is on palladium and platinum, both used in the production of EV batteries.
With its interest in Lion Battery Technologies, the company offers indirect exposure the EV megatrend. This joint venture with Anglo American (OTCMKTS:AAUKF) seeks to seize the opportunity, and promote the sale of both palladium and platinum to the EV battery market.
Thanks to enthusiasm for all things EV, this small mining company has attracted significant investor interest. Shares have soared over 204% in the past six months. But, after this epic run, could this stock produce another round of solid returns? It’s possible. As Biden makes progress on his green agenda, further gains could be in the cards for this under-the-radar name.
Granted, keep in mind that shares face big downside risk. It’s a matter of “when,” not “if,” the current “EV Bubble” pops. Tread carefully, but consider Platinum Group Metals another solid EV-related basic materials play.
Sundial Growers (SNDL)
First seeing this as a pot stock to sell, I now have a more cautiously bullish view on SNDL stock. Basically, my take on this struggling Canadian pot stock is that it’s an option on the future of legalized marijuana. Any progress on U.S. legalization in the near-term could produce gains far above potential losses.
Shares saw a small boost from the Jan. 5 Georgia election results. But, if we see immediate progress with the MORE and STATES Acts, speculators could bid this up to price far above where shares trade today.
However, there’s another factor that could boost shares in the near-term. Better-than-expected quarterly results could also fuel an outsized rally. Speculators could take what really amounts to small potatoes news, and run with it. With this in mind, risk/return may be in your favor at today’s prices.
Bear in mind that this isn’t a stock for everybody. Very volatile, shares could crater if these near-term catalysts fail to arrive. But, among the names listed here, SNDL stock is the one that could see the most immediate boost from Biden entering the Oval Office.
On the date of publication, Thomas Niel did not (either directly or indirectly) hold any positions in the securities mentioned in this article.
Thomas Niel, contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.
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