I know we’ve discussed epicenter penny stocks before. These are the names that were hit the hardest during the early days of the pandemic. They’re in industries that Fundstrat’s Tom Lee has said could benefit the most regarding economies reopening. But what if we take this idea a bit further?
I’m not talking about making an entirely new thesis but rather building upon Lee’s. I’ll ask a simple question, “What will be in demand when the pandemic ‘ends’?” In this sense, while the coronavirus may never go away, someday we will have a bit more normalcy. Stores may not be fully open. But considering states are opening movie theaters, will this be the key to unlock an end to strict social distancing? Furthermore, we’ve already begun seeing some states do away with mask mandates and other pandemic-era restrictions.
All of this could point to a new opportunity for certain penny stocks in several industries. Taking a 30,000 ft approach, a reopened economy would see more travel and potentially more retail spending. We’ve also got to think about the medical ramifications of these lockdown and social distancing measures as a whole. How will people reacclimate, or can they reacclimate to life as it were?
Sometimes taking a step back and analyzing pre- and post-pandemic conditions help find early opportunities. Just a few examples during lockdowns included the epic rises in Zoom (NASDAQ: ZM), Teledoc (NYSE: TDOC), and other stay-at-home stocks. For the novice trader, they likely heard about these stocks after they’d already made significant rallies in the market. As new vaccines are distributed, it may not be a bad idea to start thinking ahead a bit.Reopening Penny Stocks To Watch
- Havn Life Sciences (OTC: HAVLF)
- Kosmos Energy Ltd. (NYSE: KOS)
- Ring Energy Inc. (NYSE: REI)
- Ambev SA (NYSE: ABEV)
What do psychedelic stocks or “magic mushroom penny stocks” have to do with reopening? My last point above was regarding how people will reacclimate to “normal” life, and the fact of the matter is, many will likely have a hard time. Psychedelic stocks could take a more lead role when it comes to mental health. Thanks to recent advancements in science, clinical research is being conducted to study the potential benefits of psychedelic-assisted treatment.
Havn Life Sciences has become one of the names recently included in the new Psychedelic ETF (PSYK). The company is chaired by early cannabis founding-father Vic Neufeld who’s been credited with building the Aphria Brand in becoming one of the top names in Canadian cannabis during the early days of legalization.
Through Havn Labs, the company aims to standardize the supply of psychedelics to support new therapies, and it has already received its first Health Canada license. Since Health Canada has already granted it a Section 56 exemption, HAVN Labs will be able to develop formulations & conduct R&D before its Dealer status. Furthermore, the company’s recent deal with strategic partner neuroscience and technology leader, HealthTech Connex Inc., could make Havn the preferred psychedelic supply partner for the future clinical trials launched by HealthTech Connex’s Centre for Neurology Studies.
The British Columbia-based organization uses technology, clinics, and clinical trials to translate neuroscience innovations into improved care for various neurological conditions. This move also allows Havn’s own researchers to take advantage of HealthTech Connex’s neuroscientific and technological expertise. Obviously, as we see the neurologic state of the world react to reopening, alternative medicines via psychedelics could become a larger point of interest.Energy Penny Stocks To Watch: Kosmos Energy Ltd. (KOS) & Ring Energy Inc. (REI)
There will also likely be a need for more fuel. This isn’t just a result of more infrastructure spending but also basic travel. We could go for very few people traveling by plane, train, boat, and automobile to millions if restrictions are eased on a grand scale. While there’s a clear push for things like renewable energy and fossil fuel alternatives, the infrastructure isn’t there yet. In turn, we could see a reliance on fossil fuels, at least in the near-term.
Furthermore, based on earlier production cuts, will there be a supply/demand imbalance to consider? While time will tell, companies like Kosmos Energy and Ring Energy have benefited from the surge in energy stocks. Since election day, shares of both oil & gas penny stocks have surged. For the most part, sector sentiment helped drive momentum in these names. While the broader markets have sold off, both REI and KOS stocks have rallied.
Looking ahead, there are a few things to keep in mind. For REI, in particular, the company’s upcoming earnings on the 16th could reveal certain performance metrics (or lack thereof) for the last quarter. On a larger scale, OPEC+ should be monitored closely. The latest from the group suggests oil output will remain unchanged for the time being. Should this change, there could be volatility to take into consideration.Ambev SA (ABEV)
While it isn’t likely to be impacted by a U.S. economic reopening, Ambev could be something to watch in consideration of a global reopening initiative. The Latin American arm of Anheuser Busch has pulled an about-face over the last few days. Following the pullback in February after earnings, ABEV stock has bounced as much as 12% in the last 3 sessions. This may not be the massive breakout that other penny stocks have experienced in the past. But, considering the broader markets have dropped considerably over the last 3 sessions, it’s something to point out.
The fact that people drink when they’re happy, sad, celebrating, reminiscing, or “just because” could have alcohol stocks on the radar for some. What’s more, Ambev has expanded on its reach in its role in the digital age. In the company’s latest quarterly update, Ambev explained that “Ambev’s technology platforms were exponentially adopted [Chuí] in 2020. Digital businesses are here to stay, and platforms like Ze Delivery and BEES, our super app, were at the right place in the right time. As for the fourth quarter, we build on the commercial momentum from Q3 to deliver a good finish to the year. More importantly, the success of our commercial strategy in the quarter also positioned us well for 2021.”
Ze is in more than 200 cities in all 27 Brazilian states and, in 2020, delivered 27 million orders with the equivalent of one order per second only in Q4. BEES is designed to provide B2B customers more convenience via 24 hours, 7 days a week order-taking and delivery tracking. According to Ambev, “It aims to be the one-stop-shop solution for the retail, with a transformational opportunity for allowing Ambev to develop a closer and more reliable relationship with our customers’ ecosystem.”Is The “Reopening Trade” Part Of Your 2021 Strategy?
There are many different trends driving stock market momentum. While we see some of the bearish catalysts present a bit of interim pressure, that doesn’t negate that economies are pursuing reopening measures. Taking a few minutes to sit back and look at some of the potential outcomes that could be created in light of a broader effort to unlock doors that were closed in 2020. Also, no matter what, continuing to follow current market trends could play a key role in determining which sectors gain steam sooner than others.