Biotech Penny Stocks to Watch: Key Takeaways
- Biotechs are one of the hottest sectors year after year…
- But the potential reward comes with risk — every biotech spiker is a threat to dilute!
- Don’t hold these stocks, but keep them on watch…
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Biotech stocks have had one of the best runs in recent memory. Now that the industry has cooled down, I’m getting back to basics. That means a return to my favorite pattern — the panic dip buy.
Table of Contents
- 1 What Are Biotech Penny Stocks?
- 2 Top Biotech Penny Stocks to Watch
- 2.1 Biotech Penny Stock to Watch #1: Enzolytics, Inc. (OTCPK: ENZC) — The Oldie-But-Goodie OTC Runner Biotech Penny Stock
- 2.2 Biotech Penny Stock to Watch #2: China SXT Pharmaceuticals Inc. (NASDAQ: SXTC) — The Chinese Biotech Penny Stock Sympathy Play
- 2.3 Biotech Penny Stock to Watch #3: ContraFect Corporation (NASDAQ: CFRX) — The Biotech Penny Stock Spiker on Insane Volume
- 2.4 Biotech Penny Stock to Watch #4: Evelo Biosciences, Inc. (NASDAQ: EVLO) — The True Penny Stock Spiker on Insane Volume
- 2.5 Biotech Penny Stock to Watch #5: Elevation Oncology Inc. (NASDAQ: ELEV) — The Multi-Week Biotech Penny Stock Runner
- 3 Get the List of Penny Stocks I’m Watching Delivered to Your Inbox
- 4 Biotech Penny Stocks: The Bottom Line
What Are Biotech Penny Stocks?
Biotech penny stocks are stocks in pharmaceutical companies with drugs in development. Recent biotech spikers have come from the following areas:
- Companies working on COVID-19 vaccines and tests
- Companies working in pandemic relief and control
- Firms researching cancer medicines and immuno-oncology drugs
- Companies developing medicines for rare disorders
These companies are usually desperate for cash from investors. They need it to send their products through multiple phases of testing and stages of trials.
That’s their focus in the markets — to keep stock prices high by selling their progress. When their share prices grow enough, they’ll dilute to cash in, leaving bag holders with big losses…
They’re known to be extremely volatile. One minute they’re flying high on positive headlines — the next they’re down due to bad trial results, side effects on patients, FDA approval issues, or stock dilution.
That’s why I ride the hype but never believe it.
Penny stocks are some of the sketchiest stocks in the market. They suck in newbies with their upside, and these newbies start to believe as share value increases…
There are ways to profit off biotech stocks — as long as you know how the niche works. I learned by making my own mistakes.
I started trading in high school. By the time I graduated college, I had grown my small account from $12,415 to roughly $2 million. I also made some world-class blunders. Read all about it in my best-selling no-cost book, “An American Hedge Fund.”
I’ve now made over $7.4 million in profits. So far, I’ve taught 31 millionaire students how to trade with a small account in my Trading Challenge.
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Top Biotech Penny Stocks to Watch
My biotech stock picks for May 2023 are:
- (OTCPK: ENZC) — Enzolytics, Inc. — The Oldie-But-Goodie OTC Runner Biotech Penny Stock
- (NASDAQ: SXTC) — China SXT Pharmaceuticals Inc. — The Chinese Biotech Penny Stock Sympathy Play
- (NASDAQ: CFRX) — ContraFect Corporation — The Biotech Penny Stock Spiker on Insane Volume
- (NASDAQ: EVLO) — Evelo Biosciences, Inc. — The True Penny Stock Spiker on Insane Volume
- (NASDAQ: ELEV) — Elevation Oncology Inc. — The Multi-Week Biotech Penny Stock Runner
Disclaimer: this is a watchlist, not a forecast. There’s no guarantee these stocks will offer a trading opportunity or help you hit your trading targets. Keep them on your watchlist, but only trade when you see YOUR best setup.
When there are no truly great trades, use your time to study.
- New to penny stocks? Start with my FREE online guide here.
- Learn how to build your own stock watchlist here.
- Brush up on your pattern knowledge here.
Now, let’s get to the top biotech penny stocks to watch this month.
Biotech Penny Stock to Watch #1: Enzolytics, Inc. (OTCPK: ENZC) — The Oldie-But-Goodie OTC Runner Biotech Penny Stock
My first biotech penny stock pick is Enzolytics, Inc. (OTCPK: ENZC).
This ticker is proof that former runners can run again.
We don’t have strong biotech runners 24/7/365 but give it a few months or years and they always seem to come back.
With that said, this is not a buy-and-hold play.
I’ve managed to squeeze $25,538 out of this stock over my career (click the link to see my individual trades). But ENZC — like 99% of penny stocks — always comes crashing back down. Its spikes are unsustainable.
I profit by making quick day trades and capitalizing on extreme volatility.
ENZC’s 1,700% explosion in early 2021 is the kind of volatility I’m talking about.
Over two years later, low and behold … the price spiked 90% to start May 2023 with a bang.
It published press release after press release this year, and the hot sector finally provided the environment it needed to really get going.
Prices are consolidating right now.
I’m hoping it breaks 52-week highs at $0.10.
Biotech Penny Stock to Watch #2: China SXT Pharmaceuticals Inc. (NASDAQ: SXTC) — The Chinese Biotech Penny Stock Sympathy Play
My second biotech penny stock pick is China SXT Pharmaceuticals Inc. (NASDAQ: SXTC).
This is a huge double whammy.
As I’ve mentioned, the biotech sector is hot right now. But there’s another sector I’m watching; Chinese stocks.
Let me explain …
Sometimes in the market, there’s a big runner that creates copycat spikes that we in the biz call ‘sympathy plays’.
During the last two trading days in April, the Chinese stock TOP Financial Group Limited (NASDAQ: TOP) launched over 3,700%. Now THAT is a big spike.
Since that move, we’ve seen a bunch of other Chinese stocks successfully replicate the volatility. Usually, we don’t see a ticker spike higher than the sector leader … but anything under 3,700% leaves us a lot of wiggle room.
SXTC has the benefit of two hot sectors.
It’s a biotech stock and it’s headquartered in Taizhou, China.
Prices spiked right after TOP started running. I think there’s a chance it pushes even higher.
Biotech Penny Stock to Watch #3: ContraFect Corporation (NASDAQ: CFRX) — The Biotech Penny Stock Spiker on Insane Volume
My third biotech penny stock pick is ContraFect Corporation (NASDAQ: CFRX).
Trading volume is really important.
A high trading volume means there are lots of shares moving in and out. It’s a sign of good liquidity which translates to tradeability.
If no one wants to buy our shares back, we’re stuck in a volatile stock … and that’s never good.
High volume is also a sign that there are a lot of eyes on the stock. And that popularity could help push the price higher.
It’s why I trade tickers that have already traded at least 1 million shares on the day.
In mid-April, CFRX launched over 330% and traded over 120 million shares in one day …
So we know it can spike and that enough people are willing to trade it. The price is consolidating right now.
I think it’s only a matter of time before we see another spike.
Biotech Penny Stock to Watch #4: Evelo Biosciences, Inc. (NASDAQ: EVLO) — The True Penny Stock Spiker on Insane Volume
My fourth biotech penny stock pick is Evelo Biosciences, Inc. (NASDAQ: EVLO).
It’s up in the high-volume club with CFRX.
On April 27 the price spiked over 200% and it traded over 180 million shares. Prices dipped a bit since then, but I’m watching for the rebound.
It’s also a former runner …
There’s no guarantee that it will run again. But if you’re looking for more tickers to add to your watchlist, that’s a great place to start.
For example, EVLO spiked more than 280% over multiple days to start 2021.
Now it looks prime to repeat that volatility.
Biotech Penny Stock to Watch #5: Elevation Oncology Inc. (NASDAQ: ELEV) — The Multi-Week Biotech Penny Stock Runner
My fifth biotech penny stock pick is Elevation Oncology Inc. (NASDAQ: ELEV).
A characteristic of a solid spiker is its ability to follow support and resistance lines.
ELEV is on a multi-week run and we can see obvious signs of support and resistance where it consolidated and then spiked higher.
If you’re unaware of this concept, watch my video below … this is a very basic tool that all traders use.
I like to trade the intraday price action. That way I don’t have to wait days and weeks for the price to break out.
But identifying these tendencies on a daily chart bodes well for intraday chart structures.
It means the price is more likely to follow my favorite patterns.
All I’ve got to do is wait for it to set up.
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Biotech Penny Stocks: The Bottom Line
Biotech penny stocks are some of the sketchiest stocks in the market. They can have huge price swings on positive or negative news. But if you’re prepared to take advantage of the volatility, these stocks can offer great trading opportunities…
I teach students how to take advantage of volatile penny stock moves — and all the other things — in my Trading Challenge.
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What are your top biotech penny stocks to watch? Let me know in the comments … I love hearing from my readers!
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