10 Best Penny Stocks to Buy in July 2021

Investing in penny stocks can be perplexing yet fascinating. Some of the large companies today were once penny stocks. On the other side of the spectrum are some penny names that have gone bust and investors have lost all their capital.

That said, with proper due diligence we can identify some good penny stocks that can be multibagger over the long term. However, as a boilerplate caution, penny stocks are more volatile than the broader markets and in many cases they are speculative. It is always advisable to limit your exposure to them and diversify your investments across several penny stocks.

According to the SEC, “The term ‘penny stock’ generally refers to a security issued by a very small company that trades at less than $5 per share.” If the stock price falls below $1, penny stocks have to then consider a reverse stock split in order to meet the minimum listing requirements. Here are the 10 penny stocks that look like good buys in July 2021.

1. Ashford Hospitality (NYSE: AHT)

Ashford Hospitality is a Dallas-based REIT that invests in high-end hotel properties. AHT has brands like Sheraton, Marriott, Crowne Plaza, Hilton, and Hyatt, under its umbrella. Marriot and Hilton are the top two leading contributors to the company’s EBITDA.

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Why AHT looks like a good penny stock to buy in July

AHT has been under pressure as the COVID-19 restrictions took a toll on its earnings. Also, the company converted some preferred shares to common shares. While this would mean lower fixed expense towards the dividend on these preferred shares, it would also mean dilution.

Last month, the company also announced a stock issuance which will further increase the outstanding share count and lead to dilution. The company has a huge debt pile that it will need to refinance sometime in the future.

All said, looking at the pent-up travel demand, AHT looks like a good penny stock to buy now. The company has also announced a reverse stock split which will help it escape its “penny status.” If you want to play the travel recovery story, AHT looks like a good bet.

Technical and fundamental analysis

AHT has fallen below the 50-day SMA (simple moving average) which was a strong support for the stock. Looking at the post-market price action, it looks set to fall below the 100-day and 200-day SMA also. However, the stock is getting near the oversold territory with a 14-day RSI (relative strength index) of 40. RSI values below 30 signal oversold positions while values above 70 indicate overbought positions.

The fall in AHT looks like an opportunity to buy this penny name. It has also joined the Russell 2000 and Russel 3000 index after the two indices went for a major overhaul in June. Inclusion in these indices will help the stock attract inflows from passive funds tracking the index. Currently, AHT trades at an NTM (next-12 months) EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) of around 30x.

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2. Sundial Growers (NYSE: SNDL)

Sundial Growers is a marijuana penny stock. The company was battling for survival in 2020 but thanks to the boost from Reddit traders the stock bounced back in 2021. It capitalized on the surge, like other Reddit stocks, and went overboard with selling shares. In its most recent update, the company said that it has $623 million as cash and cash equivalents which is very healthy. It has another $273 million as investments on the balance sheet. The company has been using the surplus cash to invest in other cannabis companies. These investments will help drive shareholder value in the future.

To be sure, the company’s core cannabis operations haven’t been doing good and it has had to write off inventory worth millions amid sagging sales. However, the worst looks over for SNDL. The company is working to turn around the core cannabis business by focusing on value-add products.

SNDL looks like a penny stock worth betting on

SNDL might also consider a US foray through acquiring a US cannabis company. Federal legalization of marijuana in the US looks on the cards which will help lift sentiments and boost the fortunes of cannabis companies doing business in the country. Currently, most of the adult-use cannabis sales in the US happen outside the legal system.

Analysts expect SNDL to post revenues of $83 million in 2022. The company’s EV is around $900 million after adjusting for the cash and investments. This would mean a 2022 EV-to-sales multiple of around 11x. A possible turnaround in the core business and progress on the investing strategy will help take the stock higher.

SNDL has found strong support at the 50-day SMA but has faced resistance around the 100-day SMA. It trades above the 200-day SMA which looks like a bullish sign. The 14-day RSI is 44 which indicates neither oversold nor overbought positions.

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3. Charlotte’s Web Holdings (OTC: CWBHF)

Looking at the cannabis space only, Charlotte’s Web Holdings looks like another good penny stock to buy in July 2021. The company is into cannabidiol (CBD) products and does not sell either medical or recreational use cannabis. The company is the market leader in CBD products whose market size is expected to rise to $20 billion by 2024.

The company’s recent financial performance hasn’t been great as the COVID-19 pandemic took a toll on its earnings. The company’s revenue growth was flat in 2020 while its net losses swelled to $49 million. Things are expected to get better in 2021 and analysts expect the company’s revenues to rise 26% in the year while its net losses are expected to narrow to $16 million. The company is expected to reach a near break-even in 2022 on the net profit level.

Meanwhile, CWBHF stock looks reasonably priced now with an NTM EV-to-sales multiple of 3.8x. The stock is not looking bullish on the charts though and is trading below the 50-day, 100-day, and 200-day SMA. It is however getting near the oversold territory with a 14-day RSI of 40. CWBHF stock has been weak over the last month and has shed 20% of its value. The crash could be an opportunity to own this penny stock and play the CBD story.

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4. Naked Brands (NYSE: NAKD)

Naked Brands was created in 2018 when Naked Brand Group merged with New Zealand-based Bendon Limited. However, the company has exited the Bendon operations earlier this year to focus on the e-commerce operations and the Frederick’s of Hollywood brand. Like SNDL, it also was targeted by Reddit groups which triggered a short squeeze.

Naked Brands also capitalized on the spike and raised a lot of cash by selling shares. In its most recent update, NAKD said that has $270 million worth of cash and cash equivalents on its balance sheet. The company intends to use the cash to grow the e-commerce operations and also look at strategic acquisitions. Looking at the technicals, NAKD was facing a strong resistance at the 100-day SMA which is currently at $0.77. The stock however found support near the 50-day SMA. It has now fallen slightly below the 50-day SMA which looks a bearish sign.

All said NAKD looks like a good penny stock to buy in July and the bet on the company’s turnaround. The company faces a lot of headwinds including competition from e-commerce giants like Amazon. However, if the management can execute the turnaround strategy and grow the e-commerce business, NAKD could be a potential multibagger.

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5. Zomedica (NYSE: ZOM)

Zomedica is a penny stock from the clinical industry that could be worth betting on. The company is commercializing its Truforma product which is a pet care diagnostic devise. The company forecasts that the market opportunity for companion animal diagnostics is expected to reach $2.8 billion by 2024. The market for pet care is expanding fast and has only received an impetus during the COVID-19 pandemic.

“Our first product, TRUFORMA®, now is on the market and we are building out our direct sales organization to reach our customers; we are working hard with Qorvo Biotechnologies, our technology partner, to complete additional assays to complement the initial three that are currently available to customers,” said Zomedica CEO Robert Cohen in the first quarter 2021 earnings release.

ZOM looks like a good penny stock to buy after the crash

The company was also targeted by Reddit traders and it also skillfully capitalized on the spike and raised cash by selling shares. It now has cash and cash equivalents of over $250 million. The company’s market capitalization is only about $763 million which gives it an EV of $500 million. Truforma is a recurring revenue opportunity for Zomedica and if the company can successfully commercialize the product, we will have a winner on our hands.

ZOM stock has seen some selling pressure and has fallen below the 200-day SMA which was a strong support. It also trades below the 50-day and 100-day SMA which indicates technical bearishness. However, the stock is getting near the oversold territory with a 14-day RSI of 37.9. Overall, ZOM looks like a good penny stock to buy in July and bet on the growing market for animal diagnostics.

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6. Senseonics (NYSE: SENS)

Staying within the clinical industry, Senseonics looks like another good penny stock to buy in July 2021. The company produces the Eversense CGM (continuous glucose monitoring) system which is an implantable device and could revolutionize the diabetic care market. The market for diabetic care is expanding fast. The CGM market is expected to rise at an annual pace of 12.7% between 2020 and 2027 according to Grand View Research. It forecasts the market to reach $10.4 billion by 2027.

The company is in the process of commercializing the Eversense product and forecasts revenue between $12-$15 million for 2021. It has cash and cash equivalents of $178.6 million which is higher than the $110.6 million debt on its balance sheet. The strong balance sheet will help the company invest in growth and spend towards the commercialization efforts.

SENS looks bullish on the charts and trades above the 50-day, 100-day, and 200-day SMA.  It successfully managed to cross above the 50-day SMA which acted as a strong resistance. SENS was also targeted by Reddit traders as retail investors saw value in the stock. Overall, SENS looks like a good stock to buy and bet on the success of its CGM system.

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7. CytoDyn (OTC: CYDY)

Clinical stage companies offer attractive investment opportunities and tend to spike if the product gets approval and gets commercialized. However, during the trial phase, the stocks remain a risky and speculative bet. But, in markets risk and return typically go hand in hand.

CYDY is a late-stage biotechnology company and is developing innovative treatments for multiple therapeutic indications using leronlimab which is a novel humanized monoclonal antibody. The company provided Leronlimab to patients in the Philippines under the Compassionate Special Permit. Joseph Estrada, former president of the Philippines was administered the medicine and his condition was said to improve after the medicine.

Last month, it announced that Chiral Pharma Corporation has placed its first purchase order for leronlimab under the CSP in the Philippines. Earlier this month, it announced that it has “submitted a dose justification report to the U.S. Food and Drug Administration (“FDA”), which will be followed by an official submission to CytoDyn’s IND.” A potential approval by the FDA could be a game-changer for the company.

CYDY looks like a penny stock worth betting on

A group of investors is pushing for a change in management and has proposed five directors to the board and has written a letter to the company to that effect. “The letter emphasizes that if elected, the nominees would recruit a new management team to replace the current one that is responsible for these failures, and take the steps necessary to earn FDA approval for Leronlimab and enhance long-term value for all stockholders,” said the group in its release.

CYDY has fallen below the 50-day, 100-day, and 200-day SMA and looks weak on the charts. However, the proposed management changes and a possible commercialization of leronlimab could be bullish drivers. Looking at the COVID-19 situation, CytoDyn could be a penny stock worth buying at these depressed prices.

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8. Humbl (OTC: HMBL)

Contrary to its name, Humbl has outlined an aggressive business plan and is targeting three main industries which are Financial, Marketplace, and Humbl Pay. The company went public through a reverse merger with home-renovation retailer Tesoro. The company offers many products including the BLOCK Exchange Traded Index (ETX), that would let a buyer invest in a basket of cryptocurrencies. Looking at the growing craze for crypto assets, the product looks exciting.

The company has also been looking at inorganic growth and last month it completed the acquisition of Tickeri, Inc., a leading Latin-focused ticketing platform. “There is an exciting convergence underway across mobile pay, ticketing, and NFTs on blockchain,” said Brian Foote, CEO of HUMBL. He added, “Tickeri has created an outstanding technology platform and loyal audience with whom we are excited to grow together as brands.”

HMBL is a speculative penny stock

The company is also into the payments industry and has e-commerce operations. All the businesses that HMBL is targeting have a positive long-term outlook. HMBL stock has crashed from its recent highs and now trades very near the 52-week lows. The stock looks like a good penny stock to buy. It could be a multibagger even if it can accomplish even some of the aggressive plans that the management has outlined.

The stock looks weak on the charts after having tumbled sharply from the peaks. It trades below the 50-day, 100-day, and 200-day SMA. However, it is looking oversold now with a 14-day RSI of 39.1.

While HMBL is a speculative name, it looks like a penny stock worth buying in July. The stock could recover from its lows in the second half of the year.

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9. Electrameccanica Vehicles Corp (NYSE: SOLO)

Electric vehicle stocks have been red hot over the last year and most of them are mega-cap companies now. Tesla is the largest automaker by market cap while NIO’s market cap is similar to that of General Motors, the largest US automaker. Looking at the surge in electric vehicle stocks, it is tough to find a penny name. Notably, even Lucid Motors, which is a pre-revenue company commands a proforma market cap of over $40 billion.

Meanwhile, Electrameccanica Vehicles is a penny stock in the electric vehicle industry. The stock is down over 40% so far in 2021 and has a market cap of only about $445 million. Currently, it is delivering its single-seater electric car branded as SOLO. It has a production capacity of 20,000 cars annually and the model is attractively priced at a base price of $18,500. It has also started accepting pre-orders for the next car eRoadster which sounds similar to Tesla’s Roadster.

SOLO is a good penny electric vehicle stock to buy

SOLO stock trades at an NTM EV-to-revenue multiple of 13.85x. Like most other electric vehicle companies, it is also posting losses. However, given the low market cap and the massive opportunity for electric cars, SOLO looks like a penny stock worth betting on.

Amid the recent fall, SOLO has fallen below the 50-day SMA which was strong support. It also trades below the 100-day and 200-day SMA. Its 14-day RSI of 42 is however getting near the oversold territory.

Will SOLO might not become the next Tesla; its niche product offering makes it an attractive stock to buy in July. The massive fall has made the valuations also attractive.

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10. Teekay Corporation (NYSE: TK)

Energy prices are trading at a multi-year high which has helped trigger a 55% year-to-date rally in Teekay stock. The company provides transportation services for oil and gas whose demand has rebounded amid the sharp recovery in the global economy.

Looking at the technicals, Teekay is finding support near the 50-day SMA but trades just marginally above the trendline. If it falls below the 50-day SMA, it might find support at the 100-day SMA. The stock’s 14-day RSI of 45.6 is a neutral indicator. Teekay Corporation is down over 11% from the 52-week highs and is in a correction zone after having plummeted over 10% from the peak. That said, the recent fall could be an opportunity to buy this penny stock and bet on the energy industry’s positive outlook for the medium term.

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