With another week of penny stock trading off to a decent start, investors continue to look for the best small caps to purchase. Now, to do this, there are some things that investors should consider. Right now, one of the largest factors affecting blue chips and penny stocks is inflation. This is the outcome of the billions in stimulus handed out over the past year along with the recently passed $1 trillion infrastructure bill.
Also, we are seeing the price of oil start to decrease, following the release of 50 million barrels from strategic reserves. Penny stocks are impacted by a lot of what we are seeing from current world events. However, with investors wishing for a bullish future, there’s also a lot to look forward to. Keeping that in mind, let’s take a look at two penny stocks to keep an eye on.
RLX Technology Inc. (NYSE: RLX)
RLX Technology Inc. is a penny stock that increased by over 9% on Nov. 22nd before slightly correcting. And during premarket trading on Nov. 23rd, shares of RLX stock went up by a very respectable 12%, removing it from penny stock territory. RLX distributes e-vapor products to the Chinese market. The company is directly involved in the manufacturing, distribution, development and sale of its items, making it a vertical entity. Also, RLX has several branded partner retailers and stores that sell its products, vastly increasing its market reach.
Back in Aug., RLX published its financial results for its second quarter of this year. During this period, its net revenues rose 6% to $393.6 million. The company’s gross margin was about 45.1% compared to its 46% gross margin in the first quarter of this year. In that same period, its gross profit rose by 3.8% to $177.6 million in all. These numbers are really encouraging and show both the vaporizer market in China and the growth of the company.
Transocean Ltd. (NYSE: RIG)
RIG is a global industrial corporation that has a specialty in offshore contract drilling. For gas and oil wells, the corporation obtains drilling equipment, work personnel and drilling rigs. Currently, Transocean has ownership or has a stake in 37 of it mobile offshore drilling sites. There are 10 harsh environment floaters and 27 ultra-deepwater floaters among these units, with two more ultra-deepwater drillships in the works.
On Nov. 1st, Transocean published the financial results of third quarter. During this period, it had achieved total contract drilling earnings of $626 million compared to $656 million during last quarter. Its earning efficiency went up by 0.1% to 98.1% compared to the prior quarter. The company’s maintenance and operating expenses also declined during this period from $434 million down to $398 million.
All of this news shows that Transocean is trying hard to grow. Also, we have to take into consideration that the demand for gas and oil globally has increased significantly in the last year. And with some predicting this demand will only increase, RIG stock might be worth keeping your eye on. With a YTD increase of over 30%, does RIG have what it takes make your penny stock watchlist?
Author: Scott Dowdy