While it is true that penny stocks can present good opportunities for exponential gains, this is not the case with these three. Maybe at some point they gave good results, but as economists know, there is the law of diminishing marginal returns, there comes a point in the trajectory of a penny stock where it is considerable to sell the position if you have been in it, and if that is not the case, it is better to omit these investment options. Let’s take a quick look at these three penny stocks to sell.
Anika Therapeutics (ANIK)
One of their most notable achievements has been osteoarthritis pain management. It was able to generate revenues of $29.3 million, a remarkable 22% growth. However, it experienced a 33% decline in non-orthopedic revenue, with earnings amounting to only $2.3 million.
The company recorded a gross margin of 65%, or an adjusted gross margin 69% when factoring in acquisition expenses. On the profit side, the company experienced a $2.7 million loss due to shareholder activities and other extraordinary costs. Excluding these expenses, this resulted in an adjusted net profit of $0.8 million. In addition, after adjusting for these adjustments, EBITDA was $6.3 million, up significantly from $4.4 million the previous year.
Despite these positive developments in terms of revenue and earnings, the unfortunate news is that Anika’s share value has fallen over 37% in 2023. Although there have been definite improvements, the notable drop in share value and the resulting uncertainty could lead some investors to consider one of the penny stocks to sell.
Nikola Corporation (NKLA)
Nikola Corporation (NASDAQ:NKLA) is a hydrogen fuel cell electric vehicles & battery developer. The company has pursued its business plan by strengthening its financials, curbing expenses and advanced hydrogen refueling network construction.
In Q2, the company supplied over 110 trucks, and began production of its hydrogen fuel cell electric trucks. Nikola has 18 purchase orders for more than 200 hydrogen electric trucks so far.
However, the second quarter financials reveal a negative operating income of about $168.6 million. Although the company managed to increase its cash reserves by $107.1 million, this still warrants attention and concern.
Experts are concerned about the company’s history of controversies. Alleged exaggerations of the company’s technological capabilities have raised credibility questions, and a 32% year-to-date loss in stock value has left investors skeptical.
Although Nikola Corporation has ambitious goals for its hydrogen electric vehicles, fears about its financial stability, technology uncertainties and questionable track record might discourage investors at this time.
Advanced Emissions (ADES)
Last on the list of penny stocks to sell is Advanced Emissions Solutions (NASDAQ:ADES). Advanced Emissions’ mission is to reduce harmful emissions from other companies during production.
The basic concept of ADES is commendable: to make industries cleaner and less harmful to the environment. However, it experienced a year-over-year revenue decline in Q2, suggesting that its profits may not be as substantial as before.
Furthermore, the company’s $5.9 million net loss indicates it is spending more than it is taking in. Additionally, the consolidated adjusted EBITDA has decreased this year, which could indicate that the company’s earnings performance is lacking. This situation is comparable to going over your allocation, not a viable long-term scenario.
Unfortunately, the stock’s value has dropped by 19% year-to-date, showing that many investors are already reconsidering the investment. Overall, it may be best to categorize this as one of the penny stocks to sell.
As of this writing, Gabriel Osorio-Mazzilli did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.