This year, inflation has been a big worry for both penny stocks and blue chips. And ahead of the Federal Reserve’s meeting this week, investors are searching for the best penny stocks to buy for inflation. If you’re unfamiliar, inflation is a fear right now after billions of dollars in stimulus were given out over the past year and a half. And, with the price of raw goods like lumber, and other products shooting up, many fear that we could see short-term inflation affect the stock market.
Now, it’s unlikely that we’ll see people walking down the road with wheelbarrows full of hundreds to buy groceries, however, inflation could likely rise in the coming months. Most investors tend to turn toward safeguard investments in this case, such as gold and silver. However, there are plenty of penny stocks to watch ahead of potential inflation. Let’s go over two industries that could benefit.Which Industries Are Benefiting From Inflation?
On one hand, we have energy penny stocks. While the price of energy may rise, we also have to consider that the demand is rising right alongside. As the pandemic comes to an end, people are beginning to travel in big numbers. This means that the need for fuel may dramatically jump in the coming months. And while the energy sector is not fully inflation-proof, it could be a great place to look for certain penny stocks to watch.
On the other hand, many investors are looking at tech. This includes tech penny stocks such as those working on 5G infrastructure, alternative energy products, and more. Again, given the pandemic’s push for new technology, many investors have found solace in innovative and creative tech penny stocks.
So, as we see more momentum enter into the stock market, massive inflation should not be cause for major concern. However, it is a factor to consider when making a list of penny stocks in 2021. With all of this in mind, let’s take a look at three of the best penny stocks to watch ahead of inflation.3 Penny Stocks to Watch Ahead of Inflation
- Transocean Ltd. (NYSE: RIG)
- Ebang International Holdings Inc. (NASDAQ: EBON)
- ZW Data Action Technologies Inc. (NASDAQ: CNET)
Up by around 4% at midday is Transocean Ltd. Over the past week or so, investor sentiment in RIG stock has increased dramatically. A few months back, the company ordered two newbuild drillships. However, after some delays, investors worried that RIG would lose certain contracts. But, last week, the company announced that a shipyard agreed to provide around $460 million in vendor financing, adding major liquidity when investors feared there would be none.
In line with this, the company states that these two new drilling rigs will use an innovative 20,000 PSI well control system. It states that “in addition to their state of the art drilling capabilities, these rigs are also designed and equipped to optimize fuel consumption, reduce emissions, and thus minimize the associated carbon footprint of each offshore project.” Although the delay of these ships is not ideal, the company plans to have them operational by 2022.
So, why exactly is Transocean a play for inflation? Well, as stated earlier, energy penny stocks have a great amount of demand to contend with. This demand increase could result in increased financials for the coming periods.
And while RIG is not one of the largest energy stocks in the industry, it is a major player in the area of offshore drilling. Over the past six months, shares of RIG stock have increased by a substantial 73%. Because it is less volatile than some other penny stocks, many investors view it as a worthwhile addition to their watchlists. Considering this, will it be on yours?2. Ebang International Holdings Inc. (NASDAQ: EBON)
Another major gainer so far today is EBON stock. By mid-morning, shares of the tech company shot up by around 17% to just under $4. It’s worth noting that we’ve been covering EBON stock for quite some time. For some context, EBON is considered a crypto penny stock for its role in the cryptocurrency industry. While no news has come out of Ebang in the past week or so, its price is highly correlated to that of popular cryptocurrencies like Bitcoin and Ethereum. Back in May, BTC was sitting right around $60,000.
Then after a major bearish rally, prices now sit in the $35,000 range. One of the main reasons for this bearish drop in price came as Elon Musk discussed how environmentally harmful cryptocurrency mining is. But, there are plenty of companies working to undergo this process with renewable energy sources. It’s worth noting that anytime Elon Musk tweets about cryptocurrency, we often see large moves either up and down. This is just one reason for the massive volatility of cryptocurrency.
Ebang is considered a relatively pure-play cryptocurrency stock as hot produces circuit chips and crypto mining machines in China. Both of these items are in high demand right now, coupled with a major shortage. Because of this, many investors are bullish on the future of the tech industry, and specifically with crypto mining companies like EBON stock. With this in mind, is EBON worth adding to your list of penny stocks to watch?ZW Data Action Technologies Inc. (NASDAQ: CNET)
CNET stock is another penny stock that we’ve covered plenty of times. While it isn’t necessarily a pure-play crypto stock, it does work in the blockchain industry. ZW offers online advertising, precision marketing, data analytics, and more for its wide range of clients. The company mostly works with smaller and medium-sized businesses, offering blockchain and AI-enabled solutions for enterprise clients and government agencies.
Only a few weeks ago, the company announced that its subsidiary, ChinaNet Online Technology Co. Ltd., was authorized as an advertising service provider for E-commerce by Tencent Holdings Ltd. Tencent is one of the largest companies in China, with over 1.2 billion users on its platforms. Because of this, advertising to these users is both an important and potentially profitable endeavor.
“We believe this collaboration will enhance our spectrum of resources for advertising and marketing to the next level, especially for our future cross-border KOLs and e-commerce business. In addition, we intend to add blockchain to media resources to enhance the accuracy and transparency of the efficiency and effectiveness of the digital marketing.”Mr. Handong Cheng, CEO of ZW Data Action
This is a big deal, and we likely won’t see the financial result for some time to come. However, as a blockchain penny stock, ZW is also riding the bullish crypto wave right now. Considering all of this, CNET could be worth watching in the coming months and beyond.Which Penny Stocks Are the Best For Inflation?
It’s hard to say for certain which penny stocks may perform the best with inflation on the rise. But, the best advice is to try and stay ahead of the game and as creative as possible. By thinking outside of the box, investors can find penny stocks to watch that may have a chance of beating an inflation-driven market drop.
However, it’s also important to consider a company’s financials, and what speculative factors could be impacting it. With all of this in mind, buying and selling penny stocks as inflation is on the rise can be difficult. But, with the right information on hand, making a profit with penny stocks can be much easier than previously imagined.