Along with big gains from large-cap companies, penny and small-cap stocks have also been extending gains over the past four months. This is evident from the sharp growth in the Russell 2000 index, which covers 2000 small cap stocks listed on the U.S. stock market.
The index jumped more than 17% since the start of this year, thanks to improving economic and business indicators.
The index jumped from 1300 points at the beginning of the year to almost 1600 points at present. This makes the third best year for the Russell 2000 index in its history.
Small cap and penny stocks generally operate within the U.S. compared to large-cap stocks that have extensive global footprints. This is why the Russell 2000 index presents the true picture of the U.S. economy as it covers 2000 small-cap stocks.
The recent market trends and economic indicators are presenting a strong outlook for the U.S. economy, which strengthens prospects for the extension of a bullish trend for the Russell 2000 index. The Fed’s dovish rate hike policy along with expected trade deal with the second largest economy would boost business activity this year.
Indeed, Donald Trump has suggested the Central Bank cut the interest rate by 1 percentage point along purchasing bonds, which he believes would significantly boost the economy.
Therefore, in order to enjoy the uplift in economic indicators, traders are finding profit-making opportunities in the small cap and penny stocks. Below is the list of top three hot penny stocks to watch in May:
- Inuvo, Inc (NYSEMKT:INUV): Share of Inuvo jumped more than 200% in the past six months and its stock is predicted to make big price changes in May 2019. It is a technology company that provides data-driven platforms that automatically identify and message online audiences.
- Precipio, Inc. (NASDAQ:PRPO): It is one of the hottest penny stock amid its share price rally of 200% in April 2019 alone. It is a cancer diagnostics company, provides diagnostic products and services to the oncology market.
- Ideal Power Inc (NASDAQ:IPWR): It is a hot stock for May as investors seek to capitalize on profit-making opportunity after a huge selloff in its price over the last year.