6 F-Rated Penny Stocks Not Worth Your Dime

As the adage goes, “where there’s risk, there’s reward.” Unfortunately, this is not universal when it comes to penny stocks. While there are plenty of stocks in “penny territory” (under $5 per share) that are strong opportunities, there are also scores of low-priced names best characterized as penny stocks to sell.

When it comes to risk/reward, names in this category offer a lot of former, but an inadequate amount of latter. For the most part, stocks at this price level are one of two things.

They are either early-stage companies, with high growth potential, or they are struggling firms, with the potential to turnaround their operating results. If the price is right, the potential upside from the “best case scenario,” outweighs the downside risk from the “worst case scenario.” Even if the ultimate outcome is between the best and the worst, these stocks can still be big winners.

However, if the price is wrong, as with these seven penny stocks to sell, the odds are not on your side. Each earning an “F” rating in Portfolio Grader, stay away.

Allarity Therapeutics (ALLR)

Allarity Therapeutics (NASDAQ:ALLR) is a biotech focused on developing oncology treatments for various cancers. The company also uses its own proprietary method, known as Drug Response Predictor, or DRP, which entails using diagnostics to select patients likely to respond well to its treatments.

But while it may have a unique approach to drug development, this has not resulted in a breakthrough. In fact, Allarity has experienced major setbacks, which has been detrimental to the ALLR stock price. Shares have fallen nearly 97% over the past twelve months.

As reported by InvestorPlace’s William White, ALLR briefly spiked on Jan. 23, on the release of some updates from management. However, the stock has since pulled back, as it is clear from these updates that this cash-strapped firm needs to raise millions in additional capital. This will likely continue placing pressure on this F-rated stock.

Waitr Holdings (ASAP)

An “also-ran” competitor to meal delivery platforms like DoorDash (NYSE:DASH), shares in Waitr Holdings (NASDAQ:ASAP), briefly gained some traction during the pandemic era. However, since 2020, ASAP has cratered, dropping from split-adjusted prices topping $100 per share, to under $1 per share.

Despite this massive drop, shares will likely keep dropping, for two reasons. First, ASAP stock is about to get delisted from the Nasdaq exchange.

On Feb. 2, the stock will down to the over-the-counter (or OTC) market, as Waitr has decided not to get into compliance, by reverse-splitting its shares back above $1.

Second, cash burn has sped up in recent quarters. Between Dec. 31, 2021 and Sep. 30, 2022, Waitr’s cash position plunged from $60 million to $20 million. Waitr’s high cash burn has likely continued, leaving it in an even more precarious position. If you own this F-rated penny stock, sell as soon as possible.

Ault Alliance (AULT)

You don’t have to look far to see why Ault Alliance (NYSEAMERICAN:AULT) is one of the top penny stocks to sell. This diversified holding company’s stock price didn’t fall to literal pennies by mistake.

Until recently it was known as BitNile Holdings, thus far the company’s move into areas such as crypto mining and data centers, along with its investments in both public and privately-held companies has failed to produce value for common shareholders of AULT stock.

Furthermore, Ault Alliance has a history of red flags, including high dilution, poor operating results, and propensity to pivot into “hot” sectors to gin up the stock price. This myriad of longstanding concerns likely signals what the future holds for those who decide to buy F-rated AULT today. Even at its current rock-bottom stock price of around 13 cents per share, an investment in this stock could end in tears.

Biocept (BIOC)

Biocept (NASDAQ:BIOC) specializes in molecular oncology diagnostics. However, in recent years, especially in 2021, the company generated a material amount of revenue from providing Covid-19 testing services.

With Covid-19 testing demand dropping fast, so too is overall revenue. Biocept is at the commercialization stage with its main diagnostics product, CNSide, but revenue from this assay is far from enough to make up the difference. Analyst forecasts call for BIOC’s revenue to fall from $39.5 million to $7.25 million this year.

In anticipation of materially lower revenue, and increased losses, BIOC stock has fallen more than 79% since early 2022. Looking to conserve cash, management has announced restructuring plans, which include reducing Biocept’s headcount by 35%.

Although the company also plans to pursue  “strategic alternatives,” I wouldn’t assume this mean’s a takeover (at a high premium to this F-rated stock’s current share price) is likely.

Calyxt (CLXT)

Calyxt (NASDAQ:CLXT) shares have declined in price by nearly 99% over the past five years. This makes sense, given that the agricultural biotech company, which specializes in developing genetically-modified plant seeds, has struggled to make a commercial breakthrough.

More recently, though, CLXT stock has spiked, rallying by around 153% over the past month. Mainly, because of news of the company’s announced merger with a competing agricultural gene-editing firm, Cibus.

However, while this transaction could provide benefits such as cost savings, it’s unclear who benefits most from this transaction.

Per the deal terms, current investors in this F-rated stock will own just 5% of the combined entity post-merger. Furthermore, as pro forma financials have yet to be released, it’s hard to sell whether this reverse-merger is fairly priced, or if the structure of this merger is more in the favor of shareholders in privately-held Cibus.

Skillz (SKLZ)

Over the course of two years, Skillz (NYSE:SKLZ) has gone from hot stock to busted growth story, resulting in a massive stock price decline.

Yet while shares in this competition-based mobile gaming platform operator have already experienced a tremendous reversal in fortune, SKLZ nonetheless remains one of the top penny stocks to sell.

Back in August, I discussed how the company has pursued a new business strategy. Instead of spending heavily on customer acquisition, Skillz is instead focusing on generating more revenue from its existing user base. However, this has failed to save SKLZ stock. Growth has screeched to a halt, while operating losses, although narrower than before, remain fairly high ( around $25.8 million per quarter).

Skillz has the cash to sustain these losses ($465 million) for now, but unless it swings to profitability within a few quarters, further declines are likely for this F-rated stock.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.