Good Penny Stocks To Buy Today
Penny stocks are public companies that have a current share price of $1.00 or less. These companies are listed on major stock exchanges and have market capitalizations of under $100 million. Many investors are attracted to penny stock investments because their low share prices suggest a strong possible upside. The table below lists public companies with share prices under $1.00 that have had the highest trading volume during the most recent trading day. Learn more about penny stocks.
good penny stocks to buy today
So, what is a penny stock? The definition has changed over the years. Originally a penny stock was a stock trading for less than $1. Some investors still believe that a stock is only a penny stock if it trades for $1 or less, but you have more choices today regarding securities considered penny stocks.
While you can find many penny stock listings on major U.S. exchanges such as the NYSE or Nasdaq, other penny stocks don't qualify for those exchanges and are listed over the counter (OTC). You can find those OTC penny stock listings at OTC Markets or on the Pink Open Market, dubbed the Pink Sheets. That nickname originated because quotes for penny stocks were once printed on pink paper.
Pink sheet companies are typically more speculative due to low liquidity and reduced regulatory oversight. Stocks listed on the OTC Markets aren't necessarily penny stocks; many large companies, such as Swiss pharmaceutical firm Roche Holding AG (OTCMKTS: RHHBY) are listed over the counter. But you'll also find many low-priced stocks among the OTC listings and invest penny stock options.
Are penny stocks worth it? However you define penny stocks, it's not tough to see why they are attractive. Penny stocks offer the potential for a high return with a relatively minimal investment. For example, say you find a stock priced at 50 cents. If you wanted to make a 50% profit, you'd only need the stock's price to reach 75 cents.
If you buy a penny stock and plan to hold it until it doubles in price, you can see a big percentage gain without a huge price gain. For example, if you buy a stock trading at 10 cents a share, it only has to rise to 20 cents to pocket a 100% profit.
Don't make the mistake of believing large caps such as Walmart Inc. (NYSE: WMT) began life as penny stocks. When looking at a stock's history, you may see split-adjusted prices that make it seem like a stock was trading under $1 at one point. In Walmart's case, it made its public debut at $16.50 in 1970.
Penny stocks frequently have a low float of shares available to the public, and especially with little-known companies, few traders are bidding for those shares. Getting a stock at the price you want is relatively easy.
In addition, they generally have a very small market capitalization, meaning their outstanding shares' value is low. These companies can offer the potential for sensational growth and increase investor risk. A small market cap means a lack of liquidity. Penny stocks are often more difficult to sell quickly, as fewer interested investors are on the other side of the trade.
Institutional-quality stocks generally have some positive aspects when it comes to their fundamentals. Many have growing revenue and earnings, or at least the potential for growth in the foreseeable future.
Penny stocks, in contrast, often fall short on those points. It's not unusual to see unprofitable penny-stock companies, and many have little or no revenue. They may not yet have a product or service available for purchase or haven't yet gotten any customers.
For instance, penny stock Curative Biotechnology (OTCMKTS: CUBT) had no revenue or earnings several quarters after going public. The company was established to develop treatments for rare diseases but had yet to bring any products to market.
Pump-and-dump occurs when a promoter pressures investors, usually gullible people or those with little knowledge about the stock market, to put money into highly speculative stocks that the promoter already owns, having bought for a much lower price. After unsuspecting investors have piled in, the promoter sells shares at a profit, leaving other buyers in the lurch as the price drops.
It's common to see these schemes promoted in penny-stock newsletters and online platforms. If you are looking for good penny stocks, always use caution and read the fine print when you discover a recommendation.
Even if a company is a legitimate enterprise and trades on a major U.S. exchange but happens to be low-priced, there's often little coverage from either Wall Street analysts or the financial and business media. If you can't find much information about stocks, they may not be appropriate penny stocks to buy now.
Penny stocks are the poster children of volatility. In general, a lower market capitalization translates to higher volatility. That's even true of small caps listed on major exchanges and whose market capitalizations hover at around the $2 billion mark.
But it's a whole different ball game for penny stocks, which can notch big price moves in either direction during a single trading day. The percentage move can be deceptive because the stocks' prices are so low.
If you're accustomed to buying and selling stocks listed on major exchanges, you may not appreciate the importance of liquidity. When you're getting in or out of a stock, you want to get the exactly price you want, especially if you're a trader. That level of price precision, within pennies, is far less important to an investor with a longer time horizon.
But for traders, low liquidity makes closing a trade at a particular price tougher. Low liquidity results in fewer buyers and sellers, meaning a trader who wants to sell shares at 10 cents apiece may not find buyers at that price and may be forced to accept nine cents. In the world of penny stocks, that could be a significant difference.
In addition, low liquidity is a factor that can make penny stocks ripe for manipulation. That can occur when a stock's price is artificially inflated, with fraudsters selling to pocket gains, while their unsuspecting customers suffer losses. It's difficult to manipulate stocks on the major exchanges with greater liquidity and regulatory oversight.
For starters, have a set amount you are willing and able to lose. Yes, that sounds like a plan for the casino floor at Ceasar's, but you should treat penny stock trading the same way. Only bet a lot of money on penny stocks, hoping to retire on your riches, pay off debt or reach some other goal. Treat penny stock trading as entertainment and budget accordingly.
Only trade penny stocks listed on major exchanges, such as the Nasdaq and NYSE. There, you'll find many low-priced stocks, frequently trading below $5, that actually have revenue and earnings and are subject to SEC regulation. Sometimes these stocks of solid companies were beaten down by a company-specific event or a broad market downturn. Focusing on these higher-quality stocks can reduce the risk of pump-and-dump schemes and minimize volatility.
Only trade penny stocks that are available with a major brokerage, such as Schwab or Fidelity. Be sure the broker you use is licensed by regulatory authorities, including FINRA, and is registered with the SEC. That information will be on the broker's Web site, or you can call and ask for documentation. By using these reputable brokers, you also avoid outsized commissions and fees.
The penny stocks on the OTC Markets are still not listed on any of the major exchanges, but they must meet some minimum requirements. All of this means that you, as an investor, will lack information, meaning the OTC Markets and the Pink Sheets are not the best places to find penny stocks to watch.
If you limit your exposure to penny stocks, have the time and ability to quickly move in and out of trades, and implement some safeguards, it is possible to make money with penny stocks. But use greater caution than you would with a larger company, particularly if you buy a penny stock not listed on a major exchange.
While it's certainly possible to make money with penny stocks, use precautions and err on the side of being conservative. If you put pressure on yourself to get rich by trading penny stocks, you will likely make entirely avoidable mistakes.
The best penny stocks generally trade on a major exchange, such as the NYSE or Nasdaq. The OTC Markets also have some minimal listing requirements, so aren't necessarily as speculative as those on the Pink Sheets.
If you're deliberately seeking the hottest penny stocks, you may be vulnerable to penny stock websites, paid trading education programs, and newsletters. Avoid fast movers and big price gainers when researching penny stocks to buy. Those will likely reverse course even before you make a trade or shortly after.
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With another month of trading penny stocks only a few days away, investors continue to look for the best small-caps to watch. Last week, we saw the rise of Support.com (NASDAQ: SPRT), which brought in a five-day gain of over 184%.
And with a 40% pre-market gain so far, SPRT stock is up by over 1,110% in the past six months. While this is a major positive for those invested in SPRT stock, it also presents a promising sign for both penny stocks and the stock market as a whole.
Transocean Ltd. is an energy penny stock that has shot up by over 16% in the past five days. This brings its YTD gain to over 58%, which is a reflection of the bullish sentiment around the energy industry right now. For those unfamiliar, Transocean is a company that provides offshore contract drilling services for oil and gas wells. 041b061a72