Before you start investing with penny stocks, you have to know what the best penny stocks to invest with. You might be wondering now what are these best penny stocks? Well today we will show you the top 10 penny stocks you should watch.
But before we get into that, let us all learn the meaning of penny stock.
What is Penny Stock?
A penny stock is usually traded outside the major market exchanges. It is also traded in a low price and has a small market capitalization.
These stocks, however, are considered highly speculative and high risk due to their lack of liquidity, large bid-ask spreads, small capitalization, and limited following and disclosure.
Penny stocks are often trade over-the-counter through the OTC Bulletin Board and pink sheets.
In addition, the word penny stock evolved with the market. Before, penny stocks were stocks that are traded for less than a dollar per share. However, the Securities and Exchange Commission (SEC) has modified the meaning to include all shares that are trading under $5.
As you may know now that most penny stocks do not trade on the major market exchanges. But, there are some big companies, who trade under $5 per share on the main exchanges, such as NASDAQ.
You should keep in mind that penny stocks are more suitable for investors with a high tolerance of risk. Penny stocks usually have a higher level of volatility, which results in a higher potential reward and a higher level of risk.
Considering the sensitive risk levels that come with investing in penny stocks, investors like you should take particular precautions.
As an investor, you should have a stop-loss order predetermined before entering the trade. With this, you know where to exit if the market moves in a different direction.
How to Buy Penny Stock?
Just like any other stocks you would purchase, you can buy shares of penny stock by your broker. Whether if it is or not listed on a major exchange.
While cheap stocks are listed on exchanges, such as NASDAQ and NYSE they are not typically considered as penny stocks. Because they can afford a lot of the benefits of penny stocks without any much risk.
As these exchanged have some strict listing requirements and might not allow for as much of an upside as real penny stock, they tend to be more reliable.
Meanwhile, penny stocks trade on listing services, such as OTCBB and Pink Sheets.
Over-the-Counter Bulletin Board or OTCBB is a quotation. It maintains listing requirements. For this reason, OTCBB has a little bit of legitimacy.
However, Pink Sheets is a quotation publisher. It is a system that offers investors with quotation information on stocks that are registered with it. Unlike OTCBB, Pink Sheets is not registered with the SEC and does not enforce any listing requirements. Pink Sheets stock are considered risky.
Penny Stocks You Should Watch
Investing in penny trading has been a risk to be undertaking when the market volatility is high. Since this business involves investing in a company’s potential, it requires considerable investing experience.
Here are some of the best penny stocks you should watch:
Aerotech (NASDAQ: ARTX)
Aerotech is a defense design and manufacturing business, which is capitalizing on two of the largest growing industries: Drones and Virtual Reality.
The difference between Aerotech and other companies in this space is it services 80% of the increasing global aviation industry.
The primarily create technology for the military and law enforcement. The latest award for interactive law enforcement training systems has lead the stock to rally this quarter to $4.20 followed by a correction to $3.66.
Zix Corporation (ZIXI)
Zix is an email provider. This corporation focuses on secure messaging, marketing itself to corporate, and government entities. The unique approach of encryption, together with avoiding downloading, makes this an attractive service.
With sales increasing 65 percent in five years, Zix is making headway. It tends to range in and out of the penny stock category, as it rises over $5 per share on occasion. As you might expect, the company is very small, with a market cap of just under $234 million.
Revenues have been rising steadily over the past four years. With data breaches and privacy concerns drawing ever more attention to cybersecurity issues, Zix shows promise for investors who are willing to take on the risk of a penny stock.
Mueller Water Products, Inc. (NYSE: MWA)
Mueller Water Products Inc. is the leading fire hydrant maker in the U.S., having sold over 3 million fire hydrants. The company is doing well with one fire hydrant running $1000.
Although the hydrants last for decades, the same cannot be said of the gaskets and seals. In this case, replacing an old hydrant is the best option.
With over 20 million fire hydrants in the U.S., Mueller boasts of an extensive supply base, which makes the company good stocks to purchase. Besides, Mueller receives low commodities prices. This, to a large extent, increases its profit margins.
Glu Mobile Inc. (GLUU)
Glu Mobile creates games for smartphones. It has various titles that are gaining popularity for players who use phones or tablets. Some of the titles are based on action movies, while others are based on existing console games.
The company has worked his way out of debt and has strong cash reserves. Revenues have been increasing over the past four quarters, but the operating income is negative. Glu Mobile is spending on research and development to look for its next hit.
Meanwhile, the potential for this stock is based on its industry, as games continue to grow in popularity. If Glu Mobile comes up with a hit game, it will likely send the stock elevated.
Valeant Pharmaceutical Intl Inc. (VRX)
Even though the company experienced problems that saw its stock reduced by 82 percent over the 12 months, Valeant Pharmaceutical Intl Inc. is still one of the best penny stocks to invest in due to its very cheap price.
As of now, the company is one of the few biotech industries that trade so affordably. Valeant Pharmaceuticals just recently gained over 35 percent, in just three trading days.
Its affordability has served as a beckoning signal to many investors who seem to respond positively to the call. Moreover, the company offers one of the cheapest stocks.
Plug Power Inc. (PLUG)
Plug Power is a player in the growing alternative energy industry, focusing on the field of hydrogen fuel cell technology. It offers fuel cell solutions to the material handling and stationary power sectors.
The company is based in Latham, New York, and has been established since 1997. This indicates that there is some longevity to the story amid its status as a penny stock.
Twitter Inc. (TWTR)
A better monetization is the power behind the expected growth and expansion of Twitter. The company plans to monetize over 500 million people who do not have accounts to consume Twitter.
Twitter will be increasing its revenue since the users are going to be charged half of what logged in users are charged.
The company won rights with the NFL, for Thursday Night Football, which its Twitter’s fanbase will likely to shoot to soaring heights since a massive audience is going to sign up for Twitter to watch match. This will make the company one of the best penny stocks to invest in.
Hecla Mining Company (NYSE: HL)
In a time of political and economic uncertainty, the oldest minerals stock on the exchange is a place where investors could turn.
Hecla Mining Company, which was established 1891, specializes in precious minerals mining. It has reported record silver reserves for 10 years in a row.
Alibaba Group Holding Ltd. (NYSE: BABA)
Alibaba Group Holdings is one of the best cheap stocks. For the next two years, Alibaba is expected to grow 30 percent sales. This growth will make it the biggest retailer by a mile.
With $10 billion additional investments and $200 billion market capitalization, Alibaba passes as one of the best-performing penny stocks to buy.
All pointers indicate that Alibaba will keep going up and likely to outperform Apple and Alphabet in the near future.
Alibaba Group Holdings is considered as one of the best cheap stocks.
John Bean Technologies Corp. (NYSE: JBT)
John Bean Technologies Corp. supplies air transport and food processing industries with solutions and materials respectively.
The modern lifestyle has increased demand for food packaging. JBT’s input in the production of packaging is cheap, which translates into high-profit margins.
Investors out there who are thinking of investing in penny stocks should make a deal with JBT. It is one of the best-performing penny stocks and one of the cheap stocks to buy.
Investing in penny stock is risky. That is why it is important that for you to know what are the best penny stocks out there.
Looking for the best penny stock to trade is not easy. It takes time and a lot of research. You have to make sure that the penny stock you are going to trade will help you in the long run.
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