Penny stocks don’t actually cost one cent, any stock trading for under $5 a share is considered a penny stock. These types of stocks are high-risk investments, but that risk includes the possibility of big rewards. Penny stocks are extremely volatile so it’s a good idea to invest only in the best companies. The top penny stocks have favorable valuations, good prospects for growth, good ROE%, and a current ratio that indicates that the company isn’t in any immediate danger of bankruptcy.
Trade discipline is imperative when trading even the best penny stocks, so make sure you have a solid entrance and exit plan for every trade you enter. However, penny stocks are known for gapping (jumping up or down in price significantly in between trading sessions). In the event of a downward gap, you’re hit for the losses, so you can still take significant losses even with airtight stop orders.
To help you begin your penny stock trading journey, we’ve gathered some of the top penny stocks on the market today. Remember, these companies are extremely volatile. Make sure your willing to risk losing a substantial percentage of your principal before making an investment. Please note, the top penny stocks have been listed in no particular order.
Top 10 Penny Stocks
Amyris, Inc. (AMRS) –
This micro-cap industrial biotechnology company manufacturers and develops a wide variety of goods, including CBD products. Share prices are down over 70% from its 52-week high, but it has held its supporting trend line. If this company can turn it around, it can be a long and profitable ride back up, but it has a long way to go to get there still.
AVEO Pharmaceuticals, Inc. (AVEO) –
Shares of AVEO rallied recently after positive clinical results came in on an important leukemia drug the company is currently testing. The news has reinvigorated the stock. Still down over 33% YTD, shares have rallied as of late and are currently up over 110% in the last month.
AK Steel Holding Corporation (AKS)
Industrials have been underperformers in the past year, but AKS looks to have hit its bottom. The company is currently trading at an incredibly undervalued PE ratio of 5.1, and the stock has been quietly rallying. It’s up over 30% YTD. Watch for tariff news to have a big impact on the stock. If a U.S.-China trade deal lifts the tariffs on steel imports, it’s bad news for steel stocks.
Denbury Resources, Inc. (DNR)
Like most of the oil and gas stocks, DNR was beaten up last year. However, it may be ready to break out. It just crossed over its 50/20 SMA lines and it’s up over 40% this month. It’s currently trading with a PEG of only 0.1.
Palatin Technologies, Inc. (PTN)
Palantin is a biopharmaceutical company that specializes in producing advanced treatments for diseases. It’s one of the few biotech stocks that is profitable with a PE of only 8.8. Shares have been on fire and are currently up over 48% YTD.
Sunesis Pharmaceuticals, Inc. (SNSS)
This micro-cap biotech company has been on fire, up 141% just this month. Share prices have benefitted from favorable clinical-phase drug trial results. Even so, it’s still down 45% from its 52W highs.
Southwestern Energy Company (SWN)
Southwestern Energy Co. suffered last year from a glutted natural gas market, but the worst may be over. Natural gas supply is falling, and SWN recently crossed over its SMA 50/20 on the path to a potential golden cross over the SMA 200. Shares are currently up over 38% YTD.
Genworth Financial, Inc. (GNW)
This insurance stock performed poorly for most of last year, but it’s trying to dig its way out of its hole. Shares have been volatile lately, but it’s currently up over 5.2% for the month.
Avon Products (AVP)
This consumer goods brand is the only large-cap company on our top penny stocks list. The company has been a strong performer in 2019, up over 95% YTD, and it seems to be holding to its SMA 20 for support.
Top Stocks Under $1
RiteAid Pharmacy (RAD)
This company has been absolutely shelled as of late, but it may be overdone. The company is projecting to be profitable this year and it currently has an ROE of over 39%. Walgreen’s (WBA) and CVS (CVS) both reported earnings disappointments and it has soured markets on retail pharmacy as a whole. However, if you get in near the bottom you could be in a position to profit off the bounce.
Ur-Energy Inc. (URG)
Ur-Energy is an exploration stage mineral company that is currently developing multiple uranium-producing mines. There have been rumors of an impending boom in the Uranium market, and URG has been a beneficiary of those expectations. It recently set a new 52W-high and it’s up over 38% for the year.
Best Penny Stocks
The easiest way to discover penny stocks to buy today is by using a stock screener. A stock screener searches all the stocks on the market for companies that match your criteria. Many different websites have free stock screeners that you can use to help you find the top penny stocks to trade. Finviz.com offers a free version of their popular stock screening tool that’s extremely useful for finding penny stocks to trade. How exactly to set the screener is a matter of great debate, but there are a few general things that you should be aware of when using a screener.
First, set the screener to look for stocks under $5 so it will only return penny stocks. Next, think about the volume. The best penny stocks trade at high volumes because it makes the market more liquid, so spreads are smaller and it’s easier to get in and out of trades. Stocks with an average volume of over 1 million is a good place to start. From there, it’s up to you. There are a million different methods for filtering out the losers so you’ll have to do some research and figure out what you think works best. Use a combination of technical and fundamental analysis to help you determine which stocks are primed to pop.
Top 10 Penny Stocks – The Conclusion
If you have the appetite for the risk, trading the top penny stocks is a great way to see big gains in your portfolio. However, these assets are notoriously risky and the vast majority of them are long term losers. There’s always the chance that you could be buying the next Netflix (NFLX) or Amazon (AMZN), but there’s a much more likely chance that you’ll end up losing if you hang around in these stocks too long.
If you’re planning on trading penny stocks, don’t get greedy and don’t get attached to your positions. Once your trades have seen some nice gains, don’t hesitate to ring the register when the stock starts losing its upward momentum. Most importantly, don’t invest money in penny stocks that you can not afford to lose. These are high-risk assets that should only constitute a very small percentage of your total portfolio. If you stay disciplined and do your homework, you too can see big gains trading the top penny stocks.
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