If you’re seeking a fast return on investment, penny stocks may appear like the greatest option. Finding a cheap, under-the-radar stock that will become the next Fortune 500 business and buying it for pennies on the dollar is a thrilling prospect.
However, equities trading for less than $5 are among the riskiest investments. There is probably a logic to why these stocks are so cheap. New companies often issue Penny stocks, making them a potentially lucrative investment for anyone looking to make a quick return on their money.
Penny stocks are a popular investment option because of the high potential for growth compared to larger-cap firms. Stocks with low prices often have high volatility and risk. We created this list of penny stocks to help investors find those with strong underlying company fundamentals.
What are Penny Stocks?
Penny stocks are tiny companies that trade for much less than larger firms’ stock. The phrase “penny share” refers to equities valued at less than $5, despite the misleading moniker. Penny stocks are traded on unregulated markets like the over-the-counter (OTC) and SEC-regulated markets like the New York Stock Exchange (NYSE).
Because of this, Penny stocks are especially vulnerable to fraud and artificial price inflation. The “pump and dump” strategy is widespread in fraudulent penny stock trading.
Marketers who own shares of security engage in pump and dump when the price of those shares rises substantially due to the dissemination of false or misleading information about the firm issuing the securities. After the price rises, the holders “dump” the stocks onto those who hear the news and decide to buy at a higher price.
Best Penny Stocks To Buy In 2023
Vaalco Energy stock has been falling in tandem with the price of crude oil. But if you think energy costs will soon spike again, this might be one of the best penny stocks to purchase. You should still consider buying EGY stock even if you have less faith in an oil price recovery.
Saudi Arabia and other oil exporters have vowed to reduce output. Crude oil prices may rise again if concerns about the global economic slowdown subside. The earnings and stock price of Vaalco are expected to be significantly affected by this.
EGY is trading at a deeply discounted 4.3 times projected earnings and should gain from multiple expansions if oil companies regain their former popularity. EGY also sports a dividend yield of 6.6% in addition to its potential for growth.
Organigram Holdings Inc.
Organigram is a company based in Canada that grows cannabis for medicinal and recreational use. An indoor growing facility, an edibles manufacturing site, and a greenhouse are among the company’s three cultivation and production facilities. The company’s patented technology monitors growing and harvesting cycles by strain, climate, and other parameters to ensure the best possible yields.
On June 30th, Organigram’s stock price ended the day at $0.39. Over the past year and a half, its share price has fluctuated between $0.3710 and $1.27. The stock has been monitored by a single analyst for the past few months, and that analyst recommends buying the stock. The forecasted price in a year is $2.26.
For valid reasons, Jerash Holdings has been taking a step back as of late. The present slump is having a far greater impact than anticipated on the operating performance of the clothing company. Two million dollars ($16 per share) was Jerash’s quarterly net loss in the previous reporting period. The market expected earnings per share of 2 cents.
JRSH stock may still be one of the greatest penny stocks to purchase, but a Jerash rebound may take some time, as analysts have lowered their projections for the next two fiscal years. At the very least, the stock’s risk/reward ratio suggests buying. Recent commentary on Seeking Alpha noted that JRSH’s large discount to its book value creates a buffer. The potential for loss is reduced if this occurs.
ARC Document Solutions
ARC Document Solutions recovered some of its pandemic-era profits in 2023 after spitting them up in 2022. Shares of this digital printing business (which mostly serves the construction and engineering sectors) are up significantly this year, and much more growth might be in store for them.
The corporation has performed strongly despite fears that macroeconomic problems may hurt its operations. Management expects to reinvest consistent profits to benefit ARC stockholders and sustain the stock’s current dividend payout of 5.93%.
That’s the plan ARC has for its existing share buyback program. Over the next several years, ARC stock might see a massive price increase if it continues repurchasing its shares.
TOMI Environmental Solutions
TOMI Environmental Solutions produces the SteraMist series of solutions for disinfecting hard surfaces within buildings. SteraMist machines, developed to combat anthrax contamination, now clean surfaces with ionized hydrogen peroxide in healthcare, life sciences, and food safety sectors.
Are Penny Stocks A Good Investment?
Penny stock investing has its thrills. Hundreds of stocks available for less than $20, more volatile, and diverse industries all contribute to the allure of penny stocks for many investors. However, remember that penny stocks are extremely dangerous and should never account for more than a small percentage of your portfolio.
The financial risk of investing in penny stocks is high and should not be taken lightly. However, for those willing to take on a great deal of risk, the best-performing penny stocks may yield enormous long-term profits.
Rather than putting all of their money into a single penny stock, investors may spread their bets and spread the risk. Hundreds of low-quality penny stocks are on the market, and finding a few high-quality companies among them might be challenging. Successful penny stock investing, however, may be emotionally and monetarily satisfying.