Penny Stocks to buy: list 2022
Published: January 10th, 2022 by Andrew
For many traders they are a mysterious object of desire, for others they are just a big bluff: let’s talk about Penny Stocks. These are stocks with rather particular features that, in this guide, we will try to deepen in every single aspect!
Revived by the film with Leonardo Di Caprio, “The wolf of Wall Street”, Penny Stocks have always exerted a certain fascination even on the most prudent investors.
What’s the Truth About Penny Stocks? To answer this question, we have created a detailed guide with timely and detailed information on this kind of company, suitable for all those who are dedicated to investing online and for those who would like to do so.
However, before starting to talk about it, we recommend that you immediately open a free trading account with one of the best online brokers, such as eToro (official website), IQ Option (official website) and ForexTB (official website).
Opening an account, and using a demo platform, will certainly be useful for you to directly test the ideas you find below.
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Penny Stocks: what are them?
We define penny stocks as a type of risky and speculative investment, in which the shares of the companies concerned are traded on the stock exchange for a few euros (or less!) Per share.
These shares are often traded with low volumes of liquidity and – above all – do not have a precise connotation. In short, the trading risks in this case seem greater than usual.
For example, penny stocks are sometimes confused with microcap stocks. Yet the difference is substantial: the latter are associated with the market capitalization of a “small” company (between 50 and 300 million euros), while penny stocks are identified on the basis of their price per share.
Furthermore, penny stocks are often found outside the circuits of major stock exchanges, although some of these stocks are also present in regulated financial markets.
Here is a brief summary of the main features of the Penny Stocks:
|What are:||Stocks traded for a few euros / dollars|
|Type of Investment:||High risk speculative|
|Features:||High volatility and low market capitalization|
|Risks:||Finding assets subject to Pump and Dump|
|Strategies:||Investing in startups on regulated platforms|
Penny Stocks in Europe: do they work?
European penny stocks work just like the American penny stocks and generally like any other stock, while carrying additional risk.
With a lower volume, in fact, penny stocks are traded less frequently by traders, making these investments less liquid.
Penny stocks are also susceptible to strong price fluctuations, making this use certainly more dangerous.
In short, due to their lower share price and lower market capitalization, penny stocks carry greater risk. Often these are stocks made up of highly speculative and newly created companies.
With less coverage from large institutional investors, these stocks offer less information, making it harder to make solid trading decisions.
Furthermore, since they operate outside regulated markets, companies are not even required to file documents with regulatory bodies, or publish quarterly reports with useful information for investors. None of this.
All of this brings us to a primary consideration: penny stocks can be defined as illiquid investments, with a very low volume of shares being traded every day.
Less liquidity increases the chances of not finding a buyer and being forced to sell at unwanted prices. Furthermore, these companies are often subject to price manipulation by investors who buy large quantities of a share, artificially inflating the share price through false and misleading positive statements (pump and dump).
Penny Stocks Trading with eToro
As we have understood from the information provided so far, it is not at all easy to trade Penny Stocks within the official circuits.
For this reason, it should be specified that Penny Stocks can be traded on a high quality Broker such as eToro.
If we are talking about fictitious companies, suitable only for Pump & Dump and without official licenses, then we can be sure that the name of that company will not be present in the eToro basket.
On the contrary, if we refer to Startups with good potential and worth a few dollars but with a clear bullish trend, then it will be appropriate to consider Trading on this platform.
Within eToro, only the best companies are listed, those that are transparent and with balance sheets in order.
So, do we find a stock worth a few pennies and want to focus on its growth? With eToro we can do it: especially in the Nasdaq it is full of similar opportunities and on this Broker there are all the main shares of the US list.
To invest in shares, eToro’s offer is unbeatable:
- Zero fixed commissions
- Possibility to sell short
- Prices always updated and in real time
- Low spreads
Our suggestion? Open a Demo account, look for companies on the Nasdaq with a still low share value and choose the best 5 or 6 to bet on, investing virtual money.
Our wallet will begin to give us satisfaction, switching to a real account will be easy (just a few clicks) and a minimum deposit of only € 200.Register here on eToro to invest in the best Penny Stocks
Penny stocks: is it worth investing?
Investing in penny stocks can be profitable if the investor fully understands the risk that these securities entail.
Generally speaking, the investor should only use the money he is willing to lose and make sure that this investment fits into the strategy of a diversified portfolio.
Investors should set realistic expectations when buying penny stocks, recognizing that the odds of making a hefty profit usually against them. The buyer must also be prepared for the potential large losses that may arise from these investments.
Precisely for this reason, before making purchases of penny stocks, it is a good idea to “train” a bit by opening a demo account at one of the best online brokers, such as the eToro demo account (on the official website).
Penny Stocks Trading: all the Truth!
Let us now understand how you can financially trade penny stocks with even greater awareness.
We have identified some ideas below which we recommend that you pause for a while:
- Are risky: Pennies are riskier than common stocks due to lower prices per share and higher volatility. Since these are highly speculative investments, they are certainly not suitable for everyone, but only for traders who – after a careful analysis of their strategy – believe that these investments are compatible with their own levels of sustainable risk;
- Offer less liquidity: with penny stocks there is a much lower volume of shares that are traded every day. When fewer shares are sold, each significant purchase or sale can push the shares to higher or lower levels. A lower volume also means that the investor runs the risk of not being able to sell their shares at the desired price;
- Have low market capitalization: hence the term microcap. Their market capitalization is usually of the order of 50-300 million euros. It is the result of a low price per share combined with a low number of shares in circulation;
- There is less information available: this makes it more difficult to make sound investment decisions. There are fewer reports and fundamentals available, and much of the information available rarely comes from credible sources;
- They are volatile: extreme swings in penny stock prices can happen in a short time, weekly or even daily, as these stocks are very sensitive to news. Traders rarely buy these stocks for their strong fundamentals, but rather for the potential of a major new product, such as the next big pharmaceutical drug;
- They can be manipulated: Poor liquidity and lack of information make them susceptible to price manipulation which first buy a large amount of shares, then artificially inflate the share price through false and misleading positive statements. Scammers will use various media platforms such as newsletters, television or online articles to promote “the next big investment to make!”;
- No historicity: if it is a newly established company, there is no useful price history to be able to carry out a valid analysis. Sure, past performance is no indication of future performance, but it is worthwhile!
Penny Stocks NASDAQ/NYSE List
The stock exchanges of the United States are the most fertile hunting ground for penny stocks. If you want to know more, we’ve found an updated 2021 list of penny stocks on the Nasdaq and NYSE below:
- ABEV – Ambev S.A – NASDAQ
- CHK – Chesapeake Energy Corp. – NYSE
- DPW – DPW Holdings, Inc. – NYSE
- GERN – Geron Corp. – NASDAQ
- GLBS – Globus Maritime Ltd, Jersey – NASDAQ
- GFI – Gold Fields Ltd. – NYSE
- GPL – Great Panther Mining Limited – NYSE
- KGC – Kinross Gold Corp. – NYSE
- LYG – Lloyds Banking Group plc – NYSE
- NVCN – Neovasc, Inc . – NASDAQ
- NIO – NIO Inc. – NYSE
- NOG – Northern Oil & Gas, Inc. – NYSE
- ODP – Office Depot, Inc. – NYSE
- TEUM – Pareteum Corporation – NASDAQ
- JCP – Penney (J.C.) Co., Inc. (Holding Co.) – NYSE
- DCIX -Performance Shipping Inc. – NASDAQ
- PXS – Pyxis Tankers Inc. – NYSE
- SWN – Southwestern Energy Co. – NYSE
- UXIN – Uxin Limited – NASDAQ
How to choose Penny Stocks
Let’s see some steps to choose the best penny stocks on your own.
Look for the company
An informed trader is a smart trader. One of the first things to do when deciding what to do with an action is to do a quick Google search on the company in question. Sure, such a business won’t give you all the answers you want, but it can still help you determine if the title deserves more in-depth research or not.
Study the volatility
When choosing penny stocks, price volatility must be considered. The goal is to find rapidly growing stocks. Nowadays there are many useful tools to help you rank the best and worst stocks.
In this sense, even a good broker like eToro (official site) will certainly be useful to you.
Remember: if a stock hardly moves at all, there isn’t much volatility you could speculate on. Volatility can be a good thing: it means that there is action, both up and down and this can potentially generate significant margins!
Observe the trading volume
Liquidity is also important. No matter how tempting a company’s press release may seem: if there isn’t much volume behind it, don’t trade the stock!
Volume is the number of shares that change hands on a given day. The volume can help you get a more accurate look at the stock, and the convenience of trading on a particular stock.
In essence, high trading volumes mean that there is interest in a penny stock. When you decide to sell, it will probably not be difficult to find a buyer.
Look for a catalyst
A catalyst is something that triggers an important event. In the stock market, a catalyst is any news – good or bad – that can move a stock’s price.
Think of a corporate press release according to which company X is announcing the launch of a new product that is highly anticipated by the market, or of mergers, corporate scandals and so on.
Listen to what others say
It is often nice and useful to hear the noise and rumors you can see online about penny stocks.
However, be careful. Even if you do well to check what people are saying on social media about that penny stock you have targeted, you should take what you spot with great caution and you will never have to make a trading decision based on the market buzz alone.
Learn more about the stock patterns of penny stocks
History repeats itself… more or less. Of course, it is never repeated verbatim, but it can give you a pretty useful indication of how a penny stock could work.
So go in search of models and patterns, in order to try to decipher what could happen in the future to the stock you want to put in your wallet.
Pay attention to balance sheet data (and especially debt)
If a company has a lot of debt … it can be a bad alarm bell.
In short, even if you are speculating on the very short term and would like to focus your choices only on technical analysis, remember that selecting good shares also means observing the company from all points of view, including its financial health.
In short, invest well by relying above all on technical analysis, but never forget to also take into account the fundamentals. So, take the time to look at the balance sheet reports and see what’s going on.
Finally, we remind you that the best way to trade penny stocks is certainly to use the best investment platforms of the best known brokers, such as eToro. All the main shares on a global scale are listed on this Broker, it follows that even a Penny Stock if it complies with the conditions required by the main regulatory bodies can be traded safely.Click here to request the eToro Demo account
This term indicates companies by wanting a penny, or less, per share.
Much depends on the choice of title. If we invest in unknown companies with no clear information, our investment will be a gamble. Conversely, by targeting companies with high growth potential and balance sheets in order, the opportunities for profit increase.
The best pennies are listed on the most important brokers. This is undoubtedly the best way to invest.
Certainly the Nasdaq, the US technology index, full of startups with high growth potential.