Investors are always looking for ways to acquire exponential gains by committing limited capital. Penny stocks shine in this regard as they extend high-potential opportunities with a low-cost entry requirement, enacting a convenient investment channel. Simply said, penny stocks offer investors an ideal way to participate in the financial markets with a few bucks, contrary to expensive, blue-chip stocks.
In this article, we have assembled a list of the best penny stocks to buy that are worth considering due to their decent fundamentals. But before that, let us look at what exactly are penny stocks.
What are penny stocks?
Penny stocks are defined as stocks that cost less than $5 per share, mostly priced as low as a few cents. Most penny stocks are not sold on public stock exchanges like NYSE or NASDAQ and trade on the “over-the-counter” market, hence also known as “OTC stocks.” As per the issuing company’s market cap, they can also be labeled as small-cap, micro-cap, and nano-cap stocks.
These stocks belong to burgeoning and small-scale companies that have a narrow track record and non-transparent financial dealings. Moreover, these companies might not be scrutinized by SEC if their operations are at a minimal level. Consequently, penny stocks are deemed the riskiest as you can encounter frauds and much higher volatility than exchange-listed stocks.
5 best penny stocks to buy today
Here are 5 best penny stocks to buy today if you want to be associated with this promising sphere:
1. Pixelworks Inc. (PXLW)
Based in Oregon, Pixelworks Inc. specializes in the production & distribution of semiconductor-based solutions for multiple markets. The company primarily develops video display processor products and software, including display processors, image processor circuits, signal processing technology, and embedded microprocessors. To summarize, Pixelworks works on video augmentation to enhance performance with limited power consumption.
Currently, PXLW has a market capitalization of approximately $120 million with 54 million outstanding shares. Although Pixelworks has not performed exceptionally well till now, it is one of the best penny stocks to buy today, considering its reasonable revenue data and intrinsic potential. The company’s recent income statement shows almost 63 million in revenue over the last 12 months, with quarterly revenue growth of 79%.
2. Sesen Bio Inc. (SESN)
Headquartered in Massachusetts, Sesen Bio Inc is a clinical healthcare company that formulizes, engineers, and circulates TFPTs-based treatments for cancer patients. Vicineum is the chief drug (targeted fusion protein) developed by the company to offer innovative solutions for bladder cancer (BCG) and head & neck carcinoma. VB6-45d is another leading product of the company designed to treat anti-epithelial cell tumors. Besides this facet, Sesen Bio Inc. also holds an agreement with the Leiden Medical Centre to collectively generate an imaging agent.
As of now, the company has a total market capitalization of $179 million with approximately 200 million shares in circulation.
3. NewAge Inc. (NBEV)
NewAge Inc. is a Colorado-based consumer defensive company that manufactures and sells healthy products under numerous brand names like Reviive, Lucim, and Hiro Natural. The company develops and markets energy drinks, skin-care & personal care items, nutritional supplements, and diagnostic kits, such as DNA testing products. New Age Inc. mainly distributes these products via multiple channels, including online selling and direct-stores.
According to recent data, NBEV has a market capitalization of $47 million with more than 146 million outstanding shares. The company’s statistics manifest a revenue of 439 million with quarterly revenue growth of 58.70%.
4. Arrival (ARVL)
ARVL is another good penny stock to buy due to its upside potential as a component of the EV industry. Formerly known as Arrival Group SA, Arrival deals with the design and development of commercial electric vehicles, components, and robotic technology for EVs.
Although the company has been greatly impacted by the recent chip shortages, supply chain disruptions, and inflation, it incorporates several promising prospects. For instance, Arrival is set to start the production of saleable EV buses in the UK this year. Moreover, the company has announced plans to commence van manufacturing operations in Bicester and Charlotte in Q3 and Q4 of 2022, respectively.
ARVL has a total market capitalization nearing $1 billion with more than 630 million outstanding shares. Note that the company was way above the league of penny stocks in 2020-2021; hence, now is a good time to capitalize on its capability with its shares trading at approx. $1. 785. (Remember that no returns can be guaranteed in speculative investments)
5. Gevo Inc. (GEVO)
Headquartered in Colorado, Gevo Inc. is a renewable fuels company that supplies sustainable alternatives in order to mitigate greenhouse gas emissions and attain zero carbon footprint. The company functions via four segments, namely Gevo, Agri-Energy, Renewable Natural Gas, and Net-Zero, to offer eco-friendly fuel solutions.
While the GEVO stock’s value has been depreciating since the start of 2021, its long-term prospects appear to be optimistic, thanks to its environment-friendly operational structure. Another notable positive development is that the company has formed a strategic alliance with Axens North America for ethanol jet technology and sustainable aviation fuel.
Currently, GEVO has a market capitalization of $560 million with 235 million outstanding shares.
Penny stocks are a great way to take advantage of developing companies at low prices. However, do not expect to make a fortune in a few weeks or months via these stocks, as it can take a considerable time for small companies to develop and thrive.
Further, while you can jump at every opportunity they offer, finding a hidden gem among these cost-effective stocks is not that simple. You can also lose all your invested money as these stocks are termed highly vicious and unkind in the investing circle. Hence, investing in viable penny shares requires a comprehensive and intricate understanding of the companies in question.
Nonetheless, if you want to take a chance with this micro-cap investment option, you should first consider your risk tolerance, earnestly analyze the selected firms, and form a diversified portfolio with both low-value and developed stocks to maintain a balanced approach.