Penny Stock Investing: Best Stocks and Tips

Penny stocks are super high-risk investments that aren’t suitable for all investors. Then practice what you’ve learned with our free stock market simulation.

Here are some penny stocks to keep an eye on:

SymbolCompany
VTVTvTv Therapeutics Inc.
AXSMAxsome Therapeutics Inc.
ALQAAlliqua Biomedical Inc.
ADILAdial Pharmaceuticals Inc.
BTAIBioXcel Therapeutics Inc.


Penny stocks can also be called micro-cap stocks. While the latter are categorized based on their   market capitalization, penny stocks are classified as such based on their price. A stock with a market cap between $50 and $300 million is generally considered a micro-cap. The SEC defines any stock under $5 as a penny stock.

WHAT ARE PENNY STOCKS?

Because these stocks are traded over-the-counter, there are a few added risks to consider.

They are not as liquid

Because there is a much more limited number of buyers and sellers in the OTCBB, penny stocks just aren’t as liquid. One way to remedy that is to sign up for a penny-stock service which will make finding trades much easier.

Less available information

There is much  less information  readily available for stocks traded OTC. It’s harder to make an informed decision about a company about which you know very little.

Manipulation

Penny stocks can be verily easily manipulated, sometimes illegally, to drive their prices up. These stocks attract many solicitors and scammers who trick unaware investors and make a lot of money doing so.

HOW TO INVEST IN PENNY STOCKS

Penny stock market

Penny stocks’ low prices mean that they are super volatile investments. Just a small change in the stock price would have a huge effect overall. This is both the allure  and danger of penny stocks:  High Risk, High Return . A risk-taker would be enticed to buy a huge volume of shares of a cheap stock in hopes of winning big if that price goes up a bit. This is usually the plan when buying penny stocks. Investors will scoop up tens of thousands, hundreds of thousands, even millions of shares of a stock that sells for very little per share. The idea is to get in quick and cheap, and get out fast and flush.

Many OTCBB companies are working crazy hard to climb their way up to the Nasdaq and NYSE status. Some companies on the OTCBB might be good quality, but penny stocks are just very high-risk investments and they aren’t suitable for all investors. If you can’t resist the lure of these micro cap stocks, at least make sure you do extensive research.

Where to Buy Penny Stocks

Penny stocks are often not traded on any major stock exchanges. Though the NYSE, NASDAQ and AMEX are home to some of the more established penny stock companies , they’re usually traded  over-the-counter  on the OTC Bulletin Board (OTCBB) and pink sheets.

HOW TO FIND THE BEST PENNY STOCKS TO BUY

Penny Stock Software and Tools

Here are some super helpful tools to use when buying penny stocks:

Penny Stock Tips

  1. Ignore penny stock success stories that are touted on social media websites.
  2. Sell quickly .
  3. Focus only on penny stocks with high volume (at least 100,000 shares a day)
  4. Don’t fall in love with a stock!!!

The Best Stock Newsletters as of January 3, 2025

Ranking of Top Stock Newsletters Based on Last 3 Years of Stock Picks

We are paid subscribers to dozens of stock and option newsletters. We actively track every recommendation from all of these services, calculate performance, and share our results of the top performing stock newsletters whose subscriptions fees are under $500. The main metric to look for is "Excess Return" which is their return above that of the S&P500. So, based on January 3, 2025 prices:

RankStock NewsletterStock
Picks
Average
Return
S&P500
Return
Excess
Return
Percent
Profitable
Max %
Return
Min %
Return
1.Seeking Alpha logo
Alpha Picks
6471.7%23.9%47.8%77%969%-47%
Summary: 2 picks/month based on Seeking Alpha's Quant Rating; Retail Price is $499/yr. See details in our Alpha Picks Review.FEBRUARY PROMOTION:
Save $50
2.Zacks logo tiny
Value Investor
3926.8%13.9%12.8%51%494%-41%
Summary: 10-25 stock picks per year based on Zacks' Quant Rating; Retail Price is $495/yr. Read our Zacks Review.FEBRUARY PROMOTION:$1, then $495/yr
3.Zacks logo tiny
Top 10
3321.2%8.4%12.8%52%170%-56%
Summary: 10 stock picks released on January 1st of each year based on Zacks' Quant Rating & maybe 1 or 2 changes a year; Retail Price is $495/yr. Read our Zacks Review.FEBRUARY PROMOTION:$1, then $495/yr
4.Moby logo tiny
Moby.co
31142.1%31.4%10.7%74%1030%-95%
Summary: 60-150 stock picks per year, segmented by industry; Retail Price is $199/yr. Read our Moby Review.FEBRUARY PROMOTION:Get 1 pick free!
5.Motley Fool logo
Stock Advisor Canada
3631.8%25.3%6.5%81%216%-68%
Summary: 1 pick/month from the Toronto stock exchange; Retail Price is CD$199/yr. Read our Motley Fool Canada Stock Advisor Review.FEBRUARY Promotion: Get $100 Coupon
6.Motley Fool logo
Hidden Gems
7638.1%32.9%5.2%71%258%-100%
Summary: Sold as part of Epic service that includes Hidden Gems, Stock Advisor, Rule Breakers; 5 picks/month; Retail Price is $499/yr.
Read our Epic Review.
FEBRUARY Promotion: Get $200 Coupon
7.TheStreet logo
Action Alerts Plus
37820.8%16.7%4.1%56%220%-77%
Summary: 2100-150 trades per year, lots of buying and selling and short term trades. Read our Jim Cramer Review.Current Promotion: None
8.TipRanks logo
TipRanks SmartInvestor
12410.3%7.2%3.1%60%269%-48%
Summary: About 1 pick/week focusing on short term trades; Lifetime average return of 355% vs S&P500's 149% since 2015. Retail Price is $379/yr. Read our TipRanks Review.Current Promotion: Save $180
9.Motley Fool logo
Rule Breakers
6636.2%35.4%0.8%65%344%-81%
Summary: 2 picks/month focusing on disruptive technology and business models; Lifetime average return of 355% vs S&P500's 149% since 2005; Now part of Motley Fool Epic. Read our Motley Fool Epic Review.Current Promotion: Save $200
10.Motley Fool logo
Stock Advisor Canada
7125.2%24.8%0.5%73%216%-93%
Summary: 2 pick/month from the TSX and U.S. markets; Retail Price is CD$199/yr. Read our Motley Fool Canada Stock Advisor Review.FEBRUARY Promotion: Get $100 Coupon
Top Ranking Stock Newsletters based on their 2024, 2023, 2022 stock picks' performance as compared to S&P500. S&P500's return is based on average return of S&P500 from date each stock pick is released. NOTE: To get these results you must buy equal dollar amounts of each pick on the date the stock pick is released. Investor Business Daily Top 50 based on performance of FFTY ETF. Performance as of January 3, 2025.