If you’ve been looking for affordable investment opportunities, you may come across the concept of low float stocks. While these stocks aren’t going to be for every investor, they present an incredible opportunity for those who are willing to take a risk.
Low float stocks have a relatively small number of outstanding shares available for trading. This means they have very high volatility when compared to other stocks.
Because of this, trading low float stocks comes with a lot of added risk, but there’s also the potential for huge returns if you time your trade right.
In this article, we’ll take an in-depth look at low float stocks and how to find them. We’ve also picked some of the best low float stocks on the market right now.Wondering where to buy the stocks listed in this article? Check out Webull! Webull is an excellent trading app for beginnings and experienced investors alike. They have zero fee trading, and you'll even get a free stock (valued up to $1600) just for signing up!
What Are Low Float Stocks?
Low float stocks are stocks that have a very low number of floating shares, or shares that are available to buy.
It’s fairly easy to find information about a company’s shares on their current balance sheet.
You’ll see information about the current number of shares outstanding, which is the total number of shares the stock has.
Not all shares outstanding are available to trade, as some are typically held by employees or other company insiders.
These are labeled as restricted shares. To calculate the number of floating shares, you can subtract the number of restricted shares from the number of total shares outstanding.
In general, low float stocks have less than 10 million floating shares available. Some investors would define ‘low float’ as having less than 20 million floating shares.
Best Low Float Stocks To Buy
Revlon Inc. (NYSE: REV)
Revlon is one of the world’s most well-known beauty companies. They make cosmetics, skincare, and other personal care products, which are available around the world.
Although the company has been around since 1932 and is sold in over 150 countries, it is still a low float stock.
Right now, they currently have approximately 7 million floating shares.
The company has struggled in the past few years, with less than stellar earnings reports and plenty of outstanding debt.
The pandemic didn’t help matters, but Revlon is taking steps to get to a healthier financial place.
They are using a restructuring plan to get their debt paid down over the next few years and develop a healthier balance sheet.
Revlon may not be a good choice for investors looking to build a long-term portfolio. However, their ups and downs actually make them a good option for day traders interested in low float stocks.
Revlon’s financial ups and downs can result in dramatic daily price changes. Savvy investors can use this to their advantage.
Improving economic conditions could also help Revlon get back onto their feet in the coming months.
As the pandemic slowly comes to an end in some countries, many people will have more money to spend on discretionary products like makeup and skincare.
JW Mays Inc. (NASDAQ: MAYS)
JW Mays is a real estate company based in New York. They currently have less than 1 million public floating shares.
The company was incorporated in Brooklyn in 1927 and ran discount department stores throughout the New York City area.
After closing the department stores in 1988, they reincorporated as a real estate company. Today, they use the real estate that was previously occupied by their department stores.
The real estate market in New York struggled in 2020 due to the COVID-19 pandemic. Many people left the city in favor of smaller towns, and many people were worried of a permanent population decline.
However, this didn’t come to pass, and many people have moved back into the city now that vaccines are widely available. This boosted the value of New York real estate and had a positive impact on JW Mays stock.
Between June 2020 and June 2021, the stock’s year-over-year growth was over 40 percent.
This stock is on a steady upward trajectory, but the low float aspect also makes it an intriguing option for day traders. Any positive or negative news could result in a significant change.
AMCON Distributing Co. (NYSE: DIT)
Amcon is a wholesale distribution company based in the United States. They distribute thousands of different consumer products to stores all over the country.
Some of the products that Amcon distributes include groceries, cosmetics, paper products, and tobacco products.
Because many of these products are considered essential, Amcon is able to perform well even during touch economic times.
This stock is currently trading at a five year high. From June 2020 to June 2021, their share price has grown by over 165 percent.
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This growth is very impressive, but the stock still has a public float of less than 200,000 shares.
This means the stock could be more volatile than others in this price range. Traders will want to watch for a dip where they can scoop up some shares at a discount.
Despite trading at a five-year high right now, Amcon’s price to earnings ratio is currently less than 10.
This means the stock is currently trading at a very low price relative to their most recent earnings report.
All of these factors make Amcon a stock to keep your eye on moving forward.
Seneca Foods Corp. Class A (NASDAQ: SENEA)
Seneca Foods Corp. is another excellent consumer discretionary stock with a low float.
The company is based in New York and specializes in food packaging. They’ve managed to achieve consistent growth despite the pandemic because their services were essential.
Right now, Seneca Foods Corp. has a float of approximately 6 million shares.
While this stock has been performing very well over the last year, it still has plenty of potential to grow.
Its price-to-earnings ratio is currently less than 5, which is extremely low. This means that the stock is considered to be very cheap when comparing its share price to its most recent earnings report.
With such a low float, this stock has had some ups and downs over the past year. This presents plenty of opportunity for day traders to take advantage.Looking for more stock picks? Get a new trade every week for free with Trade Ideas. Trade Ideas sends you a new pick every single week along with the reasoning on why it could be ready to break out. Sign up for free right here.
Low Float Biotech Stocks
Ontrak Inc. (NASDAQ: OTRK)
Ontrak Inc. is a healthcare company that focuses on treating behavioral conditions using technology. They were previously known as Catasys.
Ontrak is a program that combines in-person behavioral health treatments with telehealth, machine learning, and AI solutions.
Many people with behavioral health conditions struggle to get the treatment they need. Ontrak’s program makes treatment more affordable and accessible.
Ontrak has attracted a lot of attention over the last year, and its stock has been through many ups and downs. Their current float is approximately 7.5 million shares.
Ontrak’s unique service offering has attracted lots of attention in 2020. The stock hit a high point back in February, but share prices plummeted shortly thereafter.
This dramatic drop happened because Ontrak lost their largest client, Aetna.
However, they are still working with Medicare as well as a number of other major healthcare companies. The loss of Aetna was purely due to the cost of their services, not the success of the program.
Their share price has slowly been improving in recent months. Despite the loss of a major client, their sales numbers have been very impressive, especially for a small biotech company.
Many experts also consider the stock to be undervalued, as their price-to-sales ratio is quite low.
Additionally, the stock has recently attracted the attention of the WallStreetBets subReddit, which has been known to increase a stock’s volatility.
Both day traders and long-term investors will definitely want to keep their eye on this low float stock.
Low Float Penny Stocks
China Finance Online Co. (NASDAQ: JRJC)
China Finance Online is a Beijing-based financial information company.
Over the past few years, there has been a lot of hype around Chinese stocks as the country continues to increase its status as a world power.
However, some people have also been skeptical of Chinese companies, especially as there have been tensions between China and the U.S.
This company currently has a float of less than 500,000 shares, which presents plenty of opportunity for day traders.
For investors looking to take a risk on Chinese low float stocks, this could be a good option.
Xiaobai Maimai (NASDAQ: HX)
Xiaobai Maimai is another low float stock based in China. They are a consumer lending company that also runs a mobile social media platform.
This penny stock isn’t going to be a great choice for long term investors, but its low float of less than 20 million is a great choice for day trading.
The stock has a history of being quite volatile, with dramatic spikes and dips over the course of a 24 hour period.
Their share price has been consistently less than $3 over the past year, so it’s not expensive to invest.
However, investors will need to time their purchases in order to take advantage of these ups and downs.
How To Find Low Float Stocks
The best way to find these stocks is to use a low float stock screener.
These tools scan through every stock on the market to find the ones that fit your parameters.
You can enter a number of different criteria to help you find the right stocks for your investing needs. In addition to a stock’s current float, you can also narrow it down by price, percent change, and much more.
Should You Buy Low Float Stocks?
Low float stocks aren’t going to be the best choice for every investor. However, they have become very popular among day traders.
If you use the right trading strategy, you can generate huge returns on low float stocks fairly quickly.
Because there are so few shares available, just one trade could have a huge effect on the stock’s price point.
This high volatility means that a low float stock could generate returns of over 10 percent in one day. However, the potential for losses is much higher as well.
Additionally, many of these stocks have a low trading volume in general, which increases the stock’s chances of volatility even further.
If you’re interested in day trading and are comfortable with a high-risk, high-reward strategy, low float stocks could be a good option for you.
In order to trade them effectively, you’ll need to have a good understanding of how the market works and how investors might be reacting to these companies.
There are certain news catalysts that can send a company’s stock up and down very quickly. Day traders will need to stay up-to-date with a company’s business to ensure that they don’t miss an important catalyst.
If you’re new to investing, low float stocks might not be for you just yet. It’s important to have a good knowledge of how the market works, as well as a strong risk tolerance.
To trade low float stocks, you’ll also need to take extra time each day to monitor the market and conduct research.
Low Float Stocks: Final Thoughts
Although low float stocks can be quite risky, they also come with the potential for huge rewards.
When investing in low float stocks, it’s important to keep an eye on current market data so you can buy or sell at the right time.
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