Based on our research and reviews, here are our picks for best penny stocks to buy in September 2020:
Penny Stocks To Watch This Month
The market has rebounded over the past few months, and these penny stocks have been some of the top performers.
If you’re looking for more cheap stocks, be sure to check out the best stocks under 1 dollar and the best stocks under 5 dollars. Also, be on the lookout for these under $10 on this page, set for release next week.
Best Penny Stocks: Top Penny Stocks for September 2020
Top Ships INC. (TOPS)
This penny stock is leading the charge this week. Top Ships is a Greece-based oceanic shipping firm that owns and operates a fleet of modern, fuel-efficient “ECO” tanker vessels.
Shares skyrocketed 130% on Monday, and they were up nearly 4% during pre-market trading on Tuesday.
The rally came after the firm announced that its 50% subsidiary, City of Athens Pte, sold one of its vessels, the M/T Holmby Hills. Top Ships will receive $10.2 million as a result of the transaction.
The company expects to sell an additional partly-owned vessel in the second week of April. Top Ships expects to receive an additional $10 million from the deal, depending on foreign exchange rates.
SuperCom Ltd. (SPCB)
SuperCom is an Israeli-based biotech stock that provides security solutions for the government, public safety, healthcare, and finance sectors.
Shares surged 120% on Monday after the company made a major announcement which is why it is one of the best penny stocks
Early Monday morning, the company announced that it was shipping an early pilot of ground-breaking software that could help contain the coronavirus outbreak.
The SuperCom system uses an ankle bracelet to monitor citizen quarantine compliance. Government officials can leverage the SaaS-based product to monitor quarantine patients so they know they’re complying with government guidelines.
Plus Therapeutics Inc. (PSTV)
Plus Therapeutics is a clinical-stage pharmaceutical company that primarily develops treatments for rare cancers. Shares rallied 57% on Monday after the company released an upbeat earnings report before the market opened.
Plus Therapeutics released its fourth quarter and full fiscal rear reports on Monday. In the fourth quarter, the company generated a net income of $920,000 or $0.12 per share.
This marked a significant improvement from last year when the company reported a net loss of $2.0 million or -($7.28) per share. Investors applauded the report and the news helped power the rally in share prices.
Pluristem Therapeutics Inc. (PSTI)
Shares of this Israeli-based biotech firm surged 37% during Monday’s trading session. The company is best known for developing innovative therapies for disease treatment.
The company announced that it had dosed three high-risk COVID-19 patients in Israel with its therapy under the Israeli Ministry of Health Approved Compassionate Treatment program.
Pluristem hopes to enroll more patients in the program soon, and it says it will provide continuous updates on outcomes once they have significant clinical data.
More on Penny Stocks
“Find out how an ordinary accountant quit his job after making it big with penny stocks.” “Discover how you could turn $10,000 into $100,000 with penny stocks.” “Here is how to make your first million in under a year by trading penny stocks.”
This is the kind of language that surrounds penny stock trading. It is a glamorous, fast-paced world, and many of the success stories you hear truly are jaw-dropping. A few of them are even true.
You can make a ton of money trading the top penny stocks, but it isn’t easy, and it isn’t for everyone. Penny stock trading is highly volatile, and as such, is more speculative than other more traditional forms of investing.
That means that the stocks you invest in do have the potential to soar—but they also may crash and burn.
In this guide, I am going to teach you everything you need to know to get started with penny stock trading. Let’s start with the very basics, and talk a bit more about the best penny stocks and why they are different from other financial instruments.
What Are Penny Stocks?
The definition of a penny stock is simple:
Penny Stocks(n)=Any publicly-traded security with a current value of under 5 dollars.
Most penny stocks cost much more than a penny, but that’s a misnomer. Traders generally use the term to label stocks that are cheap and risky. Once stocks trade for more than five dollars per share they technically stop being penny stocks.
Not all penny stocks trade on major exchanges like NASDAQ or NYSE. There are some cheap stocks on NASDAQ and NYSE, and these do count as penny stocks—but they are just the tip of the iceberg.
Are Penny Stocks Worth It?
Major exchanges have stringent listing requirements, so only the best companies make the grade. However, there are thousands of companies that trade outside of the NYSE and NASDAQ. Stocks that aren’t exchange-listed are usually referred to as OTC stocks.
OTC stocks come in several different flavors. There are several OTC exchanges with different listing requirements.
For example, Over-the-counter Bulletin Board (OTCBB) stocks have to meet some basic listing requirements. Conversely, Pink Sheets stocks have almost no listing requirements. There are also other OTC markets with stricter listing requirements.
OTCQX is the highest tier of OTC markets and it’s often used as a stepping stone to the major exchanges. There’s also the OTCQB, which is a mid-tier OTC exchange for companies that don’t meet the OTCQX requirements.
However, once you find a broker that accepts OTC trades, the process is identical to buying NASDAQ or NYSE stocks.
Pros of Penny Stocks
Why invest in penny stocks? Find out below.
Penny stocks are volatile. Sometimes they take off, and when they do, they can skyrocket. You could buy a penny stock that is worth a penny and watch it go up to $10 in a matter of weeks.
If you purchased $10 worth of those stocks instead of a penny’s worth, you could’ve earned $10,000 on one trade with minimal risk. It’s hard to find rapid gains like this in more established stocks.
You can invest in the top penny stocks with a very small bankroll. You don’t need tens of thousands of dollars to start trading. The entry barriers for penny stock trading are incredibly low.
Real opportunities exist. There are solid companies out there that haven’t made their name yet. Some of the world’s most valuable tech companies began their lives as penny stocks. If you get in on the ground floor, you can make an absolute killing.
Cons of The Best Penny Stocks
Penny stocks are highly speculative, and as such, are risky. Volatility is a two-edged blade. It can make you rich, but it can also break you overnight (which is the more likely outcome).
It does not help that it can be hard to sell a penny stock once you have purchased it. You might think, “That is not a big deal if I am just investing a few dollars,” but it can all add up if you do not manage your money with care.
It’s hard to come by quality stocks. While there are some amazing penny stocks out there, the majority are not sound investments. Many of these companies are in financial or legal trouble.
This industry is practically unregulated, so it’s plagued by pump-and-dump scams. You can avoid these if you are careful, so take the time to learn a good investment from a bad one.
How to Find The Best Penny Stocks to Buy
- Check penny stock listings like the aforementioned OTCBB and Pink Sheets. Then, start conducting your own independent research on the companies you like.
- Search for lists of the 10 best penny stocks or the top 100 active penny stocks. These posts can be a great way to find trade ideas, but make sure you check publications you can trust. Also, always take any third-party advice with a grain of salt. Do your own research.
- Sign up for an investment research service. Alerts services deliver high-quality stock picks and research for a monthly fee. Many services also include a treasure trove of bonus reports and other helpful materials, including video lessons, community support, individual coaching, and more. If you want to learn more about investment research services, read our reviews section to get the inside scoop on some of the best companies in the business.
A lot of traders buy whatever penny stocks are trending on Twitter, but there’s a better way to trade. If you want to win this game, you need to do your homework.
How To Buy Penny Stocks
You can buy penny stocks with a brokerage account. Almost every broker allows users to trade exchange-listed penny stocks, but certain brokers don’t offer access to the OTC Markets. If you want to trade penny stocks that aren’t listed on the Nasdaq or New York Stock Exchange, you’ll have to find a broker that offers OTC trading.
Where To Buy Penny Stocks
Penny stocks trade on every major exchange, including the Nasdaq, NYSE, and OTC Markets. Once you open and fund your brokerage account, you can begin buying penny stocks.
Before you choose a broker, you should compare their relevant features and resources. Check out the charting features, user interface, fee schedule, and other key factors before making a decision.
You can also request a free demo so you can try out the trading platform before committing. Some traders even keep accounts with more than one brokers so they can take advantage of all the best features.
Best Penny Stock Broker
The best answer really depends on your needs. You should look for a broker with no commissions, low fees, a feature-rich platform, and an easy-to-use interface.
Robinhood is a popular choice for beginners, but you can’t trade OTC penny stocks on the platform. More established brokers, like eTrade, Fidelity, and Interactive Brokers are among the most popular for trading penny stocks.
You can also go with TD Ameritrade and Schwab, who have agreed to a merger that should close sometime this year.
Last year, most of the major brokers switched to a zero-commission business model. Now, trade commissions are a product of a bygone era, but there are still plenty of things to consider.
Most of the established brokers offer a variety of educational resources, features, and other extras. Some brokers offer more inclusive financial services than others, so you should also consider your long-term financial needs.
If you’re in it for the long haul, you should consider choosing a firm that offers wealth management services and retirement accounts.
Robinhood and WeBull are two of the best penny stock platforms for beginners. Check out our comparison review to see which platform is best for you, and don’t forget to use the invite link to get free stocks when you sign up.
Investing in Penny Stocks
If you are serious about winning with penny stocks, you need to do your homework. Here are some questions to consider:
A lot of penny stocks are in shell companies. Shell companies do not actually do anything, despite being legally incorporated.
They are set up either for reasons relating to the branding or finances of the company which owns them, or they are reserved for future use. The point is that they are inactive.
Stay away from shell companies; only invest in real companies that are producing real products or offering real services.
Check out the statements to see if they are being filed on time and if the figures are robust. Also see if you can find out whether there is any independent auditing, and if so, what the auditors have discovered.
Make sure that the fundamentals are intact, and that the company’s business structure makes sense. See if they can actually deliver in their industry.
Investing involves a lot more than financial figures. There’s a story behind every company, and it can tell you a lot about where a company is heading.
You should review company press releases and earnings call transcripts to get a better idea of the company’s priorities. Professional analysis is also an important piece of the puzzle.
You can’t rely on the little company bio that’s listed on your brokerage platform because that information can be vague, outdated, or completely incorrect.
Search engines can help you find recent news involving the company. You can also check investor communities like StockTwits or SeekingAlpha to see how traders are viewing the company.
You should consider all of the information that’s available before making an investment.
Examples of Penny Stocks That Won Big
Need proof that penny stocks really can soar? Here are a few that have made headlines:
- Concur Technologies is a company that was trading at $48.50 per share during the 90s tech bubble. When NASDAQ crashed, shares dropped to $0.31. Eventually, share prices soared rebounded to $107.
- Have you ever shopped at Pier 1 Imports? The last recession hit this retailer hard. Shares dropped as low $0.11 apiece at the time, but they eventually bounced back to over $20.
You can make a killing if you pick up on opportunities like these. The market doesn’t always get it right, so you won’t make any money by following the crowds.
If you want to make it as a penny stock trader, you have to keep an independent perspective.
Penny Stock Scams Exposed
The penny stock market is frequently targeted by scammers. Scammers frequently use “pump and dump” schemes to net big profits.
It’s a common term for a when shareholders make a concerted effort to artificially inflate the stock’s price through circulating misleading information.
When the price goes up, they sell and cash out.
The sites and materials distributed by pump and dump scammers often look official and trustworthy. But if you buy into their stocks, you will end up losing a ton of money by investing in worthless stocks.
Thankfully, the trick to avoiding this is pretty simple. Just do the research I recommended earlier every time you are considering buying a penny stock.
Are Penny Stocks the Right Fit For You?
Penny stock trading isn’t for everyone, but if you have the right personality and mindset, you could make great money in this market. Ask yourself if you have the following traits:
- Patience to wait for solid investments to come along and only solid investments.
- Research skills, critical thinking, and attention to detail.
- Discipline and perseverance to stick with penny stock trading over the long haul.
- A handle on your emotions. While penny stock trading is exciting, you should not get into this game for the thrills.
- Honesty. The most profitable investors are always those who can be honest with themselves about the decisions they make. This is the only way to spot mistakes and make improvements.
If that sounds like you, penny stocks could be your road to riches.
Penny Stocks To Buy Today
When you’re trying to figure out what penny stocks to buy today, you’ll want to develop a watch list. Generally speaking, you’ll want to buy penny stocks that have a catalyst. The reason being is that stocks that have catalysts are usually volatile.
As a trader, volatility helps you net short-term profits. A real-time news service can help you with stocks that reacting to recent news. Many analysts don’t cover penny stocks, and headlines create lots of volatility for otherwise obscure stocks.
List of Penny Stocks
Creating a list of penny stocks is a savvy way to prepare yourself for whatever lies during the trading day. For example, you can create lists based on percentage movers, largest gainers/losers, 52-week highs/lows, etc.
Find penny stocks with high short-interest ratios to create a short-squeeze watchlist. You can also list by category, so you can quickly zero in on opportunities when a particular industry – like cannabis or cryptocurrency – is in the news.
Lists can help you make better and faster decisions.
Penny Stocks Trader Checklist
Before you trade, follow these steps to give you the best chance of success
- Screen stocks based on parameters that fit your investment strategy and identify appropriate candidates.
- Conduct due diligence research on your trade candidates to ensure you fully understand the risks.
- Determine how much you will invest. Don’t spend more than you can afford to lose. If you’re having anxiety or obsessing over a trade you’re probably investing too much.
- Formulate a trading strategy. Set profit goals and identify your entry and exit points in advance. This allows your to act decisively in case you’re forced with a split-second decision. Remember, the markets move fast, so it’s best to identify your expectations in advance.
- Make the buy. Use limit orders to ensure you build your position within your targeted entry point.
- Maintain strict trade discipline. Stick to your strategy and try not to obsess on the day-to-day price action.
- Monitor day-to-day news to ensure nothing arises that affects the outlook for your trade.
- Make your exit in an orderly fashing. Whether you lose or gain, stay calm, and don’t make impulsive decisions.
- Conduct post-trade analysis to identify reasons for success or areas where you can improve.
More Trading Tips
Following this list will help you become a more effective trader, but it’s only the beginning. You need to constantly assess and reevaluate your strategies to ensure you’re making the right moves. Here are a few more things to take into consideration.
You can practice trading before you start risking your hard-earned cash. Paper trading is the practice of working theoretical trades out on paper but, these days, most traders use trading simulators to practice these days.
Some brokers, like WeBull, even have trading simulators built into their trading platforms. Making simulated trades is a great way to get accustomed to stock trading without blowing through your nest egg.
Cut Your Losses
Don’t stick with a losing trade for too long. In certain cases, you just have to cut your losses and move on. Oftentimes, patience pays off, but sometimes you have to identify a bad trade for what it is and get out of your position.
It’s hard to walk away if you really believe in a company, but don’t let your personal bias drag you into more losses. Identifying an exit point in advance is the best way to avoid getting sucked into serious losses.
Day Trading Penny Stocks
Many day traders prefer penny stocks over traditional blue-chip stocks. Smaller-cap penny stocks don’t get a lot of coverage on Wall Street, so they tend to react to news events more drastically.
Investing in a service that alerts you on breaking news might be worthwhile if you intend to day trade penny stocks. Of course, that is not the only thing that matters. In fact, you can even use alerts created from your trading platform that point out large daily moves.
The Best Penny Stocks: Closing Thoughts
Investing in penny stocks is a high-risk, high-reward game. Many of these companies are just getting started, so it’s a toss-up whether they will be successful over the long-run. However, you can net major gains if you get it right.
Penny stocks are affordable for low-budget traders, and there are thousands of companies to choose from. If you do your research and make disciplined trades, you can earn major gains by trading these cheap stocks.
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