Penny Stocks: Top-5 Picks for October 2019
It was a wild August for the market and penny stocks traders. Back-and-froth tariff hikes between the U.S. and China helped fuel a volatile month for the stock market. But volatility can be a good thing for smart traders, and August’s back and forth swings are creating a rich environment for dip buyers. September’s best penny stocks performed well in spite of the heightened volatility.
These penny stocks could be long-term deals. Be sure to add these low-priced superstars to your watchlist this month. If you enjoy stock dork penny stocks, be sure to sign up for Stock Dork Alerts to get exclusive access to in-depth reports and much more. We’re giving away a free e-book this month, so be sure to check it out!
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.
Ardelyx Inc. (NASDAQ: ARDX)
This biotech stock is a big winner this month. Ardelyx is a west-coast is a specialized biotech firm that specializes in heart and kidney treatments. The company is facing an FDA decision on one of its key treatments next month, and it’s looking like the treatment will get approved.
Ardelyx has high hopes for tenapanor, one of its flagship drugs. On September 12th, the FDA will decide whether to approve tenapanor for the treatment of irritable bowel syndrome (IBS). In addition, Ardelyx plans to seek approval for treating end-stage renal disease (ESRD) patients on dialysis with the drug. EvaluatePharme forecasts tenapanor could earn Ardelyx $700 million per year by 2024.
The market is anticipating an approval. This penny stock is up over 61% in the last 30 days, but ARDX is still 18.8% below its 52-week high of $4.60. The chart is showing a bullish cross on MACD, and RSI is still below oversold at 64.2. If there’s a pullback before the FDA announces its decision, it could be a good opportunity to get in this one.
iBio Inc. (AM-EX: IBIO)
This biotech stock isn’t for the faint of heart. It’s probably the most speculative play on this month’s top penny stocks list. iBio is a microcap biotech firm with an enterprise value of only $29.3 million.
This stock went crazy in mid-August. Trading volume spiked to almost 20 times their average level after iBio signed a 3D bioprinting agreement with Lung Biotechnology PBC. By the close of the session, iBio gained 68% from the previous day’s close. The boost didn’t last long, however. Less than two weeks later, the stock gave back all of those gains.
iBio shares got another jolt today when news broke that iBio and CC-Pharming Ltd. were expanding their collaboration in China. Shares initially rocketed up 20% but quickly lost momentum.
Shares of iBio traded way above average volume this week and share prices fluctuated wildly. The volatility could be a day trading opportunity, but be careful. This stock’s average trading volume is pretty thin so be extra cautious when placing market orders.
Gran Colombia Gold Corp. (OTC: TPRFF)
2019 has been great for gold traders and even better for gold miners. The spot price of gold is up over 20% in 2019, powering the iShares MSCI Global Gold Miners ETF (RING) to 47% gains YTD. Policymakers are pushing for low-interest rates and a weaker dollar, both could be tailwinds for gold’s long-term value. The downside of gold as a store of value is that it’s zero-yielding, but a glut of negative-yielding sovereign bonds is making zero-yields look more attractive.
Junior gold miner stocks could be a great way to play the macro trend towards higher gold prices. This month, Gran Colombia is on our radar. The gold miner stock rode a steady stream of great headlines to 79% gains over the past three months. Columbia released its quarterly earnings just two weeks ago. The junior miner raised its 2019 production guidance to project between 225,000 and 240,000 ounces of gold this year. Production is currently up 5% TTM and the quarter was up 9% YoY. Gold prices are rising and Gran Columbia is steadily expanding production; a good formula for success in the mining sector.
The company is already turning a small profit and they have enough money to pay their bills. Its mines are producing and cost projections are in line with estimates. Shares have been trading sideways for most of August, but another jump in gold prices could set this stock off on another rally. If you’re looking for a junior gold mining stock with upside, Gran Colombia looks like a strong candidate for your shortlist. Talking about mining stock, you should check our best lithium stocks list.
Net Element Inc. (NASDAQ: NETE)
Net Element is a South Florida-based holding company that provides fintech services through several subsidiaries. The firm operates in North America, Europe, and Asia; but its primary markets are the U.S. and Russia. Its offerings include point-of-sale systems, e-commerce solutions, and support for mobile payments.
Trading volume spiked today when Net Element released a performance update on its International Transaction Solutions Segment. The firm projected revenues for this segment will grow by 40% in the second quarter. A new large-scale client, landed earlier this year, helped fuel the growth in transactional dollar volume.
CEO Oleg Firer commented in the report, “Our International Transaction Solutions segment shows continued improvement over the last quarter. We believe that this trend will continue and improve the overall performance and strategic vision of this segment as we progress through the second half of the year.”
The stock rallied on the news, but those gains could be just the beginning. Net Element could be a long-term winner if it continues to gain share in the high-growth payment processing market.
Owens & Minor Inc. (NYSE: OMI)
Owens & Minor provides medical products & business to business services to the healthcare industry. At $4.74 per share, this stock barely made August’s best penny stock list, but it looks like a value at these prices. However, at the beginning of August, this penny healthcare stock was trading for just $2.82 per share. Shares are up over 68% this month after a well-received quarterly earnings report topped the market’s expectations.
OMI’s net losses slimmed to just $10.5 million for the quarter, 82.5% less than this time a year ago. Reported revenues of $2.48 billion grew less than 1% but still topped consensus estimates of $2.43. The company forecasted full-year adjusted net income of 60 to 70 cents per share, which ranked at the higher end of consensus estimates.
It was a good report and, even with the rally in prices, OMI looks like a value in these ranges. It was a long ride down for shareholders between 2017 and now. However, if OMI can keep the turnaround going, $2.43 might be the bottom of a pivot towards a positive trend.
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 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 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?
Where are the other penny stocks listed? A couple of services which are noteworthy are OTCBB, which stands for “Over-the-Counter Bulletin Board,” and Pink Sheets. Between the two, OTCBB lists the less risky stocks; Pinks Sheets, on the other hand, follows no strict listing requirements.
These stocks are easy to buy, you can’t always use the same stockbroker you do for trading regular stocks. Some mobile trading platforms, like Robinhood and WeBull, don’t offer access to OTC stocks. However, the process is pretty much the same as buying NASDAQ or NYSE listed 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 do so overnight. You might, for example, buy a penny stock that is valued at an actual penny, and find that a few weeks later it is worth $10. Now imagine that you had purchased $10 worth of those stocks instead of a penny’s worth. Suddenly, you would have $10,000, and your risk was minimal—less than you would spend buying the best pizza in town. Good luck finding rapid, massive gains like these anywhere else.
- You can invest in penny stocks with a very small bankroll. Not everyone has tens of thousands of dollars to start trading. The entry barriers for penny stock trading are incredibly low.
- Real opportunities do exist. At any given time, there are solid companies out there that happen to be just starting out. Nobody else has noticed these companies yet, but if you get in on the ground floor, you can make a killing financially.
Cons of 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 is 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 Penny Stocks to Buy
- Check penny stock listings like the aforementioned OTCBB and Pink Sheets. Then just start researching the companies on your own.
- Search for lists of the 10 best penny stocks or the top 100 active penny stocks. Just makes sure that you are checking a publication or website which you can trust.
- Sign up for a service. Another option to find the best penny stocks to buy now is to sign up for an alerts service. You pay a monthly fee, and picks are delivered to you via email or SMS. Some services also come with video lessons, community access, email coaching and more.
A lot of traders simply buy the top penny stocks they see recommended—but this is not the best way to trade. Yes, it saves time, but it will lose you money. If you want to win this game, you need to do your homework.
How To Buy Penny Stocks
How to buy penny stocks is a question some novice traders ask. The answer is simple, open a brokerage account who offers penny stocks. Penny stocks are traded on the NYSE, NASDAQ, and OTC Markets.
You’ll need identification along with confirming your income and risk tolerance before opening a brokerage account. However, the process is fairly straightforward and usually takes 24 hours or less. Take the time to demo each trading platform before selecting a broker. Once you are set up with an online brokerage you can buy penny stocks with a few clicks of the mouse.
Where To Buy Penny Stocks
Penny stocks are traded on the Nasdaq, New York Stock Exchange, and OTC Markets. You can buy penny stocks through a stockbroker. Opening a stock brokerage account is straightforward and can be done online. You’ll need to prove your identity, as well as accurately describe your financials including income and net worth. However, the process typically takes 24 hours or less to get started.
Now, you can buy penny stocks through a number of different discount brokers. Some considerations traders have before selecting a broker include: charting features of the trading platform, ease of trading platform, commissions, minimum deposit, shares locates. Check to see if you can demo the trading platform before making a decision. On the other hand, some traders will have multiple accounts with different brokers, adding flexibility to their trading.
Best Penny Stock Broker
The best penny stockbroker is one that offers a decent commission structure and trading platform. For example, the popular app, Robinhood, does not offer OTC penny stocks to its clients except on a few rare occasions. On the other hand, brokers like eTrade, TD Ameritrade, and Interactive Brokers are among the most popular for trading penny stocks.
Before selecting a broker, think about the commissions, as well as the ease of use of the brokers trading platform. Does it have quality research reports? Traders need to ask these types of questions before choosing a broker.
Investing in Penny Stocks
If you are serious about winning with penny stocks, you need to investigate any company you are thinking of purchasing stock in. Here are some questions to ask yourself:
Is it a real company?
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 which are producing real products or offering real services.
How are the financials?
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.
What’s in the filing footnotes?
This information can often be glossed over with big companies, but when it comes to penny stocks, it can be critical. Make sure you read this section of the company’s SEC filings.
What is the story?
There is always a reason a company’s stock is valued at $5 or less. It could be common in that company’s industry (mining is a good example), or it could be that the company is simply new. In some cases, established and successful companies also get hit hard and may dip down in value before making a comeback. These are all situations where you might find good investments. Of course, these are diamonds in the rough—most penny stock companies are going nowhere. The point is that you need to have a solid reason to believe a penny stock is going to rise before you purchase it.
Some of the best companies in the world were once penny stocks. The reason why investing penny stocks makes sense is because of their huge upside profit potential. That said, penny stocks are not generally covered by wall street analysts.
However, that also means you’ll have to do your own due diligence. Only look to invest in penny stocks that are transparent and disclose key information about their financials and business outlook.
Examples of Penny Stocks That Have Done Well
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, they soared back up to about $107.
- Have you ever shopped at Pier 1 Imports? Believe it or not, this company was hit so hard by the recession that shares dropped to $0.11. Shares eventually rose back to around $20.64.
- Another stock you will probably be surprised was ever a penny stock is Ford Motor Company. Around when GM filed for bankruptcy, Ford Motor Company got down to around $2 per share.
- True Religion is a strange story. This jeans manufacturer was actually profiled by the famed penny stock trader Timothy Sykes as a one-time “spam-fraud” company that wound up turning into a real business with viable products. Shares in True Religion were $0.67 at one point, but eventually rose to around $32 per share.
If you can spot opportunities like these … you can make a killing.
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 for 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.
Of course, you can also get more detailed. By listing stocks by sector. This can be useful when a certain sector, like marijuana or cryptocurrency, are in the news. Having lists based on different market scenarios or sectors can help you make better and faster decisions.
How To Trade Penny Stocks
Looking for penny stocks tips and tricks? Here are a few pointers to help you succeed:
- Research every stock in detail before you invest, and check the fine print.
- Manage your money carefully. Just because penny stocks are cheap, that does not mean that your losses can’t add up. Do not stretch your position sizes to unreasonably high percentages of your account just because your bankroll is small right now. Be patient and your account will have a chance to grow.
- Practice trading on paper first. Make sure your methods work before you risk real money.
- Never forget that fraud is rampant.
- Cut your losses quickly if you find yourself with a bad stock. If you wouldn’t buy that stock now based on your trading methods, you should not be holding it.
- Wait for good trades to come to you. Only take “A+” trades.
- Focus on your methods, not on your winnings. If you keep trading right, the winnings will take care of themselves.
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.
Conclusion: Picking Penny Stock Winners Isn’t Easy … But The Payoff Can Be Massive
There is one certainty with penny stock investing, and that is that you will never be bored. In fact, most of the time you will probably feel like you are on a rollercoaster of volatility. Most penny stocks are worthless, and most penny stock traders will lose. But if you can spot the diamonds gleaming from amid the coal, you could find yourself making money hand over fist.
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