Stocks that trade under one dollar are often referred to as penny stocks. A penny stock by definition is a small cap company that trades under $5 per share. There are several pros and cons to trading stocks under $1 per share.
In this brief article we will explore some of the best stocks under one dollar as well as give you the insight you need to find them on your own!
Four of The Best Stocks Under $1 That Could Take Off In 2019
Globalstar, Inc. (NYSE: GSAT) – This wireless communications company provides mobile satellite voice and data services throughout the globe. The company also offers solutions that includes search and rescue.
Its devices play a key role in rescue situations. They can also help in asset tracking and theft alert. Its customers include marine and fishing companies, oil and gas, construction and forestry.
Glowpoint, Inc. (NYSE: GLOW) – A diversified communications company, it offers a suite of video conferencing solutions. These solutions include: a tier one help desk support, maintenance support, configuration and change management, service performance and reporting, proactive monitoring, network services support and more.
The company has had over 8,500 endpoints connected to a meeting over the last 12 months. In addition, it has had over 1,000 proactively managed and supported video endpoints.
Cherokee Inc. (NASD: CHKE) – Based out of California, the company manages, markets, and licenses fashion and lifestyle brands for clothing, footwear, home products and other accessories.
It owns or licenses the following brands: Cherokee, Hi-Tec, Magnum, 50 Peaks, Hawk Signature, Tony Hawk, Liz Lange, Everyday California, and other brands. All together the company has over 50 license agreements in roughly 80 countries.
Pier 1 Imports, Inc. (NYSE: PIR) – This is one that many have heard of. Pier 1 is engaged in the retail sale of things like candles, furniture, gifts, housewares and seasonal products.
The retailer, like many others has fallen upon tough times due to the dominance of online shopping and big players like amazon.com that can offer competitive pricing as well as free, fast shipping across the US
Rite Aid Corporation. (NYSE:RAD) operates over 2,500 stores in 19 states across the U.S.
It operates via two segments. The retail pharmacy segment sells prescription drugs as well as over the counter medications, make up, household necessities as well as food and beverage items.
The Pharmacy Services segment provides pharmacy benefit management services and a wide range of pharmacy-related services.
The Pros Of Trading Stocks Under $1
Typically stocks under 1 dollar receive little to no coverage by Wall Street analysts. That means they are volatile in nature. However, it’s this volatility that creates tremendous opportunity to see extraordinary returns.
On February 3, 2017, UBI Blockchain Internet LTD (OTC: UBIA) was trading at around $0.55 per share.
In less than 8 months, the stock traded as high as $115 per share. If you bought $1k worth of stock back on February 3 and sold the highs in December 15, you would have made over $200K in profits.
It’s these type of returns that draw so many people into stocks that trade for under one dollar.
Robinhood stocks under $1
Robinhood, a commission free brokerage does not allow OTC stocks so for this reason, using robinhood to trade stocks under one dollar and be a little bit prohibitive.
With that said, there are still many cheap stocks that can be traded using robinhood. The only difference is that with robinhood you will need to select stocks that trade on the major exchanges such as the NASDAQ and NYSE.
Why Do Stocks Under $1 Sometimes Fly?
Since these companies are not generally owned by mutual funds and hedge funds, they don’t get media attention and go virtually unnoticed by the general public.
This creates an opportunity for savvy traders who are willing to roll up their sleeves and do some homework.
You can find stocks that trade under $1 on all major stock exchanges, including the NYSE, Nasdaq, and AMEX. As well as, the OTC Markets. In order for a company to list on the NYSE and Nasdaq they must meet certain financial, accounting and compliance metrics. On the other hand, listing on the OTC markets is less rigid, and that is where you’ll find many of the best stocks trading under $1.
The Negative Side To Trading Stocks Under $1
Since most analysts won’t bother with cheap stocks you’re typically on your own when it comes to research. Groups that cover these types of stocks might be newsletters and bloggers, many of them are not qualified to give out stock recommendations.
In addition, you’ll have to become savvy at reading press releases since this how most information on a company is disseminated. Some companies will issue out press releases to simply “pump” it’s stock up. While others have legitimate news that they want investors to know about.
If you’re new to trading it will take some time before you’re able to decipher from what is “hype” from what is “the real deal”
How To Find The Best Stocks Under $1
Read and follow trends. The fastest moving penny stocks are ones that are “in-play.” If you’re able to spot a trending sector, or a stock that has had an explosive move, look for companies in the same space that have yet to make a move.
For example, UBI Blockchain Internet LTD. benefited from the parabolic rise of bitcoin. Since it’s a lot easier to trade stocks than it is to open a cryptocurrency account, traders were on the hunt for stocks related to the space.
Now, these trends don’t last very long, so you must strike while the iron is hot.
Visiting the OTC Markets website to see what the largest gainers and losers is good place to start. Try to see if the stocks making the greatest gains are in the same sector, and then look for ones that have not made any moves yet. You can also join a stock alert service like this one!
Regularly read press releases. A positive press release can be the catalyst a stock needs to move higher.
Be careful about social media. There can be good info on social media websites like Twitter and StockTwits. However, you have to make sure that the info you are receiving is from someone not talking up their position.
Now, if the company trades on the NYSE or Nasdaq, you can use a scanner like one found on finviz.com.
Make sure to visit the company website and vet it for yourself.
Lastly, know what your objective is. If you’re getting into a stock just for a trade, don’t fall in love with it. Try to ride the wave and move on. I hope these quick tips can help you find some of the best cheap stocks under $1 before they make their big move!