Are you searching for low-cost stocks with explosive potential? If so, you might want to look into penny stocks.
While rewards can be high, there are risks with these types of stock.
We’ve crafted a helpful guide to help you chart a path toward the best penny and sub penny stocks on the market.
What Are Sub Penny Stocks?
Penny stocks are often associated with small companies or even potential shell companies masquerading in the market as a real stock for trade.
They trade for $5 a share or less.
It has a low market price because it’s usually not considered a high-value stock.
And since a penny stock’s potential growth patterns can be hard to predict, it’s often considered a high-risk type of investment that can lose a lot of money along the way.
Now, in the stock market and trading world, there is a term for stocks with a price per share lower than $0.01 — a sub penny stock.
Some can even range in price from as low as $0.0003-0.0001.
Considering the affordability of these stocks, one might ask: does trading sub penny stocks bring any profit?
Since hot penny stocks come for a meager price, some traders are seeking them out.
After all, investors can buy and trade penny stocks for a high volume with significantly lesser money compared to other names on the table.
To put it simply, trading a sub penny stock requires a very small — sometimes almost zero — capital per share, but it also comes with a limited potential for income and a big risk for losses.
So trading stock in this manner often proves to be trickier than what traders could expect, as it comes with several risk factors that can also be hard to play with, especially for a newbie in the stock market.
Meanwhile, a penny stock is available to trade in some of the biggest names in the exchange market, but most are traded over the counter (OTC).
Trading over the counter (OTC) penny stocks is usually done through the electronic OTC Bulletin Board (OTCBB) or the privately-owned OTC Markets Group.
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Sub Penny Stocks To Watch
Here’s a list of some OTC stocks that you should watch out for and might want to buy a high volume of if you do your due diligence.
Keep reading for a breakdown of these companies and why they are considered hot penny stocks.
Golden Band Resources Inc (OTCMKTS: GBRIF)
Golden Band Resources Inc (GBRIF) is a mining company based in Saskatoon, SK, Canada.
The company owns gold properties in La Ronge, Saskatchewan, and began producing metal in April 2011.
In addition, GBRIF owns 870 km2 of land that comprises five former producing mines (three of which are still in deposit status), 13 gold deposits (three of which are 50% joint ventures), and numerous other exploration sites where gold occurrences have been identified.
So if you’re looking for hot penny stocks in the mining industry, you might want to follow GBRIF closely.
Priority Aviation (OTCMKTS: PJET)
Priority Aviation provides services such as on-demand charters, membership cards for jet charters, and even aircraft sales.
It’s a publicly traded corporation based in New York that was founded on March 25, 1999.
Also, Priority Aviation offers charter flights for transporting heavy and outsize cargo, construction equipment and machine parts, highly valued commodities, and high-margin commodities, support for peacekeeping missions as well as hazardous materials.
So, if your trading specialty is aviation, you should check out Priority Aviation.
JPO Solutions Inc (OTCMKTS: MOPN)
JPO Solutions, Inc. is a company that produces absorbent products.
In addition to its line of sorbents, the company also offers oil filtration products and restoration processes.
JPO Solutions also addresses consumer, commercial, industrial, and international spill response.
HYNAC Oil and Gas of Beijing, China, signed a five-year distribution agreement with its CEO in 2015.
A total of seven high-level suppliers and financiers from Asia, Canada, and the United Kingdom participated in the meeting.
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Vanoil Energy Ltd (OTCMKTS: VNLEF)
Vanoil Energy is a multinational corporation based in Vancouver, British Columbia, that is actively engaged in oil exploration in Kenya and Rwanda.
Among its assets are oil and gas properties.
The company holds 100% interest in two onshore blocks in Eastern Kenya covering a total area of 24,912 square kilometers.
With the funds raised from stock offerings, the company engaged in seismic exploration activities in both Kenya and Rwanda.
Oil and gas operations at Vanoil offer the company an opportunity to make significant discoveries and aspire to compete with Heritage and Tullow Oil.
Sub Penny Stock That Soared
Throughout the history of trading stocks, many sub penny stocks started with a low price — sometimes almost virtually free — but then it eventually soared.
Those who risked their money and bought a high volume when it’s still a sub penny stock had a very wonderful payday, while those who missed the boat are filled with regret.
Here are some examples of hot penny stocks that recently soared in value and paid off for savvy investors.
NovaVax (OTCMKTS: NVAX)
During the heat of the COVID-19 pandemic, talks about the race for a vaccine had been the buzz in both medicine and also in the world of stocks.
Traders were on the lookout for hot penny stocks that they thought would have increased price per share when a vaccine eventually was developed.
Investors bought these hot penny shares, and once news broke out that NVAX’s COVID-19 vaccine NVX-CoV2373 had reached Phase 3 of its clinical trials, the price of its shares rose in the market.
Microvision Inc. (OTCMKTS: MVIS)
Since December 2020, MVIS has grown by 260% as of August 2021.
Its sudden growth is commonly attributed to LiDAR sensors, microchips, and several other computer-related products.
These levels of returns are impressive — even by penny stock standards.
MiMedx Group (OTCMKTS: MDXG)
From July 2020 to June 2021, MDXG had a gain of 114%.
The growth of the shares for MiMedx Group is mostly attributed to its increased sales throughout 2020 to 2021.
Getting the specific data about this massive gain is near impossible because of how limited information on penny stocks can be.
However, the fact that it still started sub penny and grew to be one of the highest gainers says a lot.
Can You Trade Penny Stocks on Robinhood?
If you’re trading on Robinhood, you might be wondering if penny or sub penny stocks can be traded on the platform.
Robinhood supports penny stocks, as long as the stocks are listed on NASDAQ or NYSE.
However, users cannot trade OTC penny stocks, or sub penny stocks, via Robinhood.
The reason for this is that once a stock goes below $1 for a certain period of time, the chances of it getting delisted from the two mentioned exchanges are very high.
Since it will become sub penny stocks and now only be sold OTC, users cannot trade with it via Robinhood, as the platform does not allow users to deal with OTC sub penny stocks.
Should You Buy Sub Penny Stocks?
Sub penny stocks do come with some rewards as well as disadvantages for an investor.
First, although penny stocks are relatively cheap investments, investors rarely make a substantial profit unless they trade in high volumes.
Second, finding the right penny stock for investment isn’t as easy as it sounds, which can be very discouraging.
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The Dreaded Pump and Dump
Although you have the chance to make big money if you purchase a penny stock that soars in price on the market, this type of stock trading is very prone to a scheme in trading stock called “pump and dump.”
There are instances where someone would buy hot penny stock in high volume, thereby creating a false sense of demand for the stock and increasing its value artificially.
This is the “pump”.
After the stocks have increased in price and more investors trade them, the scheme would come into play: the people behind it would sell their holdings, making a huge volume of profit while doing it.
This is the “dump”.
Meanwhile, other investors drawn to the scheme will lose money as the stock instantaneously drops in its value per share.
However, there are a few effective techniques for profiting from pump and dumps.
If you’re interested, you might want to take a look into Tim Sykes, the master of making money off of pump and dumps.
Sub Penny Stocks: Final Thoughts
If you want to trade penny stocks, you need to fully understand not only the rewards but also the risks that come with them.
Sub penny stocks have the potential for massive gains if they skyrocket, making them a good potential long-term asset to hold — especially if you own a huge volume of them.
On the other hand, the potential for loss is huge as well.
Trading these stocks isn’t for everyone because of their volatility and the high risk that accompanies them.
However, as long as you do your due diligence, financial research, and learn to search for patterns, there’s no reason for you not to trade sub penny stocks.
Though, it’s important to understand that even if you are a sub penny stock pro, the risks will never fall to zero.
If you choose not to trade sub penny stocks, penny stocks are always an option to consider.
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