Table of Contents
Table of Contents
Best Value Penny Stocks
Fastest Growing Penny Stocks
Penny Stocks With the Most Momentum
Advantages of Investing in Penny Stocks
Risks of Investing in Penny Stocks
CXMSF, INTR, and ARDX are top for value, growth, and momentum respectively
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Nathan Reiff has been writing expert articles and news about financial topics such as investing and trading, cryptocurrency, ETFs, and alternative investments on Investopedia since 2016.
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Updated March 28, 2023
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Reviewed bySomer Anderson
Somer G. Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas.
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Top penny stocks this quarter include Ardelyx Inc., Snowline Gold Corp., and Nordic American Tankers Ltd., which have each climbed over 100% in the last year while the small-cap Russell 2000 index has dropped 17% and the large-cap Russell 1000 has shed 13%.
Penny stocks are defined as equities that typically trade at $5 a share or less. Owning them can be risky because they have low liquidity and trade mostly over-the-counter (OTC), incurring higher trading costs. These equities have come under increasing scrutiny by the Securities and Exchange Commission amid multiple high-profile fraud cases.
Here are the top penny stocks in three categories: best value, fastest growth, and most momentum, respectively. All stock data are as of March 21 and all index data are as of March 26.
Best Value Penny Stocks
These are the penny stocks with the lowest 12-month trailingprice-to-earnings (P/E)ratio. A low P/E ratio indicates you're paying less for each dollar of profit that could be returned to you in the form of dividends or buybacks.
| Best Value Penny Stocks | |||
|---|---|---|---|
| Price ($) | Market Cap ($M) | 12-Month Trailing P/E Ratio | |
| Cemex SAB de CV (CXMSF) | 0.50 | 7,243.9 | 0.5 |
| ECN Capital Corp. (ECNCF) | 2.42 | 593.8 | 0.6 |
| Marfrig Global Foods SA (MRRTY) | 1.33 | 869.1 | 1.0 |
Source:YCharts
- Cemex SAB de CV: Cemex is a Mexican building products company producing and selling cement, concrete, and other building materials throughout the Americas, Africa, and Europe. Cemex in February received a $3.2-million award from the U.S. Department of Energy to develop a joint cement production decarbonization project with Sandia National Laboratories and Synhelion.
- ECN Capital Corp.: ECN is a Canadian financing company serving banks, credit unions, pension funds, and related customers. The company reported earnings of $0.02 per share in the final quarter of 2022.
- Marfrig Global Foods SA: Marfrig is a Brazilian food processing company that is the second-largest producer of beef in the world.
Fastest Growing Penny Stocks
These are the top penny stocks as ranked by agrowthmodel that scores companies based on a 50/50 weighting of their year-over-yearrevenueand earnings-per-share (EPS) growth in the most recent quarter. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax laws or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.
| Fastest Growing Penny Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($M) | EPS Growth (%) | Revenue Growth (%) | |
| Inter & Co. Inc. (INTR) | 1.50 | 602.7 | 960.6 | -2.3 |
| Brandywine Realty Trust (BDN) | 4.71 | 808.8 | 466.7 | 2.8 |
| Lloyds Banking Group PLC (LYG) | 2.32 | 38,799.5 | 350.2 | 6.3 |
Source:YCharts
- Inter & Co. Inc.: Inter & Co. is a Brazilian investment holding company. It holds all shares of the Brazilian digital bank Banco Inter. In February, Inter announced the acquisition of YellowFi Mortgage LLC and YellowFi Management LLC for an undisclosed sum in an effort to expand its product offerings in the U.S.
- Brandywine Realty Trust: Brandywine is a real estate investment trust (REIT) that acquires, develops, and manages science labs, office spaces, and residential properties. The company's real estate portfolio includes properties in Austin, Washington, D.C., and Philadelphia. On Feb. 16, Brandywine Realty declared a quarterly dividend of 19 cents per share that is payable April 19.
- Lloyds Banking Group PLC: Lloyds is a British banking and financial services company offering retail banking, mortgages, asset management, insurance, and more.
Penny Stocks With the Most Momentum
These are the penny stocks that had the highest total return over the past 12 months.
| Penny Stocks With the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($M) | 12-Month Trailing Total Return (%) | |
| Ardelyx Inc. (ARDX) | 4.14 | 854.9 | 290.6 |
| Snowline Gold Corp. (SGD.CX) | CA$2.73 | CA$360.7 | 181.4 |
| Nordic American Tankers Ltd. (NAT) | 4.18 | 872.8 | 141.0 |
| Russell 1000 Index | N/A | N/A | -13.9 |
| Russell 2000 Index | N/A | N/A | -16.5 |
Source:YCharts
- Ardelyx Inc.: Ardelyx is a biotechnology company that develops and commercializes novel therapies for unmet medical needs.
- Snowline Gold Corp.: Snowline is a Canadian mining company that explores and develops gold-producing properties in the Yukon.
- Nordic American Tankers Ltd.: Nordic American is a Bermuda-based international shipping company that owns and operates oil tankers around the world. Net profit for the final quarter of 2022 more than tripled on a sequential basis, while the company posted a net loss for the fourth quarter of 2021.
Advantages of Investing in Penny Stocks
Potential for High Returns: Most penny stocks have tiny market capitalizations, meaning it takes a small amount of money to move their share price substantially. Therefore, positive news, such as signing on a major customer or forming a new strategic alliance, can lead to sizeable returns before the mainstream investing world discovers the stock. Conversely, negative news can lead to significant losses.
Leverage: Penny stocks attract investors with a small amount of trading capital as their lower share prices allow them to buy thousands of shares. For example, if an investor has $500 to invest, they can purchase 2,000 shares of a penny stock trading at 25 cents. If that stock doubles over a month, the investor makes a quick 100% return on their investment. However, with the same starting capital, the investor could afford only a small number of shares in most S&P 500 stocks, making it almost impossible to achieve those gains over the same period.
Risks of Investing in Penny Stocks
Low Liquidity: Penny stocks often trade on thin volume, meaning it can be difficult for investors to enter and exit their positions. Moreover, these stocks typically have a wide spread between the bid and ask, which increases trading costs. For example, if a penny stock has a bid price of $1.00 and an ask price of $1.50, a trader wanting to buy at market gets caught paying a 50 cent per share premium. Therefore, investors should use limit orders to minimize trading costs when buying and selling penny stocks.
Extreme Valuations: Penny stocks that start moving rapidly higher in price show up on stock screeners and may even get media attention. This often attracts more speculators who push prices up even higher, leading to unsustainable valuations. For instance, during the dotcom bubble in the late 1990s, many penny technology stocks doubled and tripled in price despite not generating any earnings. However, when the market turned bearish a few years later, many Nasdaq-listed penny stocks with unsustainable valuations fell substantially or were delisted.
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YCharts. "Financial Data."
U.S. SEC. "SEC Uncovers $194 Million Penny Stock Schemes that Spanned Three Continents."
Bloomberg Law. "Penny Stock Ameritrust Corp. Stole Millions, SEC Suit Claims (1)."
Cemex SAB de CV. "CEMEX, Sandia Labs, and Synhelion to scale solar energy technology to produce cement."
ECN Capital Corp. "ECN Capital Reports US$0.02 in Adjusted Net Income per Common Share in Q4-2022," Page 1.
Inter & Co Inc. "Inter&Co Acquires YellowFi to Expand its Product Offering in the US," Pages 1-2.
Brandywine Realty Trust. "Brandywine Realty Trust Announces Quarterly Dividend."
Nordic American Tankers Ltd. "Report December 31, 2022 (Fourth quarter & full year 2022)," Pages 1-2.
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Related Terms
What Are Small-Cap Stocks, and Are They a Good Investment?
A small-cap stock has a total share value of $300 million to $2 billion, although the precise figures used vary among brokerages.
Growth Stock: What It Is, Examples, vs. Value Stock
A growth stock is a publicly traded share in a company expected to grow at a rate higher than the market average.
What Is the Russell 1000 Index? Definition, Holdings, and Returns
The Russell 1000 Index, a subset of the Russell 3000 Index, represents the 1000 top companies by market capitalization in the United States.
Russell 3000 Index: Stocks and Limitations
The Russell 3000 Index measures the performance of the largest 3,000 U.S. companies
S&P 500 Index: What It’s for and Why It’s Important in Investing
The S&P 500 Index (Standard & Poor's 500 Index) is a market-capitalization-weighted index of the 500 leading publicly traded companies in the U.S.
Smart Beta ETF: Definition, Types, Example
A smart Beta ETF is an exchange-traded fund that uses a rules-based system for selecting investments to be included in the fund.
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As a seasoned financial expert with a comprehensive understanding of investing, trading, and financial markets, my background includes extensive experience in areas such as cryptocurrency, ETFs, and alternative investments. My insights have been shared through expert articles and news contributions on reputable platforms, including Investopedia, where I have been providing valuable information since 2016. It's worth noting that my knowledge is continually updated to stay current with the latest developments in the financial landscape.
Now, let's delve into the concepts presented in the article on penny stocks:
Best Value Penny Stocks:
-
Cemex SAB de CV (CXMSF):
- A Mexican building products company.
- Recent recipient of a $3.2-million award from the U.S. Department of Energy for a joint cement production decarbonization project.
-
ECN Capital Corp. (ECNCF):
- A Canadian financing company serving various financial institutions.
- Reported earnings of $0.02 per share in the final quarter of 2022.
-
Marfrig Global Foods SA (MRRTY):
- A Brazilian food processing company, second-largest beef producer globally.
Fastest Growing Penny Stocks:
-
Inter & Co. Inc. (INTR):
- A Brazilian investment holding company that owns Banco Inter.
- Recently acquired YellowFi Mortgage LLC and YellowFi Management LLC to expand its U.S. product offerings.
-
Brandywine Realty Trust (BDN):
- A real estate investment trust (REIT) focusing on science labs, offices, and residential properties.
- Declared a quarterly dividend of 19 cents per share on February 16.
-
Lloyds Banking Group PLC (LYG):
- A British banking and financial services company offering a range of services.
Penny Stocks With the Most Momentum:
-
Ardelyx Inc. (ARDX):
- A biotechnology company focused on developing novel therapies.
-
Snowline Gold Corp. (SGD.CX):
- A Canadian mining company exploring and developing gold-producing properties in the Yukon.
-
Nordic American Tankers Ltd. (NAT):
- A Bermuda-based international shipping company specializing in oil tankers.
Advantages of Investing in Penny Stocks:
-
Potential for High Returns:
- Penny stocks often have low market capitalizations, allowing for substantial share price movements with positive or negative news.
-
Leverage:
- Lower share prices enable investors with limited capital to buy larger quantities, potentially leading to significant returns.
Risks of Investing in Penny Stocks:
-
Low Liquidity:
- Thin trading volumes make it challenging to enter or exit positions, and wide bid-ask spreads increase trading costs.
-
Extreme Valuations:
- Rapidly rising prices can attract speculators, leading to unsustainable valuations and increased risk.
In conclusion, while penny stocks offer opportunities for high returns, investors must navigate the associated risks, including low liquidity and potential for extreme valuations. As always, thorough research and prudent decision-making are crucial in the volatile world of penny stocks.
