Penny stocks have always been interesting to more seasoned investors looking to make big gains with minimal upfront investment. These low-priced stocks, typically trading below $5 per share, are often associated with smaller, emerging companies brimming with potential. While they come with higher risks, penny stocks also offer the possibility of significant rewards, making them an intriguing option for those seeking to diversify their portfolio or capitalize on rapid market movements.
This year’s market trends suggest renewed interest in these budget-friendly investments as certain industries—ranging from green energy to biotech—experience accelerated growth. For investors willing to do their homework, penny stocks can offer an opportunity to uncover hidden gems before they break into the mainstream.
To simplify your search, we’ve compiled a list of some of the best available penny stocks, highlighting companies with promising fundamentals, innovative strategies, and potential for long-term growth.
Methodology: How Did We Choose These Penny Stocks?
We used the advanced InvestingPro stock screener to filter out the best penny stocks based on a few key criteria. For this particular list, we focused on companies based in the US and assessed:
Current Price: Only companies with a price under $5.00 are typically considered to be ‘Penny Stocks’.
Fair Value Label (InvestingPro): Based on more than 14 financial models, having a FVL of ‘Bargain’, ‘Undervalued’ or ‘Fair’ ensures that the business fundamentals of these stocks point towards a solid financial foundation.
Overall Health Label: This must be ‘Excellent’, ‘Great’ or ‘Good’ at the time of choosing the stocks. As penny stocks can experience large swings of volatility, understanding that the business health is overall favorable helps to reduce investor nervousness.
By following the above criteria, we’ve identified penny stocks that are not only financially strong, but also poised for potentially significant growth in the coming months.
Top Penny Stocks This Month
| Company Name | Stock Symbol | Current Price* | Fair Value Upside | Health Label |
|---|---|---|---|---|
| BAB Inc | BABB | $0.95 | 10.7% | Great |
| iHuman Inc | IH | $1.74 | 61.7% | Good |
| Table Trac | TBTC | $4.40 | 20.7% | Great |
| Waterdrop | WDH | $1.65 | 35.9% | Good |
| Community Health | CYH | $2.94 | 23.7% | Good |
* Please note that due to the inherent volatility of penny stocks, the current price as listed is likely to fluctuate from the time of publication (which is seen above). Investors should make sure to perform additional due diligence before buying any of these stocks.
1. BAB Inc. (BABB)
Current Price: $0.95
Fair Value Upside: 10.6%
BAB, Inc. franchises and licenses bagel and muffin retail units under the Big Apple Bagels (BAB), My Favorite Muffin (MFM), and SweetDuet (SD) trade names in the United States. Its BAB franchised brand includes daily baked bagels, flavored cream cheeses, premium coffees, gourmet bagel sandwiches, and other related products; and MFM brand comprises various freshly baked muffins and coffees, as well as units operating as My Favorite Muffin Your All Day Bakery Café features specialty bagel sandwiches and related products. The company’s SD brand includes frozen yogurt products. BAB, Inc. was founded in 1993 and is based in Deerfield, Illinois.
2. iHuman Inc (IH)
Current Price: $1.74
Fair Value Upside: 61.7%
iHuman Inc. provides intellectual development products to individual users, kindergartens, and distributors in the People’s Republic of China. The company offers interactive and self-directed learning apps. iHuman Inc. was founded in 1996 and is based in Beijing, the People’s Republic of China.
3. Table Trac (TBTC)
Current Price: $4.40
Fair Value Upside: 20.7%
Table Trac, Inc. designs, develops, and sells casino information and management systems in the United States, Australia, Japan, the Caribbean, and Central and South America. The company offers Table Trac, an information and management system that automates and monitors the operations of casino table game operations, as well as adds functionality to related casino system modules for guest rewards and loyalty. It also provides system sales services comprising installation, custom casino system configuration, and training, as well as license and technical support services to casinos. The company was incorporated in 1995 and is based in Minnetonka, Minnesota.
4. Waterdrop (WDH)
Current Price: $1.65
Fair Value Upside: 35.9%
Waterdrop Inc., through its subsidiaries, provides online insurance brokerage services to match and connect users with related insurance products underwritten by insurance companies in the People’s Republic of China. The company offers short-term and long-term health and life insurance products and services. It also operates a medical crowdfunding platform; and E-Find patient recruitment, a digital platform that helps pharmaceutical companies to find matches for clinical trials. Waterdrop Inc. was founded in 2016 and is headquartered in Beijing, the People’s Republic of China.
5. Community Health (CYH)
Current Price: $2.94
Fair Value Upside: 23.7%
Community Health Systems, Inc. owns, leases, and operates general acute care hospitals in the United States. It offers general acute care, emergency room, general and specialty surgery, critical care, internal medicine, obstetrics, diagnostic, psychiatric, and rehabilitation services, as well as skilled nursing and home care services.
How to Find The Best Penny Stocks
You can find the best penny stocks easily by using InvestingPro. Here are the steps:
- Head over to the InvestingPro Stock Screener tool.
- Add the following filters:
- Current Price: Under $5.01.
- Fair Value label (InvestingPro): Is One Of, ‘Bargain’, ‘Undervalued’ or ‘Fair’.
- Overall Health Label: Is One Of, ‘Excellent’, ‘Great’ or ‘Good’.
- Make sure that any further filtering for Sector, Geography, etc are as you want them.
You’ll then see the full list of all the companies falling in the desired screener filters’ range.
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Penny Stocks FAQ (Frequently Asked Questions)
What are penny stocks?
Penny stocks are typically shares of small companies that trade for less than $5 per share. They are known for their high volatility and potential for significant gains or losses.
Learn More 📜
For a more in-depth look at this type of security, read our dedicated Article on “What Are Penny Stocks? (And How To Trade Them)“
Why are penny stocks considered risky?
Penny stocks are considered risky due to their low liquidity, high volatility, and limited publicly available information, making them susceptible to price manipulation and fraud.
Where can I buy penny stocks?
Penny stocks can be bought on major exchanges like the NYSE or NASDAQ, and over-the-counter (OTC) markets like OTCBB or Pink Sheets.
How do I find good penny stocks to invest in?
Research is crucial; look for companies with strong fundamentals, growing industries, and solid management. Financial news, stock screeners, and analyst reports can be helpful.
What are the benefits of investing in penny stocks?
Potential high returns, diversification of portfolio, and the opportunity to invest in emerging companies are some benefits of penny stocks.
How much should I invest in penny stocks?
Only invest money you can afford to lose, as penny stocks are speculative investments. A small percentage of your overall portfolio is recommended.
Can I make money with penny stocks?
Yes, it is possible to make money, but it requires due diligence, careful selection, and a strategy to manage risks.
What are the common scams associated with penny stocks?
Common scams include pump-and-dump schemes, where misleading information is spread to inflate the stock price, followed by the perpetrators selling off their shares at a profit.
Can beginners invest in penny stocks?
Beginners can invest in penny stocks, but it’s crucial to have a good understanding of the risks involved and to start small.
How does liquidity affect penny stocks?
Low liquidity can lead to large price swings and difficulty buying or selling shares without impacting the stock price.
Are all penny stocks found on the OTC market?
No, while many penny stocks trade on OTC markets, some are also listed on major exchanges like NASDAQ or NYSE if they meet certain listing requirements.
What is the difference between OTC stocks and penny stocks?
OTC stocks are traded over-the-counter rather than on formal exchanges and can include higher-priced stocks, whereas penny stocks are defined primarily by their low share price.
Do penny stocks pay dividends?
It is rare for penny stocks to pay dividends, as most of these companies reinvest profits into business growth. But it is still possible to find penny stocks that pay a dividend.
What is ‘Scalping’ in penny stock trading?
Scalping is a trading strategy aimed at profiting from small price changes, often over short periods, and it requires quick decision-making.
What factors contribute to the volatility of penny stocks?
Low market capitalization, less trading volume, and limited information can contribute to high volatility.
How should I approach selling penny stocks?
Have a clear exit strategy, set target prices for selling, and remain disciplined. Avoid emotional reactions to market fluctuations.
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