Top Penny Stocks To Watch

The U.S. Securities and Exchange Commission (SEC) defines penny stocks as securities issued by small public companies that trade for less than $5 per share. However, at TipRanks we consider shares trading for $10 or less as penny stocks. Unlike regular shares, they are often traded over the counter through the OTC (Over the Counter) Bulletin Board and are not always listed on an exchange. Hence, they can also be known as “OTC stocks”. Another difference is that there can be a lack of reliable information available about penny stocks, making it more difficult for investors to research them. This lack of information, coupled with a thin market, makes them more vulnerable to manipulation and even fraud. Saying that, some of the most successful companies in the world including Amazon, Apple, and Ford started out as penny stocks showing just what a great opportunity they can offer.

Given their low trading price and growth potential new and inexperienced investors often start their journey with penny stocks. As always, it is important to be aware of the risks and to conduct research before making an investment. See how analysts are rating the stocks you are interested in and make sure you check the historical performance of any analysts whose recommendations you are thinking of following. Consider if you prefer to invest in stocks that are listed on a stock exchange, as they may offer additional security to those traded over the counter. As penny stocks are often offered by small companies with limited resources, they can be high risk investments. This can be compounded by a lack of reliable information. Be aware that trading volume can spike following company news and prices can rise if the event is positive, until demand subsides, which can be within a day, or weeks, if at all. This volatility can make penny stocks attractive to short term traders.

The following 10 penny stocks have the best average upside potential based on Wall Street analysts’ price targets: