The cheapest stocks on the market always catch the eyes of young investors. It’s a great way to get your “foot in the door” so to speak. However, these cheap penny stocks come with a lot more risk than you can imagine.

So, why are stocks listed for such low prices? And what are the most intriguing penny stocks available? Let’s take a closer look below.

Cheapest stocks to consider

The Cheapest Stocks to Consider for Your Portfolio

The stock market in the long-term is nothing like gambling. This is a common misconception. Investing in stocks increases the overall wealth of Americans. Short-term trading or gambling, on the other hand, simply takes the money from the loser and gives it to the winner. The house or brokers also get their cut and this lowers returns.

Trading the cheapest stocks in the short-term is no different. You shouldn’t buy into penny stocks and expect quick returns solely based on the low share prices. That’s like playing Russian roulette. You are destined to fail.

Just like any investment, you have to do your research and buy into promising companies with the potential to grow. And as a rule of thumb, the lower the share price of a stock, the more risk comes with it. It’s actually not that “cheap” after all.

In most cases, these are companies that aren’t established within their respective industries. Or they may not have any profitability at the current moment.

But taking on risk isn’t always a bad thing for your portfolio. And for new investors, it can be a great learning experience with the opportunity to make real money.

Yes, there is a lot of risk when buying the cheapest stocks available. But, higher risk can lead to higher reward. So, let’s take a look at some of the cheapest stock available…

Cheapest Stocks List

Here is a list of cheap stocks under $5 that you may want to consider:

  • Western Copper and Gold (NYSE: WRN)
  • New Gold (NYSE: NGD)
  • Northern Oil & Gas (NYSE: NOG)
  • Snipp Interactive (OTC: SNIPF)
  • Taseko Mines (NYSE: TGB)

These five stocks look to have growth potential after a rocky few months for the stock market. From commodities to tech companies, there’s a little bit of everything to consider. And for a larger list, check out these top 20 penny stocks.

Are Penny Stocks Always a Bargain?

Bringing in huge returns on penny stocks will make any investor smile. But, that’s more likely for a day trader than a long-term investor.

While they may seem like a bargain, these stocks can wreak havoc on your portfolio if you don’t play them correctly. This is where your research can make all the difference.

To determine the potential of the cheapest stocks, you should consider every angle. Look at their recent earnings reports. Check their market cap and dig deep into the internet for any news reports. It’s also important to analyze these stocks’ price changes over both the short- and long-term.

Most companies provide annual updates and press releases through their own websites. Don’t skip a beat and search every corner before investing.

This is where you may find the next diamond in the rough. While there’s no uniform textbook to buying penny stocks, there are ways to cut down your list with proper research. The more information you have, the better decisions you can make.

Investing in Cheap Stocks

The cheapest stocks have earned a well-deserved reputation for high risks and intense volatility. However, balancing your investment portfolio can give you the ability to take on more risk in cheap stocks.

Cheap stocks may not necessarily be the best investments. However, no great investor overlooks any company, no matter how big or small. Some of today’s major industry players began trading as penny stocks. In fact, Amazon (Nasdaq: AMZN) debuted on the market for under $2 a share in 1997. And Apple (Nasdaq: AAPL) was trading for under $1 a share in the early 2000s. Now, these companies are global titans.

However, for every company like Amazon and Apple, there are hundreds of penny stocks that fail. For investors to find the cheapest stocks, they must look at smaller and riskier companies. Stocks in these sectors may be either undiscovered or unloved by the market as a whole.

Some of these cheapest stocks don’t seem very appealing today. However, long-term investors who are willing to exercise patience and hold on to shares of these companies throughout multiple economic cycles could benefit.

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