The best penny stocks to buy this year can provide you with huge returns. These stocks are also perfect for new investors who are looking to learn more about the market and day trading.

Small-business stocks have a lot of upside potential. That and their lower price per share is why they’re popular among younger and more inexperienced traders. However, many seasoned investors still consider penny stocks an important piece of their portfolios.

Find the best penny stocks to buy in 2020

Popular Penny Stocks to Buy Right Now

Before you dive in, it’s important to get more familiar with these types of stocks. The more you know, the better chance you have at finding the next winner in the market.

What are penny stocks? They’re sometimes called nanocap stocks, microcap stocks or cheap stocks. And they typically trade for less than $5 a share.

Once the stock price overcomes this threshold, you might see massive returns. Moreover, many investors will purchase many shares to increase their chances at larger profits.

The current market volatility has everyone on edge. That’s an even better reason to consider these over-the-counter stocks. There’s a chance at more rewards, but high risk comes with it as well.

Below is a list of the top five penny stocks to buy in 2021. From real estate to commodities, you can find the next big hit in the market today.

5. Whiting Petroleum Corporation

Whiting Petroleum Corporation (NYSE: WLL) has suffered as much as anyone during the coronavirus pandemic. In fact, it was trading at more than $25 a share during May 2019. Just one year later, it’s down to $1.19.

Whiting is a hydrocarbon exploration company that filed for bankruptcy due to the drop in oil prices. This isn’t necessarily a bad thing. There’s higher risk for shareholders, but also some upside potential.

Whiting has the resources to turn this thing around. In addition, some companies that file for bankruptcy return with a vengeance. This is Whiting’s chance to regroup while the oil market stabilizes. This stock might pay off over time for investors who are willing to ride out the storm.

4. Cedar Realty Trust

Cedar Realty Trust (NYSE: CDR) is a real estate investment trust that is slipping as of late. However, it’s primed for growth once the pandemic is past us.

The real estate market is in shambles due to shelter-in-place orders and fears of contracting the coronavirus. Nobody is willing to leave their homes to shop, and who can blame them?

According to its website, Cedar owns a “portfolio of predominantly grocery-anchored shopping centers in high-density urban markets from D.C. to Boston.” Outside of essential groceries, these shopping centers are like ghost towns at the moment.

Once the pandemic passes, consumers will be ready and eager to get out and buy again. This makes for a perfect growth scenario for Cedar Realty.

Its stock is trading at $0.91 a share. Before the pandemic began, it was as high as $3.69. Add this one to your list of the best penny stocks to buy in 2021.

3. EMCORE Corporation

EMCORE Corporation (Nasdaq: EMKR) manufactures fiber optics and other systems for the defense industry. This tech company is an innovator in producing navigational components for aerospace and defense systems.

Due to the current lockdown in California, EMCORE’s production is down. However, this could actually create more demand for its products going forward. Contacts can begin to pile up, and once the lockdown ends, EMCORE will be in full force.

Its stock is below $3 at the moment and fell as low as $1.46 in late March. The potential is there for huge gains during the second half of 2021.

2. Ritter Pharmaceuticals

Ritter Pharmaceuticals (Nasdaq: RTTR) develops therapeutic products that treat gastrointestinal issues and diseases. The key to this penny stock is its potential merger with Qualigen. According to a recent press release, the merger is in the home stretch.

The release also states that this merger may provide “meaningful value” for stockholders. At the moment, Ritter stock is trading at $0.51 per share.

It peaked at $1.27 in September before falling off a cliff. But it’s steadily regaining momentum as one of the best penny stocks to buy right now.

1. Mohawk Group Holdings

Mohawk Group (Nasdaq: MWK) is a consumer tech company that was founded in 2014. Its AI system provides real-time shopping data for in-home items. This includes appliances, beauty products, housewares and kitchen items.

Mohawk’s data can determine what customers are looking for and what they actually need these items for. This company is on the rise, and its Q1 expectations tell the story.

First quarter revenue might come in around $25 to $26 million. That would be year-over-year growth of about 43%. This is even more impressive considering the current economic climate.

Mohawk stock is growing and is just below $4 a share at the moment. It fell as low as $1.42 in April, but was as high as $10.74 last year.

Find the Best Penny Stocks to Buy Today

Investing in penny stocks is becoming a very attractive option on apps like Robinhood. As investors look for stocks that will rebound after the pandemic, small caps are at the top of that list.

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The best penny stocks to buy in 2021 are weathering the storm and preparing for post-pandemic growth. With Investment U, you won’t miss a step as the market recovers.