Top 14 Penny Stocks List for Investing in 2022
Penny stocks have a low barrier to entry. For a few dollars you can buy a stake in multiple companies. And these micro cap stocks have big return potential. But they can be hard to track down. That’s why we’ve put together a list of penny stocks.
The list below offers high risk-to-reward investment opportunities. Some of the stocks might double or even triple your money in little time. But with that opportunity comes downside risk. I’ll cover the risk and reward in more detail below, but first, here’s a list of the top penny stocks.
Top Penny Stocks List
*Stock data from August 17, 2022
Top Penny Stocks Highlights
Eos Energy Enterprises is a clean energy company based out of New Jersey that is looking to lead the way in changing how the world stores power. Its main product is its Znyth, which is an aqueous zinc battery that can be used to replace lithium-ion batteries. These batteries are manufactured out of its plant in Pittsburgh, Pennsylvania.
This company is not only providing clean energy to its customers but is also working towards a clean operation. Everything from its supply, manufacturing and operation is moving towards zero carbon footprint and zero waste. This is definitely a top penny stock for environmentally-conscious investors.
Globalstar is a satellite communications company based out of Louisiana. It operates a low Earth orbit satellite constellation consisting of 24 satellites for mobile voice and data communications. These services are provided to commercial and recreational customers in more than 120 countries.
It targets a wide range of customer segments. With everything from government to commercial fishing to transportation. It offers fixed and mobile satellite phones, simplex and duplex data modems as well as other services. With so much to offer to its customers and investors, it’s no surprise to see Globalstar on our top penny stock list.
Why are Penny Stocks High-Risk, High-Reward Investments?
Most penny stocks are shares of microcap companies valued at $300 million or below. As a result, they don’t have the scale to justify listing shares on major exchanges. These exchanges require costly auditing and reporting, along with other requirements like a higher share price.
Small company size and lack of reporting can lead to big price swings. Penny stocks can have big drops in value in a short amount of time.
Some companies in the penny stocks list also trade over the counter (OTC). Instead of trading on a centralized exchange, they go through a broker-dealer network. For example, Pink Sheets is a business that helps bring small company shares to market.
Due to these smaller networks, penny stocks are less liquid. It might take longer to fill your buy or sell orders. This can also lead to higher implicit trading fees. The bid-ask is wider to compensate brokers. On top of that, the smaller size keeps many analysts away…
When fewer people analyze and trade ownership in a business, there’s the potential for larger price deviation from intrinsic value. So you might be able to find great businesses trading at deep discounts.
Lower prices can also give insiders an edge. Insider trading is not illegal if the insiders wait for inside information to become public and report their trading activity. Investors can then follow their investment moves thanks to public disclosure requirements.
Following the right insider trading is a profitable strategy. That’s why our Chief Investment Strategist Alexander Green researches insider activity. He even manages a trading service, The Insider Alert, dedicated to the strategy.
Many small cap stocks also have larger growth opportunities. Some of the businesses only address a small piece of the markets they operate in. So if they gain more market share, they can easily double or triple in size. Which would lead to impressive gains.
Don’t Bet the Farm
The reward potential is high with any given penny stock… but so is the risk. So don’t bet the farm on just one. The following table is a great reminder to never put too much money into one trade…
|Loss||Return to Breakeven|
If you put all of your money in a penny stock that loses 90% of its value, it would take a 900% gain to reach breakeven. And a 900% gain doesn’t come around too often. So instead of betting big on one company, you can buy a basket of penny stocks to limit risk.
A good rule of thumb is to put no more than 4% of your total portfolio in any one position. Then if you combine that with a 25% stop loss, you limit your total portfolio loss to 1% on any given trade.
How to Trade Penny Stocks
Trading penny stocks has never been easier. You can set up an account with an online broker such as Robinhood. It’s as easy as setting up a bank account. Then once you’ve verified your account and put some money into it, you can start trading.
I hope you find the penny stock list above to be helpful. It’s a good starting point, but you should always do your own research before investing. There are so many investment opportunities for you to explore…