Currently, investing in the stock market provides numerous options for growing your money. However, there are still numerous instruments that you can trade and generate profits. Penny stocks are one such investment sector. In this article, we will learn everything there is to know about them and also the most popular penny stocks in September 2022.
List of Contents
What Exactly Are Penny Stocks?
Penny stocks are those that trade for $5 or less per share. Most penny stocks represent small businesses that probably trade over-the-counter (OTC), while some make the trade on major exchanges. As a result, many penny stocks are less liquid than their larger equivalents. Therefore, investing in penny stocks might be particularly dangerous and incur higher trading costs. IronSource Ltd. (I.S.), biotech firm VistaGen Therapeutics Inc. (VTGN), and cannabis company Sundial Growers Inc. are all examples of penny stocks.
In addition, there is no clear benchmark for penny stocks. Importantly, they cover a wide range of industries and sectors. Moreover, since these are primarily small-cap companies, the Russell 2000 Index of small-cap stocks can be reasonable. In the previous year, the Russell 2000 underperformed the Russell 1000 index benchmark, returning -13.1% vs. -9.7% for the Russell 1000. These data, as well as those listed below, are current as of August 26, 2022.
Top Penny Stocks in September 2022
If you are looking for the best value, the most rapid growth, and the most momentum penny stocks, you can look at the following tables.
The Best Value Penny Stocks
- Genworth Financial Inc. (GNW)
Genworth Financial provides mortgage insurance through its subsidiaries. Enact, U.S. Life Insurance, and Runoff are the three divisions under which it operates. Earlier this month, on July 22, Genworth announced that Moody’s Investors Service had raised its senior unsecured debt rating from B1 to Ba2. Moody’s has not changed its opinion on Genworth’s creditworthiness.
- BGC Partners Inc. (BGCP)
BGC Partners is a financial technology and brokerage firm. It provides brokerage services for government bonds, corporate bonds, equities, energy, commodities, and other financial instruments. BGC said it had won a lawsuit against it alleging that it overpaid to acquire Berkeley Point Capital LLC in 2017. The trial was scheduled for October 2021, and on August 26, 2022, the Delaware Court of Chancery determined that the purchase was fair. The court stated that BGC paid the lower end of the range for Berkeley Point. Moreover, BGC’s Special Committee was autonomous, fully empowered, and well-functioning.
- Pitney Bowes Inc. (PBI)
Pitney Bowes is a firm that provides shipping and postal services. Moreover, it provides organizations with logistics, financial services, and technology goods. Among its services are domestic parcel delivery and digital delivery.
The Most Rapid Growth Penny Stocks
- Qurate Retail Inc. (QRTEA)
Qurate Retail is a retail conglomerate that includes brands such as QVC, HSN, Frontgate, and Garnet Hill. The firm specializes in video commerce, e-commerce websites, and digital streaming. Qurate issued a quarterly cash distribution of $2.00 per share on its 8.0% Series A Cumulative Redeemable Preferred Stock on August 15, 2022. The dividend is payable on September 15, 2022, to stockholders as of August 31, 2022.
- Safe Bulkers Inc. (S.B.)
Safe Bulkers provides marine dry bulk transportation services through subsidiaries. The corporation carries products such as coal, grain, and iron ore over global maritime routes. On July 27, 2022, Safe Bulkers reported earnings for the second quarter of 2022. On the back of higher revenue, net income increased by 55.2% yearly.
- UWM Holdings Corp. (UWMC)
UWM Holdings is a holding corporation that operates as United Wholesale Mortgage LLC. It is a large wholesale mortgage lender in the United States through this company, with operations in all 50 states. UWM reported earnings for the second quarter of 2022 on August 9. On the back of higher total revenues, net income increased by 55.3% year on year. UWM attributed the improved performance to an increase in new brokers and loan officers and increased traffic to its BeAMortgageBroker.com website.
The Most Momentum Penny Stocks
- Borr Drilling Ltd. (BORR)
Borr Drilling is a Bermuda-incorporated multinational drilling contractor. It owns and operates jack-up rigs for offshore oil and gas.
- ADMA Biologics Inc. (ADMA)
ADMA Biologics is a biopharmaceutical business that develops, manufactures, and markets biologics to treat immunocompromised patients. Its treatments are aimed at people who have weakened or suppressed immune systems. On August 10, 2022, ADMA reported earnings for the second quarter of 2022. Its net loss shrank as total revenues nearly doubled year on year. According to the corporation, multiple medications, including Asceniv, drive growth.
- Geron Corp. (GERN)
Geron is a late-stage clinical biopharmaceutical firm focused on discovering and commercializing medications to treat blood malignancies. Moreover, it also includes treatments that allow bone marrow and normal blood cell production to be restored.
Benefits of Investing in Penny Stocks
- Leverage
Penny stocks appeal to investors with limited trading capital since their lower share prices allow them to purchase thousands of shares. If an investor has $500 to invest, they can buy 2,000 shares of a penny stock trading at 25 cents per share. If that stock doubles in value over a month, the investor receives a rapid 100% return on their investment. However, with the same starting capital, the investor could only purchase a modest number of shares in most S& P 500 stocks. As a result, it can achieve similar profits over the same period nearly unfeasible.
- High Returns
Since most penny stocks have small market capitalizations, it just takes a small amount of money to significantly alter their share price. As a result, signing on a key partner can lead to significant returns. Negative news, on the other hand, might result in large losses.
Risks of Investing in Penny Stocks
- Excessive Valuations
Genuinely, penny stocks that begin rapidly increasing in price emerge on stock screeners and may even gain media attention. This frequently draws more speculators, who drive prices even higher, resulting in unsustainable valuations. For example, during the late 1990s dot-com bubble, numerous penny technology firms rose and tripled in value despite producing no earnings. When the market went bearish a few years later, many Nasdaq-listed penny stocks with unsustainable valuations plummeted or were delisted.
- Low Liquidity
Penny stocks sometimes trade on little volume. Thus, this makes it difficult for investors to enter and exit positions. Furthermore, the bid-ask spread on these equities is often wide, increasing trading costs. For example, if a penny stock has a bid price of $1.00 and an ask price of $1.50, a trader looking to purchase at the market is forced to pay a 50-cent premium per share. As a result, investors should use limited orders to reduce trading costs when buying and selling penny stocks.
Conclusion
In short, investing in penny stocks is another good choice. However, this article may contain opinions and investment ideas that are not appropriate for all types of investors. All of the comments, opinions, and analyses contained within this article have been rendered as of the day the posting was made. They are subject to change without prior notice as market, and economic situations are prone to rapid change. Thus, it is necessary for all investors to always pay attention to related news.
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Source: Investopedia