Though one of the oldest, stock market trading has not lost its popularity among new and experienced traders. Its popularity is surging day by day. Apart from the conventional stocks, there are other stocks too that have attracted many traders. The most famous in this list are penny stocks. What are penny stocks? And Which are the best penny stocks to buy? both these questions are trending on the internet these days. So, here are the direct and precise answers to your questions.
What are penny stocks?
Penny stocks are referred to as stocks of small firms that usually have low stock value compared to larger firms. Traders can also use this name for shares of those companies which trade under $5. Traders require a dedicated and reliable platform to trade these stocks. This platform is provided by the financial service provider or, in short, a broker. We will discuss the top broker for trading penny stocks later in the article.
Why do traders find penny stocks attractive?
Penny stocks come out to be an attractive option for those traders who wish higher than average market volatility. What is market volatility? The market volatility of a share reflects by what magnitude and how frequently the price of a concerned stock will decline or surge during a trading day.
High volatility also depicts a great opportunity on the trader’s part to harvest profit when selling and buying penny stocks. For instance, if a trader buys 1,000 shares of a company X at a price of $1 and sells them at $2, he/she has doubled his/her money and has harvested $1000. However, you must also remember that high volatility comes with both profits and losses. There is a high risk of losing money if you trade carelessly. So, stay vigilant while making any move in the financial market.
Factors to be considered while trading penny stocks
Not all stocks fall under the list of best penny stocks or are risk-free or offer greater returns. There are many which come with a high risk of losing money. However, you can mitigate loss and risk by considering these three vital factors.
- Trade with a reliable broker: It is the most important thing you must consider before trading penny stocks. A well-regulated broker having a proper license number and regulatory certificate is considered safe. When you visit the website of the broker, look for these three things. If you find any of these missing, leave the website immediately, as this can be a scam. There are various broker’s websites which aim at stealing money and the personal information of visitors.
- Look for high daily trading volume stocks: Many traders wish to trade penny stocks through day trading and swing trading for earning profit. However, most traders forget that if they wish to sell any stocks, there must be traders on the financial market wishing to purchase them. Try to go with those penny stocks which have a higher average daily trading volume. For this, you can use several indicators or stock screeners. Remember, higher volume assists you in selling off your shares when you wish, not when value is at rock bottom.
- Check earnings per share before opting: The value of earnings per share of a stock is equivalent to the present earning of the firm divided by the present number of shares outstanding. Try to look for penny stock that has positive earnings per share value. This value directly points out that the firm is currently profitable or not. Most penny stocks point out newly formed or smaller companies, so this method is not always applicable or possible. If you wish to invest in a share with negative earnings per share value, ensure that it has a controllable level of debt.
Best penny stocks to buy in 2021
Here is the list of best penny stocks that will help you harvest the most out of the market in 2021. We have divided them into some categories to explain them clearly. Opt for the one which you find suitable concerning your trading conditions and objectives.
Best penny stocks in tech sphere 2021
Here is the list of tech stocks
1) Best value tech penny stocks 2021
Sonim Technology Inc
The company offers cloud-based software, mobile devices, industrial-grade accessories for the hospitality, construction, logistics, and other industries. The net revenue of Sonim Technology Inc was about $15.8 million in the Q4, compared to $17.2 million recorded in the similar quarter a year before.
Exela Technologies Inc
Exela Technologies is basically an automation firm. It provides software and services in the sphere of human resources management, accounting, and several other services. In the initial results for the quarter four and 2020 full year, the firm recorded a net loss of about $88.9 million in comparison to the net loss of about $304 million during a similar interval in 2019. Further, the firm posted a net loss of approximately $178.5 million in 2020 as the revenue decreased 17.3% to $1.3 billion.
Borqs Technology Inc
Borqs Technology Inc is basically a software provider specialized in cloud service solutions and android-based customizable devices.
2) Fastest-growing best penny stocks in the tech
ImagineAR provides AR services (or augmented reality) as a mobile application. Such mobile applications turn signs, logos, and several other items into a 3D histogram, AR videos, and other attractive and interactive content. Liquid Avatar Technologies Inc, a fintech firm, and Imagine AR together launched Oasis Digital Studios. It is basically an agency to assist the development of augmented reality-based NFTs (Non-Fungible Tokens).
Hello Pal International Inc
A social apps platform, Hello Pal, includes language learning and live-streaming. Its major headquarters are situated in Canada and China. This platform enables its 4.4 million customers to exchange gifts, and further turn them into cash. The firm reported a significant surge in total revenue (monthly) as of March 2021.
Ideanomics functions as a fintech firm. The company’s electric vehicles business offers discounts on electric vehicles, electricity, batteries, group purchasing, and financing. Moreover, it offers financial services solutions powered by blockchain and artificial intelligence.
3) High momentum tech best penny stocks
Sun Pacific holding corporation
Sun Pacific holding mainly deals in renewable energy resources and has several subsidiaries. Its major items include energy-efficient lighting and solar power bus shelters.
Extreme Vehicle Battery Technologies Corporation
Extreme Vehicles Battery Technologies Corporation offers items for the energy storage markets and electric vehicles. The firm launched its new smart charger series IoniX Pro EV in March 2021.
Alpine 4 Holding Inc
Alpine 4 Holding is an operator and owner of small firms that generate items for a wide range of sectors, including construction, defense, and technology. In March 2021, the firm announced to merge its two subsidiaries Morris Sheet Metal Corporation and Deluxe Sheet Metal, Inc. The merging of these two biggest midwest region sheet metal contractors can hopefully surge the value of the share of this company.
Best penny stocks to purchase using technical analysis for 2021
SPAR Group, Inc
SPAR Group or SGRP finished off the month of March 2021 with a large gap upward, rising from about $1.40 to $1.60 overnight. This provides us with a positive sign that a concerning stock price will continue increasing as traders surge more bullish about the company’s price. Here trading volume is also high, reflecting that traders can harvest a good amount from this penny stock.
Ambow Education Holding Ltd (AMBO)
At the end of March, investors noticed hammer candlestick appearing in the graph of Ambow Education Holding Ltd (Ambo). The stock price surged after about a 10 percent loss in the last week of March. It indicates that the stock is following a bullish reversal pattern. It can prove to be one of the profitable investments as prices may show a sharp increase.
GlycoMimetics, Inc. (GLYC)
After a sharp decline of about 20 percent in prices over last month, GlycoMimetics, Inc. (GLYC) may pick its pace, and its stock prices may surge soon. It can provide the desired profit if traded wisely.
Penny stocks of new firms
Elys Game Technology, Corp. (ELYS)
The corporation was established in the year 1998. But in several ways, the world of sports betting and gambling, the sectors in which ELYS works, is one that is still growing with all the risks and potential that this involves. This is because different forms of gambling and betting that were illegal before are turning legalized or equivalent to this all across North America.
In this sector, Elys Game Technology’s Sales are doing extremely excellent. The total five-year revenue data reflects 83% growth. As per the recent quarter, the sales showed about 43% growth. More and more people are spending on this gambling stock through interacting platforms.
Top brokers for trading penny stocks
To trade penny stocks, you require a financial service provider which offers all tools and platforms to trade. The financial market comprises many stockbrokers, including both fake and authentic ones. Hence, you must take care while opting for a brokerage firm. We have made it a bit simple for you by providing the list of top penny stock brokers.
1) ROinvesting: ROinvesting was established in the year 2015. Since then, the firm has made continuous efforts to surge the trading standards of its clients. It is a leading firm operated by famous Royal Forex limited. The broker is regulated by the top-tire financial authority, the Cyprus Securities and Exchange Commission, under the license number HE336694.
The broker facilitates trading on more than 350 assets, including forex, stocks, indices, cryptocurrencies, and several others. There is no commission on trading. You just need to pay a minimum deposit of $100 to open an account and a swap fee to hold a position overnight. Apart from this, the broker offers a top trading platform MetaTrader 4, to ease trading. This platform is globally accepted and used by many novice and experienced traders.
2) Global TradeATF: The brokerage firm came into existence in the year 2013. It is the trading name of popular Bayline Global World limited. Bayline Global Limited monitors all the transactions and website operations of the brokerage firm. Moreover, the firm is regulated by the Belize International Financial Services Commission (IFSC) under license number 000188/91. Thus, it is absolutely a safe and reliable venture.
The broker provides all tools to ease trading, including research tools, educational tools, more than 60 analytical tools, and several others. The research session includes an economic calendar, a report season calendar, the latest news, and trading signals. Thus, the broker keeps you up-to-date about all market price fluctuations, political changes, economic changes, or any sudden incident which can affect your trade.
3) T1markets: T1markets, a brokerage firm established in the year 2020, is a leading name in the trading sector. It is regulated by the popular Cyprus Securities and Exchange Commission under license number 333/17. The firm has uploaded all essential documents verifying its authenticity and regulation on the official website. Thus, we can say that the firm is absolutely a safe venture.
Apart from being reliable, the firm provides robust encryption and safeguard tools to secure client’s personal information and transaction details. The broker has four different accounts for trading. You can choose any depending on your needs. Also, the broker has kept the sentiments of Muslim traders in mind and has offered an Islamic trading account abiding by Sharia law. Moreover, clients can enhance their skills and knowledge through broker’s educational courses, articles, tutorials, videos, and webinars.
4) HFTrading: The brokerage firm is a trading brand of New Zealand-based firm CTRL Investments Limited. It has received a license from the top two tiers, including the Financial Markets Authority (FMA) and the Australian Securities and Investments Commission (ASIC). The broker has kept the safety of client funds and privacy on priority by offering SSL protection, strong encryption, and a firewall to secure data.
Moreover, the firm facilitates leveraged trading. Leverage is a financial tool through which you can trade relatively larger assets, providing only a small amount upfront. It helps in magnifying profits. The broker’s trading platforms include web trader, MetaTrader 4, and mobile applications. The features of these platforms include lighting fast speed, precise price movement data, regular notifications, and many more.
How to open a stock brokerage account?
The account opening process with the financial service provider is simple and instant. You need to spend your five valuable minutes if documents are scanned beforehand.
- Open the website by clicking an authentic URL and register yourself by providing your name, country, and email address for verification.
- Enter the one-time password, or OTP verification code sent on your email.
- Fill the questionnaire provided on the website.
- Once you enter OTP, the website will direct you to the documentation session. You are required to provide your address proof (bills containing permanent address and photo), identity proof (such as a passport or national id card), and bank and financial statements.
- Choose the stock and the account type that best fits your pocket, profit objectives, experience level, and financial conditions.
- Deposit the amount and start trading.
- If you are a neophyte, it is better to start with a demo trading account. With this account, you can practice trade and strategy before entering the real trading world. Moreover, it is free for beginners.
- Remember to scan your documents beforehand. It will reduce the total time required to open an account.
- Stay away from the fake website and always check the URL before providing any personal information or depositing money.
The Bottom Line
Many traders do not find trading penny stocks worth as they belong to low market cap companies. Trading penny stocks is risky, but, at the same time, if you make each decision wisely, they can double even triple your profit. The list of best penny stocks provided in the article can help you harvest better profit this year. If you still fear entering the market, you can go with the demo trading account explained above in the article.
Frequently asked questions
What are penny stocks?
Penny stocks are referred to as stocks of small firms that usually have low stock value compared to larger firms. Traders can also use this name for shares of those companies which trade under $5.
Where can I trade penny stocks?
You can trade penny stocks with any of the following brokers:
- Global TradeATF