What are the best penny stocks under $1? If you saw this headline, that’s probably a question you have heading into the second half of the week. As we’ve discussed in the past, your definition of “the best” compared to another trader’s definition may be different. You might be looking for slower-moving penny stocks versus highly-volatile ones. On the other hand, you might want to take advantage of short-term, explosive moves if you know how to handle the increased risk profile.
Regardless, when it comes to the best penny stocks under $1, you’ve got your work cut out for yourself. A move of just a few pennies can equate to significant percentage changes in position value. For example, a penny stock that trades around $0.10 only needs to move a penny in order to realize a 10% change. You can’t say the same for a company like Apple or Tesla if they experience the same type of move in price.
What Are Some Good Cheap Stocks To Buy?
Penny stocks are defined as stocks under $5 and are some of the cheapest stocks in the market. When it comes to finding some good cheap stocks to buy, it’s important to stick to your trading rules and understand your risk tolerance.
When looking to invest in stocks, many investors aim to find undervalued companies. These are ones that have share prices lower than their true value. Buying these so-called “cheap” stocks can lead to excellent returns if the stock price rises to reflect the company’s actual value. However, determining which stocks are genuinely underpriced requires research and analysis. Here are some tips for finding good cheap stocks to invest in.
Long-Term Investing In Penny Stocks
Think long-term. The best cheap stocks are from strong companies that are momentarily undervalued but have great long-term growth potential. Avoid stocks that are cheap for good reason, like companies in declining industries or those with weak financials. Focus your search on stocks from growing industries and companies with solid fundamentals.
Use valuation metrics. Valuation ratios like the price-to-earnings (P/E) ratio compare a stock’s price to financial metrics. Lower P/E stocks may be undervalued. Also, consider the price-to-book ratio, price-to-sales ratio, and price-to-cash flow. Compare ratios to historical averages, competitors, and industry benchmarks to find undervalued stocks.
Penny Stock Picks From Stock Screeners
Screen for stocks based on valuation. Stock screening sites allow you to screen for stocks that meet certain valuation criteria. For example, you could screen for stocks with P/E below 15 and price-to-book below 1.5. Screening makes it easy to discover overlooked cheap stocks that warrant further research.
Analyze the company’s financial health. Cheap stocks aren’t wise investments if the underlying business is struggling. Review financial statements and consider metrics like revenue growth, profit margins, debt levels, and cash flow. The company should demonstrate financial strength before you consider investing.
Research the qualitative factors. Don’t invest just based on numbers. Consider factors like the company’s industry, competitive advantages, management team, and market positioning. What is driving growth? Does the business have solid long-term prospects? The company’s qualitative merits should back up the quantitative appeal.
Technical Trends & Penny Stocks
Consider stocks trading near 52-week lows. Stocks trading near their 52-week low prices can represent good value if the lower price reflects temporary factors as opposed to permanent deterioration. But always investigate why the stock has declined before assuming it is a bargain.
Pay attention to earnings surprises. When companies exceed EPS expectations, share prices may gap up for a short time. Investors can take advantage of the temporarily inflated share price by buying once the surge settles. Just be sure the company’s future remains strong.
Use analyst recommendations judiciously. Analyst reports can identify stocks considered undervalued by experts. But always form your own opinion too—analysts aren’t always right. Use reports to complement your analysis, not replace it.
Avoid value traps. Some cheap stocks are inexpensive for good reason—the business is faltering. These “value traps” appear undervalued but never improve. Be skeptical of overly cheap stocks and thoroughly analyze the business’s fundamentals before investing.
Penny Stocks Under $1
By thoroughly researching cheap stocks using valuation metrics, financial statements, qualitative analysis, and other information, you can find high-quality businesses trading below their true worth. Taking advantage of these opportunities while avoiding value traps can lead to excellent investment returns over the long run. Maintain discipline and patience while searching, and always form your own opinions. In this article we look at a handful of cheap penny stocks under $1.
Penny Stocks To Watch
Processa Pharmaceuticals (NASDAQ: PCSA)
Biotech penny stocks remain a focus, and companies like Processa are among the list of names gaining momentum recently. The company is developing chemotherapeutic drugs for cancer patients and has been making headway on the presentation circuit.
This week the company presents at the ThinkEquity Conference in New York. The latest presentation is about a month after Processa participated in the HC Wainwright Global Investment Conference on September 13th. What’s more, there is a current Phase 1b trial with a cohort that is nearing enrollment completion.
According to the company, the first three of five cohorts in the Phase 1B trial of its capecitabine in gastrointestinal cancer, have completed enrollment and the initial safety evaluation. The fourth cohort has completed enrollment, and the safety evaluation is ongoing. Enrollment in the last cohort is expected to be completed this quarter. This will lead to an assessment of the safety profile and potentially preliminary efficacy of the NGC-Capecitabine in totality across all cohorts by year-end, according to Processa.
Better Home & Financing Holding (NASDAQ: BETR)
Last quarter, Better Home & Finance closed a business combination with Aurora Acquisition Corp. via a SPAC merger. As with many SPAC stocks, BETR faced the typical sell-off immediately following the tie-up, which has lasted for over a month. However, over the last three days, shares of Better Home & Finance stock have actually begun trading higher.
The Softbank-backed company provides residential mortgage, insurance, and real estate services in the US and UK. Better launched a unique “One-Day Mortgage) this year allowing certain customers the ability to get an underwriting determination on a loan application within 24 hours. It did $98 billion in mortgage volume from 2019-2022, according to the company, and more than $4 billion in real estate transaction volume.
Better reported its first half of 2023 results at the end of August. It posted sales of $51.1 million. The business combination also unlocked $565 million in capital. Kevin Ryan, Better’s President and CFO, said, “We are pleased that our continued expense discipline in a challenging mortgage environment has allowed us to dramatically reduce both our GAAP loss and our Adjusted EBITDA loss in the second quarter. We believe the proceeds from closing the business combination alleviate the previously disclosed going concern uncertainty. Pro forma for the business combination, our June 30, 2023 cash and cash equivalents would have been $632.4 million.”
With a surge in momentum this week, BETR stock could be one of the names to watch.
Outlook Therapeutics (NASDAQ: OTLK)
We discussed OTLK stock yesterday as shares pushed higher. Despite the downtrend in the stock market over the last two days, shares of Outlook Therapeutics are up. A lot of the positive sentiment has stemmed from the news at the end of September that Outlook requested a meeting with the FDA.
Outlook wants to discuss the complete response letter from August regarding the biologics license application for its ONS-5010. The treatment candidate is Outlook’s wet AMD drug. “Our belief remains unwavering that the retina community needs an FDA-approved ophthalmic bevacizumab to deliver an alternative on-label bevacizumab option for patients with wet AMD,” said Russell Trenary, President and CEO of Outlook Therapeutics, in a September update.
With Outlook back on the move, its dramatic rise from around $0.20 to over $0.50 has not gone unnoticed.
Hub Cyber Security (NASDAQ: HUBC)
Hub Cyber is one of the otherwise very quiet penny stocks to watch that exploded recently. There haven’t been any news headlines from the company in weeks and daily volumes were extremely low heading into October.
However, with the rise of interest in cybersecurity stocks, cheap stocks like HUBC have gained speculative attention. What does the company do? It isn’t going to be competing with the likes of Palo Alto Networks (NASDAQ: PANW) anytime soon from the look of earnings. This speculation has helped fuel a move that has allowed HUBC stock to far outpace anything PANW stock has done from a percentage-change perspective.
Last month Hub gave a series of updates and plans to further build upon its growth. This included a new line of products to enhance Zero-Trust security for its clients. The company’s flagship Hub Secure File Vault has also undergone a transformation to become more robust for large enterprises and governments.
Against this backdrop Uzi Moskowitz, CEO of Hub Security, stated, “These updates represent our unwavering commitment to our clients, investors, and employees. We are navigating these transformative times with resilience and determination, focusing on innovation and financial stability to emerge stronger than ever.”