What are Penny Stocks?

What are Penny Stocks? What are the Characteristic of Penny Stocks?

What are Penny Stocks?


Penny is a form of stock market traded security that attracts minimum pricing.  

These securities are mostly offered by companies with low market capitalization rates.  

Therefore, they are also called nano-cap stocks, micro-cap stocks and small-cap stocks depending on the market capitalization of the company.

Penny stocks meaning

The market capitalization rate of a company is determined by the current price of its shares or shares and the number of outstanding shares i.e. the number of shares of the NAV. 

Penny stock inventories are often found in the lower classes of such stock exchanges or lesser-known stock exchanges.

Characteristic of Penny Stocks?

What are the Characteristic of Penny Stocks?

High Returns: 

These shares offer much higher returns than other forms of securities. 

As such shares are issued by small and micro-cap companies, they have a wide potential for growth. 

As a result, penny stocks are risky given the intensity of response to market fluctuations.

Low cost: 

Normally in some countries, penny stocks are usually priced below Rs. 15 to 20. 

Therefore, you can buy a substantial amount of stock units from a penny stock list with a small scale investment.

Unexpected pricing: Penny stocks may not attract sufficient pricing during a sale. 

This can result in low or non-existent profit margins. 

Likewise, these shares can also attract a price much higher than your cost; Therefore, there was considerable benefit.

Why you invest in penny stocks is important?

Penny stocks can be considered hit or miss security. 

The companies issuing them can grow into a larger organization and in their early years yield higher than average returns or tanks, causing huge losses.

Despite these information, money stocks should be included in your portfolio. Here are the reasons why -

Multibagger:

Some of these stocks have the potential to grow into multi-baggers. 

This means that those shares are found in multiples of the investment amount. 

If the specific security doubles its investment amount, it is called a double-bagger, and if it returns ten times its investment value, it is considered a ten-bagger.

Including them in your portfolio can increase your chances of returns faster and outperform large and mid-cap funds. 

However, do an in-depth research on the penny stock list to gauge which stocks have the potential to be multibaggers.

What are the risks associated with penny stocks?

Given the scale at which companies offer such shares, they are highly risky. These stocks rely heavily on market conditions to increase their value.

In addition to the basic risks th at come with any market-linked securities, there are other forms of risk associated with penny stocks. These are -

Limited Information: 

Given the fact that companies that issue penny stocks are start-ups, there is a lack of information on their financial soundness, past performance, growth prospects, etc. 

Individuals may invest differently. Therefore, do intensive research on the list of penny stocks in India before investing.

Scams

Penny stock scams are common in international financial history. One such popular method is "pump and dump". 

Companies and scammers buy considerable amounts of penny stocks resulting in price inflation that attracts other investors to follow the hype.

However, once enough buyers have invested in such shares, such companies and scammers sink their shares. 

The result is that the immediate investors end up losing less as they try to sell it.

What is an example of a penny stock?

Top NASDAQ / NYSE Penny Stock List:

Symbol    Penny Stock Name         Country

NOK         Nokia Corporation          Finland

FCEL        FuelCell Energy Inc.        USA

MARK      Remark Holdings Inc.     USA

XELA        Exela Technologies Inc.  USA

PRTY         Party City Holdco             USA

NGD          New Gold Inc.                   Canada

AR             Antero Resources Corp   USA

APHA        Aphria Inc.                        Canada

HTGM       HTG Molecular Diagno    USA

Top NSE/BSE Penny Stock List:

SL       Company                               Price 

1         Morarka Finance                 34.40 

2         Jayatma Enterprises           19.25

3         KMC Speciality Hospit        21.50

4         Kriti Nutrients                      35.40

5         Tejnaksh Healthcare           34.40

6         Aditya Birla Money              43.40 

7         Avonmore Capital                10.00

8         Kriti Industries                     26.50

9         Continental Petroleum        33.60

10       Standard Batteries                 5.37 

11       Sita Enterprises                      9.00

12       Prakash Woollen & Syn       20.90

13       Faze Three                             43.45

14       Lakshmi Automatic              31.95 

15       Aryan Share And Stock          6.31




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