Best Penny Stocks To Buy: Find the Best Ones To Watch

Stock graph with upward trend, symbolized with a penny.
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Despite their high risk and poor reputation, penny stocks are highly popular among investors. And while they are notoriously volatile, that doesn’t mean you can’t find a hidden gem once in a while. If you’re interested in trying your luck investing in penny stocks, here are some worth keeping an eye on. Many of them are in the biotech, pharmaceutical, energy and tech industries.

5 Penny Stocks To Keep on Your Watchlist

Last year was great for the penny stock market. The popularity of this kind of trading was heavily influenced by the meme stock phenomenon. With this trend slowly fading in 2022, it might become more challenging to find success with penny stocks. Yet, there are still some investors willing to take the risk.

If you’re one of them, here are the five best penny stocks to keep on your radar this year.

1. Pitney Bowes (NYSE: PBI)

Pitney Bowes is a clear exception to the rule that penny stocks represent obscure, here-today-gone-tomorrow companies. This global shipping and mailing mainstay was founded in 1920. It trades at a relatively low 15.84 times earnings and pays a robust 4.42% dividend yield. Currently trading under $5, the stock’s average analyst target is $7, and analysts rate it a “buy.”

Statistic Price
Market Cap $801.256 million
Share Price $4.62
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2.  Sesen Bio (NASDAQ: SESN)

Companies in the clinical healthcare field are also quite popular among penny stock investors. Sesen Bio provides targeted fusion protein therapeutics for cancer treatment. The company’s flagship drug is Vicinium, which is a bladder cancer treatment that consists of an anti-epithelial cell adhesion molecule antibody fragment tied to a form of pseudomonas exotoxin A. The company is preparing to resubmit a biologics license application to the FDA for the drug.

Statistic Price
Market Cap $102.604 million
Share Price $0.51

3. Bolt Biotherapeutics (NASDAQ: BOLT)

This clinical-stage immuno-oncology company is known for developing tumor-targeted therapies that take advantage of the inherent adaptability of the immune system. It’s most famous for its immune-stimulating antibody conjugate, which uses immunostimulants that activate myeloid cells to kill tumor cells. Analysts give BOLT a “strong buy” rating with an average price target of $9.80. Bolt Biotherapeutics was founded in 2015 by Dr. Edgar G. Engleman of Stanford University.

Statistic Price
Market Cap $58.456 million 
Share Price $1.56

4. AgroFresh Solutions Inc. (AGFS)

AgroFresh Solutions is a consumer defensive stock that could be ready to grow after years of decline. Growers, packers and retailers use AgroFresh products to preserve fresh produce when it’s harvested, during transport and while it’s stocked in stores. Analysts rate the stock a “buy” with an average price target of $4.

Building Wealth
Statistic Price
Market Cap $95.823 million
Share Price $1.82

5. Pixelworks Inc. (NASDAQ: PXLW)

Pixelworks is a semiconductor company that focuses on providing “end-to-end,” optimized video delivery. Its research and development activities center around video enhancement, with the goals of increasing performance and functionality while conserving power. Products include a cinematic video platform, mobile displays, projectors and video streaming technology. The stock has an average price target of $5 and a consensus “buy” rating from analysts.

Statistic Price
Market Cap $109.076 million
Share Price $2.02

What Exactly Is a Penny Stock?

Historically, in the United States, penny stocks were those traded for less than one U.S. dollar per share. However, in recent years, that definition has evolved to include all shares trading under $5. It’s important to know that, for those trading outside the U.S., the definition of these types of stock can vary. For example, in the U.K., stocks priced over £1 are not considered to fall under the penny stock umbrella.

In general terms, penny stocks are classified as microcap stocks. These are usually associated with smaller-scale companies that have a market cap of under $250 million. Penny stocks are typically traded over the counter, meaning all exchanges are performed through decentralized dealer networks with no need for an exchange regulator’s supervision. Yet, there are some occasions when penny stocks are traded on large stock exchanges like the New York Stock Exchange. 

Final Take

Penny stocks can be a good alternative for traders who lack the capital to make more substantial investments. Although they involve a higher risk than other options available, there’s always the possibility of stumbling upon a hidden gem. Just remember to always do your due diligence and tread carefully. 

Advice

Penny stocks can make investors a lot of money, but they can also make them lose a lot. Before trading these high-risk shares, it’s essential to do some research to avoid any unpleasant surprises in the long run.

Penny Stock FAQs

Here are the answers to some of the most frequently asked questions about penny stocks.
  • Can you get rich by trading penny stocks?
    • While penny stocks represent a high-risk investment option and could potentially make shareholders lose a lot of money, that's not a golden rule. Some penny stocks could have high percentage returns. For example, if you purchase 10 shares of a stock at $1 per share and the price jumps by $1, your investment will double, as opposed to buying 10 shares at $100, in which case you'd only get a $10 profit from your $1000 investment.
  • How do I pick a good penny stock?
    • Before investing your hard-earned money in penny stocks, you need to take the following actions:
    • — Use only funds you can afford to risk.
    • — Understand the market conditions.
    • — Do some research on the company.
    • — Learn about share pricing and valuation.
  • How high can a penny stock go?
    • There is no limit on how high a penny stock can go. However, when reaching over $5 per share, it would cease to be considered a penny stock.

Daria Uhlig contributed to the reporting for this article.

Information is accurate as of May 23, 2022.

Our in-house research team and on-site financial experts work together to create content that’s accurate, impartial, and up to date. We fact-check every single statistic, quote and fact using trusted primary resources to make sure the information we provide is correct. You can learn more about GOBankingRates’ processes and standards in our editorial policy.

About the Author

Daniela Rivera is a bilingual freelance content creator with an advertising and media background. She has a degree in Communication Science and over 10 years of work experience as a copywriter. She specializes in generating engaging and creative concepts and texts for advertising, e-commerce, blogs, podcasts and social media.

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