Penny stocks allow you to target much higher gains than the market average. You’ll likely be investing in companies with a small market capitalization and limited liquidity – so the risks are much higher than other stock types.
In this guide, we analyze the 10 best penny stocks to buy in 2023. We also discuss the mechanics of penny stocks, how to identify suitable companies, and where to complete your purchase.
The best penny stocks to invest in right now are listed below: Note: Our criteria for the above penny stocks list is based on the SEC’s definition – meaning each company trades for under $5 per share. You’ll need a solid methodology when choosing the best penny stocks to buy. Below, we take a much closer look at the top penny stocks to buy today. BioNano Genomics is a US-based healthcare company that specializes in DNA processes. It has developed proprietary technology that helps understand DNA structures within human cells. Some of the niche areas BioNano Genomic is targeting include genetic diseases, cell bioprocessing, molecular genomics, and oncology. BioNano Genomics is listed on the NASDAQ exchange and is currently valued at just under $99 million. This makes BioNano Genomics a micro-cap penny stock with plenty of upside potential. Currently, BioNano Genomics stock is trading at $2.79 per share. This is just a fraction of its 52-week high of $30.10. Like many penny stocks, BioNano Genomics witnesses significant volatility. Year-to-date, the stock is down 80%. In terms of its financials, BioNano Genomics reported a revenue increase of 29.87% in its latest earnings report. However, although net profit margins were up 6.82%, it still generated a $38.9 million loss. BioNano Genomics’ balance sheets should also be considered. Cash and short-term investments took a major hit during the quarter. There was a 58.68% decline to $77.06 million. Moreover, total liabilities increased by 52.8% to $56.63 million. Ultimately, an investment in BioNano Genomic stock is reliant on its DNA advancements and treatment-specific solutions. Therefore, it’s wise to keep an eye on treatment developments and potential FDA filings.
Nine Entertainment is an Australia-based media company with subsidiary holdings in TV broadcasting, radio, and newspapers. Some of its subsidiaries include the Sydney Morning Herald, Nine Network, Pedestrian, and the Australian Financial Review. Nine Entertainment was listed on the Australian Stock Exchange in 2013. It currently trades at $1.98 per share and is up 9% year-to-date. Over a five-year period, Nine Entertainment stock is up 7.88%. Unlike many penny stocks, Nine Entertainment is a medium-cap company – currently valued at $3.2 billion. What’s more, this is the best penny stock to buy for dividends. Nine Entertainment stock is currently offering a running dividend yield of 5.56%. In its most recent earnings calls, Nine Entertainment stock reported revenues of $646.88 million. This is down 4.67% year-over-year. Moreover, the firm made a quarterly loss, although this was minute at just $647,000. Nine Entertainment is currently holding $119.6 million in cash and short-term investments. This is down 22% from the prior year. In the short term, investors will be looking to regain the stock’s 52-week high of $2.27. From current prices, this would require an upside of 14%.
While Rolls-Royce is best known for its luxury cars, it also specializes in defense and aerospace technologies. It designs and manufactures aviation power systems and safety mechanisms for the air, land, and sea. Rolls-Royce stock trades on the London Stock Exchange and is currently priced at just 205.28p. (about $2.51). This is one of the best-performing penny stocks right now, with Rolls-Royce up 197% over the prior 12 months. Year-to-date, the stock is up 107%. Although Rolls-Royce stock has a large market capitalization of £17 billion (about $20.8 billion), there’s still plenty of upside to target. In the short term, a return to its 52-week high of 233p represents a solid target. This would require an upside of 13%. However, long-term investors will be looking to target the 300p that Rolls-Royce hit in 2018. Crucially, Rolls-Royce’s most recent earnings report yielded excellent results. For a start, Rolls-Royce increased revenue by 34.34% to £3.76 billion. Net income saw a significant rise of 179.09% to £614.5 million. EBITDA also saw a notable increase of 82.43% to £472.5 million. Although Rolls-Royce saw a 4.95% increase in cash and short-term investments, total assets declined by 2.85%. That said, Rolls-Royce reduced its total liabilities by 5.87% to £34.71 billion.
Torrid Holdings is a US-based clothing company that specializes in women’s apparel. In addition to dresses, shoes, shorts, and hosiery, it also manufactures jewelry, accessories, and beauty products. Torrid Holdings has stores in over 600 locations across 35 US states. Torrid Holdings stock was listed on the NYSE 2021, so is firmly in its growth stage. Currently, Torrid Holdings trades at $2.02 and is one of the best-performing penny stocks in recent weeks. Over the prior month of trading, Torrid Holdings stock is up 44%. However, over a one-year period, the stock is down 53%. Looking at its most recent earnings report, Torrid Holdings had a poor quarter. For example, revenues were down 18.21% to $289.14 million. Net income saw a significant drop – down 70.81% to $6.63 million. There was also a 72.73% decline in earnings per share, down to $0.06. The balance sheet also took a hit, with cash and short-term investments down 19.32% to $18.54 million. In terms of valuation, Torrid Holdings has a market capitalization of just $210 million. Its P/E ratio of just 9.60 times is considered low when compared to the broader industry.
Centamin is an established gold mining company with global operations. One of its most profitable mines is based in Sukari, Egypt. This mine is estimated to have 6 MOZ worth of gold reserves – which translates to 14 years of further mining operations. Centamin is listed on the London Stock Exchange and currently trades at just 81.15p (about $0.66). It has a market capitalization of just £936 million (about $764 million) and a P/E ratio of 14.9 times. This is a volatile penny stock, with Centamin down 29% year-to-date. That said, there’s a lot to like about Centamin. First, the mining company offers an attractive running dividend yield of 4.38%. Moreover, the firm’s most recent earnings report yielded some positive results. For instance, revenue saw a year-over-year increase of 11.48% to £212.8 million. Net income also saw an increase, rising 7.35% to £45.48 million. Investors also saw an EBITDA increase of 24.76% to £93.60 million. Unlike many penny stocks, Centamin has a solid balance sheet. It currently has total assets of £1.51 billion and liabilities stand at just £131.06 million. Cash from operations saw a 33.49% increase year-over-year and free cash flow rose by 449.56%. Therefore, Centamin is well-positioned to continue its global mining exploration.
Hub Cyber Security is an Israel-based cybersecurity company that trades on the NASDAQ. It specializes in confidential computing, managed services, and regulatory compliance. Due to the most recent Israel-Hamas conflict, demand for cybersecurity services is witnessing an unprecedented rise. Hub Cyber Security is a direct beneficiary, as reflected in its recent stock price performance. For example, Hub Cyber Security stock has increased by 180% in the prior 24 hours of trade. Over a five-day period, the stock is up 214%. Currently, Hub Cyber Security stock trades at just $0.67. With momentum on its side, investors will be looking at its 52-week high of $3.10. This would require a further upside of almost 350% from current prices. Hub Cyber Security has a market capitalization of $67 million – so expect lots of volatility in the coming days. In terms of its financials, Hub Cyber Security saw a 30.25% increase in revenues over the prior quarter. That said, the firm still made a quarterly loss of $30.08 million. The balance sheet is also concerning, with cash and short-term investments currently at just $3.99 million. This represents a 71.42% decline year-over-year. Moreover, total liabilities saw a 20.07% increase to $65.98 million. Parazero Technologies is an Israel-based drone company that specializes in commercial flights. It utilizes real-time data analytics to increase flight safety in populated areas, allowing Parazero Technologies to facilitate deliveries in major cities. Parazero Technologies recently secured approval from the Australian government for its services. This has resulted in significant interest in its stock. In fact, over the prior 24 hours of trading, Parazero Technologies stock has increased by 132%. Over the prior five days of trading, the stock is up over 285%. Although Parazero Technologies is headquartered in Israel, its stock is listed on the NASDAQ. This is a micro-cap penny stock, with Parazero Technologies currently valued at just $16.3 million. The stock currently trades at $2.70 per share. Parazero Technologies has a 52-week high of $4.15 and based on its current trajectory, this could be regained in the coming days. Its most recent earnings call reported a 137.66% increase in revenue. Net income rose by 54.31%, but this still yielded a loss of just over $216,000. Like many micro-cap penny stocks, Parazero Technologies has a fragile balance sheet. It holds just over $172,000 in cash and short-term investments. Based on current liabilities, it has a total equity of negative $1.97 million. As such, the firm will likely need to source additional funding in the near future. Camber Energy is one of the best penny stocks to buy for growth momentum. This is a US-based mining company with operations in crude oil and natural gas exploration. Over the prior five days of trading, Camber Energy stock has increased by 52%. It trades at $0.33 per share and is listed on the NYSE American. With a market capitalization of just $29 million, there’s plenty of upside to target – especially with global energy prices remaining high. Moreover, trading volumes on Camber Energy stock are considered high at $6.1 million, This ensures that there’s enough liquidity to enter and exit positions efficiently. We also like the look of Camber Energy’s most recent earnings call. The firm reported a 22.37% increase in revenues, up to $7.24 million. Even more impressively, Camber Energy reduced its operating expenses by 45.88% to $3.31 million. Although net income increased by 52.72% year-over-year, Camber Energy made a quarterly loss of $1.55 million. The firm has a net positive balance sheet, with total assets and liabilities standing at $49.49 million and $25.7 million respectively. The main drawback of Camber Energy stock is that, unlike most oil and gas companies, it doesn’t pay a dividend. Acurx Pharmaceuticals is a healthcare company that develops new antibiotic treatments. The firm specifically targets bacterial DNA, preventing it from growing and causing infections. Acurx Pharmaceuticals is also one of the best penny stocks to buy for upside momentum. Listed on the NASDAQ, the stock is up nearly 73% in the prior 24 hours of trading. Acurx Pharmaceuticals stock has increased by 171% over a five-day period. Currently priced at $3.32 per share, the firm has a small market capitalization of just $43.1 million. However, average 24-hour trading volumes are low at just over $421,000. This means increased volatility and potential issues when exiting a position. Nonetheless, Acurx Pharmaceuticals has a solid balance sheet. It currently holds $9.15 million in cash and short-term investments. In contrast, its total liabilities stand at just $3.02 million. That said, Acurx Pharmaceuticals didn’t generate any revenue in its most recent quarter. This is because the firm is exclusively focused on research and development. If and when Acurx Pharmaceuticals receives approval from the FDA, this will have a significant impact on its stock valuation. Until then, this penny stock remains a high-risk investment that is unable to generate income. While Phoenix Motor might not be the next Tesla, this electric vehicle (EV) manufacturer is still worth considering. Phoenix Motor specializes in EV-based commercial vehicles. This includes everything from shuttle and school buses to flatbed and work trucks. Its vehicles offer zero-emission and sustainable transportation services, which could appeal to government contractors. Phoenix Motor stock is listed on the NASDAQ and is currently valued at just $33.6 million. Its stock trades for $1.58 per share, which is down from its 52-week high of $1.94. That being said, Phoenix Motor is one of the best-performing penny stocks over the prior 24 hours – with gains of 58%. Moreover, Phoenix Motor stock is up 73% over the past five days. In terms of its financials, Phoenix Motor saw a 22.75% decline in revenue in its most recent quarterly earnings. Furthermore, operating expenses increased by 35%. Phoenix Motor’s balance sheet is also concerning, with just $382,000 in cash and short-term investments. That said, it has $18 million in assets and just $10.3 million in total liabilities. Therefore, Phoenix Motor has a net positive valuation. We utilized the following methodology and analysis principles when ranking the best penny stocks to buy: According to the SEC, penny stocks are publicly traded companies with a share price of $5 or less. However, there are several other characteristics of penny stocks to be aware of. First and foremost, many penny stocks trade on over-the-counter (OTC) markets. This means that investing in penny stocks can be challenging for retail investors. A specialist broker is required and they would need access to the OTC Markets Group – which is the leading US exchange for penny stocks. To offer some insight, while the OTC Markets Group lists 12,148 penny stocks, it has a total market capitalization of just $1.2 billion. This means that the vast majority of S&P 500 constituents are worth more than the entire OTC Markets Group exchange. As such, most penny stocks have a micro-cap valuation. Similar to the best micro-cap cryptocurrencies, penny stocks are aimed at high-risk investors who want to outperform the market. That said, we should note that not all penny stocks trade on OTC securities exchanges. Some of the best penny stocks discussed today trade on the NASDAQ, NYSE, and London Stock Exchange. This means that the best online stock brokers offer access to these penny stocks, so you won’t need a specialist OTC provider. Now that we’ve explained how penny stocks function, let’s explore why this marketplace is worth considering. In a nutshell, penny stocks are popular for their high-growth potential. Investors add penny stocks to their portfolio to target much higher gains than the broader markets. The reason that penny stocks can increase in value so quickly is they’re usually micro-cap companies. For example, some of the best penny stocks discussed today are valued at below $70 million. This means that even a small amount of buying pressure can result in the stock increasing significantly. In another example, Parazero Technologies stock has increased by over 285% in the prior day. This stock has an even smaller market capitalization of just $16.3 million. And then there’s Acurx Pharmaceuticals. This healthcare stock is valued at just $43.1 million. In the past 24 hours, Acurx Pharmaceuticals stock has increased by 73%. And over five days of trading, the penny stock has increased by 171%. The reality is that large-cap stocks like Amazon, Apple, and Microsoft won’t be able to replicate similar gains. Not in the same timeframe at least. This is because they have huge valuations, so it takes significant buying pressure to see sizable growth. All that being said, there’s an important consideration to make when researching the best penny stocks. What goes up can just as quickly capitulate. For example, while a stock can increase by 100-200% in one day, it can also lose the majority of its value over the same period. Penny stocks aren’t just suitable for short-term traders looking for a quick entry and exit. On the contrary, some of the best penny stocks to buy are long-term investments. For example, some growth companies will initially list on OTC markets. They don’t meet the requirements for primary exchanges like the NYSE or NASDAQ. This might be because they don’t have a large enough valuation or the company doesn’t have enough stockholder equity. Either way, OTC exchanges can be a great way to find up-and-coming penny stocks before they explode. Therefore, penny stocks are ideal for growth investors looking for the next Tesla or Apple. Some investors are attracted to penny stocks because of the low share price available. As per the SEC’s definition, penny stocks trade for under $5. This means that you can buy a large number of shares without needing to invest significant amounts. For example, consider that Centamin – a penny stock involved in gold mining operations, currently trades at just 81p (about $0.66). This means that an investment of just $1,000 would get you over 1,500 shares. Now consider the same $1,000 investment in a large-cap stock like Tesla. The current Tesla stock price is $258 – so you would get less than three shares with a $1,000 outlay. Choosing the best penny stocks to invest in is no easy feat. After all, on the OTC Markets Group exchange alone, more than 12,000 penny stocks are listed. There are thousands more when you factor in the NYSE, NASDAQ, and international exchanges. On the flip side, having access to so many penny stocks makes diversification simple. This ensures that you’re not overexposed to a small number of companies. For example, cybersecurity and defense companies are seeing growth right now, considering the increased tensions between Israel and Hamas. Similarly, there’s also increased interest in oil and natural gas mining operations, considering energy prices remain high. This section of our guide is the most important; we explain how to pick the best penny stocks for your portfolio. This ensures that you’re investing based on independent research, rather than third-party recommendations. The first step is to research the markets for the top-performing penny stocks. Put simply, penny stocks are a reactive asset class – so there’s often a reason why companies see a rapid price increase. For example, we mentioned earlier that Parazero Technologies stock has increased by 285% in the past five days. The reason for this is that Parazero Technologies has secured approval from the Australian government. This means the firm can operate its commercial drones in major Australian cities. Now, once a penny stock witnesses stock price momentum, this often encourages others to invest. This is similar to how the best meme coins work, as cryptocurrencies are also based on hype and FOMO (fear of missing out). So, to get the ball rolling, do some research on which penny stocks have produced the biggest gains over the prior 1-5 days of trading. Focusing on the short-term price of penny stocks will only get you so far. In addition, you should also focus on specific industries. Depending on global events and broader market cycles, certain industries go on prolonged bull runs. For example, consider a major data leak from a social media company. The likelihood is that cybersecurity and biometric penny stocks will benefit from the news. After all, there will be increased demand for these services to ensure that companies comply with stricter regulations on data privacy. Your strategy here is simple – search for up-and-coming penny stocks operating in this industry. In another example, consider your strategy if oil and gas prices hit 5-year highs. In this instance, you’d want to search for penny stocks that benefit from high energy prices. This would include oil and gas firms that are actively involved in exploration and distribution. Make no mistake about it – the best penny stocks have solid fundamentals. This means that the underlying business is performing well and that it has a positive long-term outlook. The most effective way to analyze a penny stock’s performance is to read its earnings report. Now, we must stress that the availability of quarterly earnings reports depends on the exchange. For example, penny stocks listed on the NYSE and NASDAQ are legally mandated to release in-depth reports. This gives you a 360-degree overview of how the company performed in the prior three months. You can then compare this to previous quarters and other market competitors. However, penny stocks listed on OTC exchanges don’t need to follow the same requirements. In many cases, limited financial results are published once a year. This makes it more difficult to analyze the company. Nonetheless, if the penny stock is listed on a major exchange, you can view its most recent earnings call on Google Finance. This breaks down information such as: The image below shows the most recent earnings report from BioNano Genomics – a penny stock involved in DNA structure advancements. The report shows that revenues increased by 29.87% when compared to 12 months prior. Although this is positive, the earnings report also shows that operating expenses increased by 23.83%. Additionally, we can see that BioNano Genomics made a $38.91 million loss during the quarter. You’ll find that quarterly losses are common with penny stocks, as many are growth companies that are yet to establish themselves. Ultimately, the best penny stocks to buy have growing revenues and net income, while keeping their operating expenses to a minimum. In addition to company performance, the balance sheet is also crucial when researching penny stocks. The balance sheet forms the lifeblood of a company – as it determines its financial health. With this in mind, it’s wise to focus on penny stocks with a healthy balance sheet. This means having sufficient cash and assets, and minimal debt. In doing so, the company is able to operate efficiently without seeking external funding. Let’s look at an example to clear the mist. Now let’s compare this to Hub Cyber Security – a cybersecurity penny stock that’s increased by 180% in the prior 24 hours. The most successful penny stock investors monitor the market regularly. This enables investors to buy a penny stock as soon as a positive news story is developed. In doing so, you’ll get a first-mover advantage over the broader markets. Crucially, penny stocks can explode in value after a notable announcement. It’s not just regulatory approval that can send a penny stock soaring. Additionally, notable partnerships, major contract agreements, or even acquisition rumors can yield similar results. However, keeping tabs on thousands of penny stocks isn’t an effective strategy. This is why it’s best to niche down to a specific industry or market. This will enable you to become an expert in your chosen area and be aware of important news developments without delay. Although penny stocks can be a lucrative investment, the risks are high. Here’s what to consider before investing in penny stocks: We’ve covered the basic of penny stocks, but there are many to choose from, and it’s important to do thorough research before investing. There are lots of tools available online, but we think AltIndex is a great option for stock investors. AltIndex is one of the best resources for penny stock traders. This user-friendly platform specializes in alternative data metrics, which means it generates stock recommendations based on unconventional information – such as social media sentiment analysis, website analytics, job postings, app downloads, employee sentiment, and financial news mentions. AltIndex utilizes artificial intelligence and machine learning to analyze its findings. For example, the software will scan social media websites like Twitter and Facebook, look at a range of metrics, such as comments, followers, likes, and shares, and then determine whether social media sentiment is positive or negative on different stocks. This will then generate a ranking score, which ranges from 1 to 100. This reflects the likelihood that the stock will outperform or underperform the broader market. AltIndex then gives buy, hold, or sell ratings based on the score. AltIndex tracks thousands of stocks from the NASDAQ and NYSE. Buy and sell signals are instantly delivered to your email inbox, making it easy to keep track. AltIndex offers three pricing plans: $0, $29, or $99 per month, depending on how many stock recommendations you want. The plans comes with 1, 10, or 25 monthly predictions, respectively. There’s also an enterprise plan with unlimited predictions, but you need to contact the company to get a quote. All plans are flexible and can be canceled at any time.
Penny stocks are a risky asset class that can produce rapid gains or losses in a short period of time. Plenty of research is required when building a penny stock portfolio – so make sure you consider the risks before proceeding. To help, you can use AltIndex, which provides a wide variety of tools and resources for stock investors.
Best Penny Stocks to Buy Now in 2023
A Closer Look at the Top Penny Stocks to Buy
1. BioNano Genomics – Micro-Cap Healthcare Stock Specializing in DNA Structures
2. Nine Entertainment – Australian Media Company With a Running Dividend Yield of 5.56%
3. Rolls-Royce – Top-Performing Penny Stock With 1-Year Gains of 197%
4. Torrid Holdings – US-Based Women’s Clothing Company With 1-Month Growth of 44%
5. Centamin – Dividend-Paying Gold Mining Stock With a Solid Balance Sheet
6. Hub Cyber Security – Cybersecurity Service Company With 5-Day Gains of 214%
7. Parazero Technologies – Commercial Flight Drone Services With 5-Day Stock Growth of 285%
8. Camber Energy – Strong Momentum Penny Stock With 5-Day Gains of 52%
9. Acurx Pharmaceuticals – Robust Balance Sheet Covering Debt Levels 3 Times Over
10. Phoenix Motor – Micro-Cap EV Automaker Focused on Commercial Buses and Trucks
Our Methodology When Rating the Best Penny Stocks
What are Penny Stocks?
This means that penny stocks are super-volatile and speculative. While a penny stock can increase by several hundred percentage points in one day, it can also lose the majority of its value before the market closes. Moreover, penny stocks attract limited liquidity. This means that you might face issues entering and exiting a trade.
Why Invest in Penny Stocks?
Potential for Significant Returns
Invest in Growth Companies From the Ground Up
Ideal for Diversification Strategies
How to Pick the Best Penny Stocks to Invest in
Recent Price Performance
Where to Find the Best-Performing Penny Stocks?
Explore Trending Industries
Company Fundamentals and Performance
Why Do Some Penny Stocks Not Generate Any Revenue?
Balance Sheet
Do Penny Stocks Pay Dividends?
Developments and Regulatory Approval
What are the Risks of Penny Stocks?
Where to Get Penny Stock Tips
AltIndex – Get Free AI Stock Tips, Alerts, and Alternative Data
Conclusion
References
FAQs
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