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Penny stocks — those that trade for under $5 — are inherently risky, and under-$1 stocks are riskier still, but they can also result in great rewards. Because the stocks are so cheap, it doesn’t take much for them to drop to zero. By the same token, a price rise to just a few dollars a share can mean a big payday for investors.
Check Out: 4 Genius Things All Wealthy People Do With Their Money
Penny stocks are often found in emerging industries or in those industries that require a long period of research and development prior to the production of a viable product. The companies are typically early-stage technology, pharmaceutical, biotech or therapeutics companies.
9 Best Penny Stocks Under $1
Here are some penny stocks that will cost you less than a dollar and just might be worth the investment:
- GEE Group Inc. (JOB)
- Cybin Inc. (CYBN)
- Purple Biotech Ltd. (PPBT)
- Pedevco Corp. (PED)
- Netcapital Inc. (NCPL)
- TRX Gold Corp. (TRX)
- S&W Seed Co. (SANW)
- Star Equity Holdings Inc. (STRR)
- Terran Orbital Corp. (LLAP)
1. GEE Group Inc.
- Price as of June 3: $0.35
- Market Cap: $38.1 million
- Consensus Rating: Buy
GEE Group (Nasdaq: JOB) is a national staffing and recruiting company for information technology, legal, engineering, finance, accounting and healthcare firms. Its brands include Ashley Ellis, General Employment and Omni One.
The stock closed at $0.35 on June 3. In the past year, the stock price has ranged from $0.30 to $0.63. The two analysts following the stock in June rate it a “buy.” It’s a relatively stable stock with a beta of 0.46 (1.00 being neutral), but it could be undervalued right now.
2. Cybin Inc.
- Price as of June 3: $0.34
- Market Cap: $261.87 million
- Consensus Rating: Buy
Cybin (NYSE: CYBN) develops proprietary psychedelic-based therapeutics for disorders like major depressive disorder, alcohol use disorder and anxiety disorders. The company is based in Canada.
Cybin closed at $0.34 on June 3. Its 52-week range is $0.21 to $0.74. Of the five analysts polled by Yahoo Finance in May, four rated it a “buy” and one rated it a “strong buy,” for a consensus rating of “buy.” Consensus price targets range from $4.50 to $7.
3. Purple Biotech Ltd.
- Price as of June 3: $0.74
- Market Cap: $19.32 million
- Consensus Rating: Buy
Purple Biotech (Nasdaq: PPBT) aims to develop first-in-class anticancer therapies that overcome tumors’ drug resistance and improve outcomes. It has several therapies in the pipeline, including for pancreatic cancer and head and neck and colorectal cancers, both in Phase 2 trials.
Shares closed at $0.74 on June 3. Three analysts watching the stock rate it a “buy.” The price target is a head-turning $9. Additionally, Chardan Capital and H.C. Wainwright & Co. maintained and reiterated, respectively, “buy” recommendations in March, April and May.
4. Pedevco Corp.
- Price as of June 3: $0.92
- Market Cap: $82.21 million
- Consensus Rating: Buy
Pedevco (NYSE: PED) is an oil and natural gas exploration and production company that focuses on developing conventional energy assets using unconventional technologies. It currently has properties in Texas, New Mexico, Colorado and Wyoming. The company admits to having nearly lost its listing on the New York Stock Exchange because of debt acquired in 2014 through 2017. Following a major investment in 2018, the company restructured, paid down debt and brought in a new management team.
Pedevco closed at $0.92 on June 3. Although it trended downward over the last few months of 2023, it’s on the rise now, and analysts rate it a “buy.” In fact, EF Hutton has reiterated its buy recommendation three times in the past year. Shares are currently trading over 91 times earnings following a sharp earnings decrease last year. However, analysts predict earnings to grow from $0.01 last year to $0.04 this year.
5. Netcapital Inc.
- Price as of June 3: $0.13
- Market Cap: $2.6 million
- Consensus Rating: Buy
Netcapital (Nasdaq: NCPL) has made a name for itself among equity crowdfunding companies. It’s a fintech that helps private companies raise capital online and assists in onboarding, regulatory-document filing and compliance review. The Boston-based company also serves as an advisor to tech startups and facilitates investing.
Netcapital shares are currently trading near their 52-week low of $0.11.
6. TRX Gold Corp.
- Price as of June 3: $0.47
- Market Cap: $128.31 million
- Consensus Rating: Buy
TRX Gold is a gold mining company focused on increasing its production while adhering to strict environmental, social and corporate governance standards. The company calls its flagship Buckreef Gold Project a “blue-sky opportunity” to increase gold production, as it expects to do in fiscal year 2025.
All three analysts watching the stock in April and May rated it a “buy,” according to Yahoo Finance. Analysts expect the share price to reach $1.35 within the next year.
7. S&W Seed Co.
- Priceas of June 3: $0.32
- Market Cap: $13.67 million
- Consensus Rating: Buy
S&W Seed Co. (Nasdaq: SANW) produces seeds for a variety of crop products, including alfalfa, sorghum and stevia. The company distributes seeds via direct sales and dealer-distributors. S&W’s research and development projects include hybrid crops and gene-edited alfalfa plants as well as a yield-boosting sorghum solution.
Two of the three analysts who watch S&W rate the stock a “buy” and one recommends holding. The price target is $2 based on two analysts’ predictions. A low beta of 0.94 indicates stability.
8. Star Equity Holdings Inc.
- Priceas of June 3: $0.85
- Market Cap: $13.15 million
- Consensus Rating: Buy
Star Equity Holdings (Nasdaq: STRR) is a construction and real estate investment company based in Old Greenwich, Connecticut. It operates under two divisions: construction, which designs and manufactures modular homes and structural wall panels, and investments, which manages and finances Star Equity’s real estate assets and investments.
The company is not profitable as of June, but analysts predict 65.2% earnings growth in the next year compared to 12.60% for the S&P 500, according to Yahoo Finance.
9. Terran Orbital Corp.
- Price as of June 3: $0.84
- Market Cap: $167.81 million
- Consensus Rating: Buy
Terran Orbital (NYSE: LLAP) manufactures satellite products for the aerospace and defense industries. It’s involved in all phases of satellite solutions, from design to on-orbit support.
Terran Orbital is a fairly volatile stock with a beta of 2.25, and its earnings missed analyst estimates in two of the last four quarters. But if analyst predictions are correct, investors with a high tolerance for risk could see their shares gain almost 470% in the next year, according to MarketBeat.
Final Take
These companies represent a range of sectors, including technology and medical. Companies in these sectors have the potential to be very successful and provide significant returns to their investors, but the failure rate is high.
What’s more, stocks that trade for less than $1 for 30 days or longer run the risk of eventually being delisted from their exchange. Unless the price increases on its own or the company takes action, such as reverse-splitting the stock to boost the price by reducing the number of shares, the stock could be relegated to the over-the-counter market, which has less liquidity.
When deciding which penny stocks to buy, be sure to carefully research the company to make sure you understand the product or service it offers, its potential for success and the competitive landscape in which it operates. And penny stocks should be a recreational investment — this is not the place to put your retirement savings or the kids’ college fund. That said, large returns are possible, especially if you do your homework.
FAQ
- What is a good stock to buy under $5?
- For a good stock under $5, consider Rocket Lab USA Inc. (RKLB). Analysts expect share prices to increase dramatically in the next 12 months, and 10 out of 11 watching the stock rate it a "strong buy" or "buy."
- What are the best stocks under $2?
- While stocks trading at less than $2 are still considered penny stocks and therefore risky, Pixelworks Inc. (PXLW) and Avino Silver & Gold Mines Ltd. (ASM) are both valued under $2 and have consensus ratings from analysts of "buy."
- What are some good stocks to buy right now?
- The stocks listed above are good choices to start with, but it's important to assess your risk tolerance and goals before investing. Consider blue chip stocks, like Apple or Pfizer, for more security — but keep in mind that success is never guaranteed with any investment.
Daria Uhlig contributed to the reporting for this article.
Data was compiled on June 3, 2024, and is subject to change. Information on analyst ratings was sourced from Yahoo Finance.
