Top 7 Robinhood Penny Stocks to Watch in May 2023

Penny stocks trade at $5 per share or less. You can trade penny stocks on Robinhood as long as they are listed on a major exchange like the NYSE or Nasdaq. The fact that Robinhood traders can’t access most of the OTC markets, which is where most penny stocks trade, only adds to the volume they pour into listed penny stocks.

There’s nothing special about using Robinhood as your broker. What is different about Robinhood is how its traders behave …

In 2020, Robinhood traders bought and sold options contracts at 88 times the rate of traders who use Charles Schwab, a more traditional broker. They traded 40 times the per-dollar amount of stocks as Schwab traders.

But somewhere in there, these trigger-happy traders figured out how to organize.

These 3 dudes smarter than any short seller I've ever met.$GME https://t.co/3676VHjFEk

— Timothy C. Bohen 🇺🇸 (@tbohen) January 29, 2021

They learned that they could work together and beat Wall Street at its own rigged game. Their tools are memes, hot sector mania, and the short squeeze.

While I don’t want my students to act like Robinhood traders, there’s plenty of value in knowing what they’re watching.

Right now, these stocks are at the top of the list …

List of the Hottest Penny Stocks on Robinhood in May 2023

My top 7 Robinhood penny stocks to watch for May 2023 are:

• (NASDAQ: NNOX) — Nano-X Imaging — The JNJ Stake Penny Stock
• (NASDAQ: SBFM) — Sunshine Biopharma Inc. — The Mega Earnings Winner Biotech Penny Stock
• (NASDAQ: IMGN) — ImmunoGen, Inc. — The Biotech Breakout Stock Testing Five-Year Highs
• (NASDAQ: PACW) — PacWest Bancorp — The Volatile Banking Crisis Penny Stock
• (NASDAQ: GFAI) — Guardforce AI Co., Ltd. — The Post-Offering Hot Sector AI Penny Stock Spiker
• (NYSE: CVNA) — Carvana Co. — A Much-Hated Penny Stock Currently Overloaded with Shorts
• (NASDAQ: ATOM) — Atomera Incorporated — A Double Weekly Watchlist Pick Penny Stock

Welcome to the month of May.

As the adage goes, April showers will bring us flowers.

The tulips are blooming here in Michigan … but the stock market sits in an area of uncertainty.

The price of major indices continues to consolidate sideways near the highs for 2023.

That’s all fine and dandy until we remember the ongoing inflation battle that involves high-interest rates to slow the economy.

Not to mention the debt ceiling crisis that the U.S. government can’t seem to compromise on.

I don’t know which way the market’s going.

I’d love to see it bloom. New highs in 2023 would bring so many strong runners in the small-cap sector. It would be a smorgasbord.

The issue is, no one can say for certain … least of all me.

I’m not troubled by that.

Instead, I try to focus on the momentum that I can see with my eyes. I’m not going to speculate on future moves.

The key is to approach every day the same. Be prepared to capitalize on volatility.

I let the trades come to me.

That’s why I’m not holding any long-term positions in these tickers.

I’m just watching these stocks. And this is one of many watchlists I maintain …

Sign up here to get my weekly watchlist each Sunday!

There’s no guarantee that any of my watchlist picks will be tradeable. But if something happens, smart traders should be ready.

Best Robinhood Penny Stocks for May 2023

These are the top 7 Robinhood penny stocks to watch in May 2023 …

They have a chance to catch fire …

Watch them — and don’t get burned!

#1: Nano-X Imaging (NASDAQ: NNOX) — The JNJ Stake Penny Stock

My first Robinhood stock pick is Nano-X Imaging (NASDAQ: NNOX).

This ticker IPOed in August 2020 and it showed us an impressive amount of volatility early on.

In the months following, the price managed to launch by more than 360%.

Since then it fell off and slid below the IPO price.

It’s a perfect example of why we don’t buy and hold.

This bullish volatility is often fleeting. And trust me, you don’t want to hold a bag of shares you bought at the top of the spike.

That’s why we wait for key catalysts to move the price and we trade with a plan.

Like when NNOX announced FDA approval on May 1 and the price spiked more than 90%.

Thanks to an additional nugget of information, the total spike was more than 250% … 

Major healthcare company Johnson & Johnson (NYSE: JNJ) significantly increased their investment in NNOX.

It’s the equivalent of a celebrity endorsement. And it’s why I’ve still got eyes on this runner.

#2: Sunshine Biopharma Inc. (NASDAQ: SBFM) — The Mega Earnings Winner Biotech Penny Stock

My second Robinhood stock pick is Sunshine Biopharma Inc. (NASDAQ: SBFM).

The biotech sector has been especially hot recently.

NNOX was a good example of that momentum. And SBFM is another … 

The price just launched over 160% after it announced a bullish earnings report.

Most recent data showed company revenues had increased by 2,100%.

That kind of news has legs. It could carry the price higher after a period of consolidation.

#3: ImmunoGen, Inc. (NASDAQ: IMGN) — The Biotech Breakout Stock Testing Five-Year Highs

My third Robinhood stock pick is ImmunoGen, Inc. (NASDAQ: IMGN).

Some catalysts are better than others.

Not all news is good news. We try to focus on the strongest catalysts so that our trades have the best chance of success.

Over time, you’ll learn how to distinguish the difference between important news and random garbage no one cares about.

Take notes as I list out the catalysts on this watchlist and it’ll start to click.

IMGN is a biotech stock that announced bullish cancer news. The price spiked more than 250% and broke above 5-year highs.

Right now it’s consolidating above that level. That’s a good thing for a recent runner. The excitement is dropping, and what’s left is a stock that the market says is worth its share price.

#4: PacWest Bancorp (NASDAQ: PACW) — The Volatile Banking Crisis Penny Stock

My fourth Robinhood stock pick is PacWest Bancorp (NASDAQ: PACW).

I’m always looking for volatility.

Sometimes the catalyst is bearish … maybe you’re surprised to hear there can be long opportunities on stocks falling off of their highs.

Like Warren Buffett says, be greedy when others are fearful.

We’re still experiencing fallout from the bank crisis. And right now I’m most interested in PACW.

First Republic Bank offered some good trade opportunities. But the shares are delisted now.

PACW is the most recent bank to get hit. And the share price is trading 80% off the highs.

The stock may delist like First Republic, that’s why it’s safest to trade the intraday volatility.

And make sure to keep your eyes on bank updates.

#5: Guardforce AI Co., Ltd. (NASDAQ: GFAI) — The Post-Offering Hot Sector AI Penny Stock Spiker

My fifth Robinhood stock pick is Guardforce AI Co., Ltd. (NASDAQ: GFAI).

Let’s talk about another red-hot group of stocks … artificial intelligence.

I’m sure you’ve heard about it on the news by now. We’re quickly approaching “the singularity.”

I’m only joking. Sort of …

AI is expected to displace 300 million jobs globally.

And we’ve seen companies like Wendy’s start to incorporate the technology with regular business.

The good news is, there’s so much money moving around in this sector. And that means there are huge opportunities for small account traders like us.

We’ve already seen GFAI spike twice in 2023. The first was more than a 270% move. The second topped out at over 660% … 

I’ve said it before and I’ll say it again, this sector is not done. We’re just at the beginning.

Past spikers can spike again … 

#6: Carvana Co. (NYSE: CVNA) — A Much-Hated Penny Stock Currently Overloaded with Shorts

My sixth Robinhood stock pick is Carvana Co. (NYSE: CVNA).

If you’re unaware of the importance of a short squeeze, let me paint a picture for you.

A stock releases bearish news. A bunch of short sellers think it’ll be easy to ride the momentum lower.

But too many shorts pile in. And the price isn’t falling as fast as they need it to.

Soon the brokers start to ask for their shares back and traders have to buy-to-cover to exit. It creates a huge domino effect of short sellers blowing up and the price explodes upward.

That’s where we come in … 

Our goal is to profit from that bullish volatility.

On May 5, CVNA announced losses for the quarter that exceeded expectations. The company lost money, but not as much as analysts predicted.

Then a funny thing happened. Prices jumped over 90%. Now they’re consolidating above $10.

There are warnings CVNA won’t turn a profit anytime soon. And It’s reported to have a significantly high short interest.

I smell a squeeze opportunity on the horizon.

#7: Atomera Incorporated (NASDAQ: ATOM) — A Double Weekly Watchlist Pick Penny Stock

My seventh Robinhood stock pick is Atomera Incorporated (NASDAQ: ATOM).

I keep big runners on my watchlist because you never know when they’re going to wake up.

Past spikers can spike again. We see it all the time in this niche.

For example … 

ATOM launched more than 1,600% between 2020 and 2021.

And now it’s back at the top of my watchlist after releasing bullish first-quarter results and microchip innovation.

The chip industry is under pressure right now as a result of U.S. and China tensions.

And ATOM’s innovation marks an especially bullish milestone for the stock.

Prices spiked over 100% as a result. And I think there could be more in the tank.

Types of Penny Stocks on Robinhood

Robinhood is a retail-focused brokerage. That means it only allows clients to trade on major exchanges such as the NYSE and the Nasdaq.

There are a ton of stocks below $5 on these exchanges. The problem is, you’re only getting part of the pie.

The OTC markets and pink sheets also offer a huge range of volatile penny stocks … But you’ll need a different brokerage account to trade them. Robinhood won’t cut it. 

Check out this post for the lowdown on how to find the best brokerage for you.

How to Find Penny Stocks on Robinhood 

Don’t follow my stock picks blindly. You’ve gotta become self-sufficient. Sure, you can find penny stocks on Robinhood’s mobile app… 

But I recommend creating your watchlists from your laptop — it’s a lot easier. Use a screener to search for stocks below $5. You’ll probably want to find some with volume too.

But it’s impossible for one person to watch every penny stock on Robinhood. So either grab a couple of friends to help you stare at hundreds of stocks … or choose a few that show good potential.

How to Choose Penny Stocks on Robinhood

Choosing penny stocks to trade requires a number of well-planned steps. Doesn’t matter which broker you use.

It’s all about finding hyped-up stocks. Then you ride the momentum and jump off before the move crashes. That can make it sound easy. It’s not. It takes years of education and planning to learn how to ride the momentum in this niche.

But here’s a quick overview…

First, look at stocks with hype. Maybe there’s a news catalyst that day. It could be trending on social media, or maybe it’s just a current hot stock.

Next, make sure that the stock’s daily trading volume is high enough to allow you to get in and out easily. Remember to manage risk.

It’s also important to check the price action on the stock chart. Reading the chart can help you pick a perfect entry position. It can also show good places to set your stop loss and help you understand what the stock’s next move might be.

Chart reading doesn’t have to be complicated. In fact, many seasoned traders look for clean and simple chart patterns.

Keeping up with news, watching the charts, and analyzing trading volume can all be done on a number of different apps … But if you want to get serious about your trading, there’s a much more effective way to do all of these things… 

Get a 14-day trial of StocksToTrade for just $7 for access to one of the most powerful stock trading tools on the planet. 

How to Trade Penny Stocks on Robinhood

If you’re gonna trade penny stocks on Robinhood — or anywhere else — you better know the restrictions. 

Pattern Day Trading Rule

You have to keep the pattern day trading (PDT) rule in mind. This rule isn’t specific to Robinhood. If you have a small account, it can affect your trading.

The rule limits traders to no more than three day trades within a rolling five-day trading period. That is unless you have $25K or more in your trading account.

It can seem inconvenient — especially for new and excited traders — but it’s actually meant to protect you. Most traders lose money. The PDT rule tries to stop newbies from overtrading.

Try to see it as a good thing. It’ll force you to only focus on the best trades. That’s the best study tool there is.

Robinhood Day Trading Limit

The PDT rule can be a big problem for some traders. But again, I encourage you to see it as a good thing. No, you don’t have to listen to me…

Just like when I said that I didn’t think Robinhood had the best day trading software around. You can use it if it works for you. But understand that different brokers can work better for different people.

Don’t limit your options by choosing one just because it’s easy.

This is important, so pay attention. Do your research. Only you can decide which broker and trading platform are right for you.

Decide whether you’ll trade with a cash account or use margin. Margin is automatic on some Robinhood accounts. That can be risky. Read more about margin here.

You also need to figure out if you want access to extended-hours trading. That can also come with risk. I don’t recommend that for new traders.

What’s key is access to charts, watchlists, stock research, Level 2 data, and indicators. You can get all that and more with StocksToTrade. Plus you can trade right from the platform with our broker integration — and you can add on what’s arguably the trading chat room. 

When you start trading you have a lot of decisions to make. So take your time. Make a detailed list of what matters to you, then find the right broker and trading platform.

Robinhood Penny Stocks to Watch: How to Make Your List of Penny Stocks

When you build the habit of searching for the best stocks and trading setups, you’ll quickly develop a list of stock tickers that’s long. It happens to every trader…

That’s where watchlists come in handy. It’s your personal collection of stock tickers that you think show potential. Most traders keep multiple watchlists, such as one for a certain sector and others for specific chart setups. How you organize it is all up to you.

Need help with your watchlists?

Sign up for my no-cost weekly watchlist and I’ll send you my top picks for the week every Sunday!

Should You Trade Penny Stocks on Robinhood?

Robinhood can be more popular with newer traders. But as traders progress past newbie status, they tend to switch to a more robust platform.

Whether you should use Robinhood to trade penny stocks is up to you. But before you make a decision, you should know the advantages and disadvantages that come along with it. 

Let’s take a look at a few.

Advantages

• Free Trades: There are no commission fees with Robinhood trades — that’s one of its biggest draws. But realize they gotta make money somehow. And that could potentially affect the quality of your trade executions
• No Account Minimum: Traders can start right away because there’s no account minimum.
• Ease of Use: More people are on their smartphones a lot these days. Robinhood’s app can make signing up for and funding an account quick.
• Streamlined Interface: One of Robinhood’s drawbacks is that it lacks the tools and resources other brokers have. But its focus on simplicity can be useful for less-knowledgeable traders. Just know that as your skill set expands, you’ll likely outgrow this platform.
• Fractional Shares: Robinhood has fractional shares. That means traders can pay as little as $1 for a portion of a share, even if that share’s full price is hundreds of dollars.

Disadvantages

• No OTC Trades: One of the biggest disadvantages of using Robinhood is that it doesn’t allow OTC trades. If trading penny stocks is your strategy, that takes a huge amount of low-priced stock opportunities off your table.
• Poor Phone Support: If you’re trading with real money, you want to know your broker will be there for you if you need help. Communication may be getting better at Robinhood, but seems to be slow going.
• App Dependability: Look online and you’ll see complaints about Robinhood’s app reportedly failing at crucial times. This is a serious concern for traders using real money.
• Limited Functionality: Robinhood lacks the tools and resources more experienced traders expect.
• Potentially Delayed Data: Stock quote data may be delayed as much as 20 minutes. Yep, that’s a problem if you’re trading low-priced stocks. They move fast. 

How to Manage Risk on Robinhood

In Hollywood movies, stock traders are often portrayed as high-octane risk-takers. But in reality, the habits of most successful traders aren’t quite as exciting.

The first thing smart traders think about before entering a trade is how to manage risk.

It means you don’t lose more money than your trading plan allows. It’s important to be able to exit positions easily with little stress. When you have a bad day in the market, at least you’ve done your best to protect your account and live to fight another day.

One way to manage risk is to set stop-loss levels. You can place an order with your broker to close a position if you lose too much money. For those disciplined enough, top traders set mental stops and manually close positions that hit loss limits.

Traders can place stop-loss orders from the Robinhood app. They should work as long as there’s enough trading volume in your stock.

Can You Get Rich Trading Penny Stocks?

I hate this question.

Look, you can get rich doing just about anything. Go to med school and become a brain surgeon. Sell the finest underwater woven baskets the world has ever seen. Brew kombucha in your garage. Pump penny stocks.

OK … some of those might be a stretch. My point is anything is possible.

But day trading is hard. Day trading penny stocks on Robinhood can be even harder.

It’s not impossible to get rich in this niche. But be realistic with your expectations. Nothing good ever came from lying around on your butt thumbing through stock pick articles.

If you’re serious about trading penny stocks, start taking your education seriously.

I have a ton of resources available to help you on your quest:

• Sign up for my weekly watchlist here.
• Get Oracle’s NO-COST trade alerts.
• Join Daily Income Trader for daily workshops and pro-level resources!

Robinhood Penny Stocks to Watch: Conclusion

As you can see, Robinhood has some pros and cons just like any other broker or platform. It’s up to you to find your strategy, then find a broker and platform that fits your needs.

If you want to try a more advanced platform, check out StocksToTrade. It’s a platform built by traders for traders and it has a TON of tools and resources that will make even the most experienced traders happy.

The Breaking News Chat alert service can be added to its already-powerful offerings — and traders are in LOVE with it. See how two skilled stock market pros can help you find the news with the most potential to move stocks. 

Here’s where you can learn more and sign up TODAY.

Have you used Robinhood to trade penny stocks? I’d love to hear about your experience. Leave a comment below!