Navigating the vibrant world of penny stocks presents an exciting, albeit intricate, pathway for beginner investors. Penny stocks, characterized by their low share price, offer a unique entry point into the stock market. They also offer a BIG challenge.

You can’t just invest in a penny stock and let it cook. That’s how you go broke.

Read this article because it offers some of my top penny stock picks for beginners, giving you a strategic entry point into building your own watchlists..

I’ll answer the following questions:

What is a penny stock?
Which penny stocks are most active?
What are the top penny stocks for beginners?
How can beginners navigate the risks of penny stock trading?
What strategies can be employed for making money with penny stocks?
How does social media influence penny stock trading?
What are the risks of investing in penny stocks?
How can traders minimize risks when investing in penny stocks?

Let’s get to the content!

Table of Contents

1 What is a Penny Stock?
- 1.1 Most Active Penny Stocks
2 Top Penny Stocks List for Beginners
3 Performance Analysis of Selected Stocks
4 Reasons for Investing in Penny Stocks
- 4.1 Strategies for Making Money in Penny Stocks
- 4.2 Risks of Investing in Penny Stocks
5 How to Avoid Penny Stock Risk
- 5.1 Finding and Evaluating Penny Stocks
6 Key Takeaways
7 Frequently Asked Questions

What is a Penny Stock?

A penny stock typically trades at less than $5 per share. Primarily found on smaller exchanges and over-the-counter (OTC) markets, these stocks represent companies with lower market capitalizations. Intriguing for investors due to their low price and potential for substantial returns, penny stocks also carry a higher level of risk and volatility compared to established company stocks listed on major exchanges like Nasdaq or the New York Stock Exchange (NYSE).

Most Active Penny Stocks

Most active penny stocks are those with the highest trading volumes within a specific period. This activity can indicate investor interest and potential market movements, providing insights but also reflecting the speculative nature of these investments. Tracking volume along with price movements can help identify active penny stocks that might offer profitable opportunities.

Top Penny Stocks List for Beginners

My top 5 stock picks are:

NASDAQ: BMR — Beamr Imaging Ltd — The NVIDIA Partnership AI Stock
NASDAQ: SMCI — Super Micro Computer Inc — The Mega-Cap Stock That’s Moving Like a Penny Stock
NYSE: PLTR — Palantir Technologies Inc — The AI Earnings Winner IRIS Swing Trade Idea
NASDAQ: LUNR — Intuitive Machines, Inc. — The Moon Landing Moonshot Stock
NASDAQ: HOLO — MicroCloud Hologram Inc — The Parabolic Short Squeeze That I’m Watching for a Dip and Rip

For beginners, diving into penny stocks requires careful selection to navigate the inherent risks successfully. A list of top penny stocks for beginners should consider factors like trading volume, company fundamentals, recent news, and market position. While specific stock recommendations fluctuate over time, focusing on sectors with growth potential or companies showing strong management can be a good starting point.

Before you send in your orders, take note: I have NO plans to trade these stocks unless they fit my preferred setups. This is only a watchlist.

The best traders watch more than they trade. That’s what I’m trying to model in this article. Pay attention to the work that goes in, not the picks that come out.

Sign up for my NO-COST weekly watchlist to get my latest picks!

Without further ado…

#1: Beamr Imaging Ltd (NASDAQ: BMR) — The NVIDIA Partnership AI Stock

My first stock pick is Beamr Imaging Ltd (NASDAQ: BMR).

On February 12, at 7 A.M. Eastern during premarket hours, it announced a partnership with NVIDIA Corporation (NASDAQ: NVDA).

NVDA is arguably the most popular company in the world right now.

It’s surging to new heights as the tech sector scrambles for NVDA microchips. The massive tech stock is smashing company value records and even pushed past other $1 trillion-plus tech businesses like Meta Platforms Inc. (NASDAQ: META).

A hook up with a sector leader like NVDA is HUGE news for a penny stock.

The share price spiked 1,500% in less than 24 hours. And it reminds me of another intense spiker that started running only a few days earlier on February 7.

MicroCloud Hologram Inc. (NASDAQ: HOLO) managed to spike 2,600% in a similarly spectacular fashion. But when the price slid lower, it consolidated for a few days before breaking out and reaching $98 per share!

The stock was trading below $2 less than two weeks before … That’s a 6,400% move.

Currently, BMR is consolidating above a key level despite a February 14 offering of 400,000 shares.

Watch my video below for a complete trade breakdown:

Bohen’s Weekly Watchlist 📈👀 – 02/18/23

Among the other stocks in his watchlist, @tbohen's focus stock this week is $BMR!

Tim Bohen shares a couple reasons as to why you should watch this stock this coming week! 📊

Full Watchlist: https://t.co/S1uJchcWH7 pic.twitter.com/BsOP1Zd3kR
— StocksToTrade (@StocksToTrade) February 18, 2024

It’s not a 100% guarantee that BMR will push to new highs. Nothing is when it comes to the stock market.

But in my 15 years of trading, one of the main things I’ve learned is that volatile stocks can follow popular patterns.

We’re not certain BMR will break out.

But if it does, there are patterns we can use to trade the price action.

#2: Super Micro Computer Inc (NASDAQ: SMCI) — The Mega-Cap Stock That’s Moving Like a Penny Stock

My second stock pick is Super Micro Computer Inc (NASDAQ: SMCI).

We trade low-priced stocks because:

We can load up on shares.
The low price helps the stock spike higher from a percentage perspective.

Higher priced stocks aren’t known to surge like volatile penny stocks. But the AI sector is so hot in 2024, we’re seeing some INSANE moves from big stocks.

I used to trade large-cap stocks before I found Tim Sykes’ strategy for big percent gainers. I still keep an eye on larger stocks because the momentum helps to influence small-cap plays. And right now I’m watching SMCI because it looks exactly like a penny stock.

In 2024, prices spiked 280% despite starting the year above $250 per share.

Look at this insane vertical move and pullback:

SMCI chart multi-month, 1-day candles Source: StocksToTrade

I know this runner is out of bounds for most small-account traders.

But that doesn’t mean you have to ignore it. Here’s another perspective …

When large-cap stocks behave like volatile penny stocks, it’s possible to trade them for lower prices using options.

At the mention of “options” a lot of traders shy away.

It’s not as confusing as you might think.

An option is a contract that gives you the right to buy or sell shares of a stock.

I don’t trade options — I leave it to pros like tech entrepreneur and trader Ben Sturgill. His Spyder webinars are the product of more than 2 decades of experience in the market and a unique technology, and they’re well worth checking out.

Check out the webinar here to see why Ben’s smart-money scanner has been going haywire lately!

There are so many opportunities to profit in this market. Pick a strategy that sounds good to you and START STUDYING!

#3: Palantir Technologies Inc (NYSE: PLTR) — The AI Earnings Winner IRIS Swing Trade Idea

My third stock pick is Palantir Technologies Inc (NYSE: PLTR).

The company works in the defense sector.

Since the emergence of AI, there’s been growing concern about the technology’s utilization by scammers, criminals, and enemies of the state to disrupt and prey on society at large.

Companies like PLTR have to increase the strength of their services to combat this growing risk. That’s what makes the niche so essential.

The company announced in November that it secured 80 new deals in the third quarter of 2023. Each deal is valued at $1 million or more.

The price spiked up to $22. And that was the breakout level.

On February 5 an earnings report came out while the market was closed. The next day, prices gapped up 20% and continued the spike to an impressive 50% in the following days.

PLTR chart multi-month, 1-day candles Source: StocksToTrade

Our AI IRIS swing trade tool alerted us to a possible setup on PLTR.

In the AI stock sector, an AI tool can lead us to the biggest plays … It’s quite a world we live in.

#4: Intuitive Machines, Inc. (NASDAQ: LUNR) — The Moon Landing Moonshot Stock

My fourth stock pick is Intuitive Machines, Inc. (NASDAQ: LUNR).

This is a REAL space play, shockingly.

Most penny stocks are trash companies that don’t actually do anything.

But when Elon Musk is involved … You know something’s going down. Or in this case — up.

The company’s Nova-C class lunar lander launched into orbit from NASA’s Kennedy Space Center in Florida at 1:05 A.M. Eastern, Thursday, February 15. It was attached to SpaceX’s Falcon 9 rocket.

Musk is CEO of SpaceX. The company isn’t public, so the best traders can do to get in on the SpaceX action is to trade sympathy plays like LUNR.

So far … the mission is successful.

And LUNR share prices have spiked 230%.

StocksToTrade Breaking News alerted the February 20 move at 8:27 A.M. Eastern:

33% GAIN off of $LUNR!🔥

Retweet & favorite if you caught a piece of this move!👀

Get the Next Alert 🚨👇https://t.co/YaHBqQzn5V #DayTrading #StocksToWatch pic.twitter.com/Ru23PFM8UE
— StocksToTrade (@StocksToTrade) February 20, 2024

The Breaking News chat room features two former Wall Street analysts constantly monitoring a wide array of news sources, including exclusive channels not readily available to the public. They distill this information, and deliver the kind of news that moves stocks directly to the chat room.

This service is not just about delivering news; it’s about delivering the right news at the right time, allowing traders to capitalize on opportunities as they arise.

Get a 14-day trial of Breaking News Chat here — only $17!

#5: MicroCloud Hologram Inc (NASDAQ: HOLO) — The Parabolic Short Squeeze That I’m Watching for a Dip and Rip

My fifth stock pick is MicroCloud Hologram Inc (NASDAQ: HOLO).

HOLO is the most legendary short squeeze of 2024 so far.

Prices launched 6,400% after the company announced it was joining the “Communications Industry Association” on February 7.

That means absolutely nothing. But it didn’t need to in order to trade this stock for a profit, as several of my students did.

Short sellers piled in and tried to ride the weak-seeming premarket spike lower, but the short selling strategy is overcrowded right now. Too many shorts were scrambling for shares and profits.

When a few started to exit (buy to cover), the bullish momentum ignited a powder keg. Short sellers blew up all day long.

And short sellers blew up again when the price broke out to $98 on February 16.

I’m not waiting for the price to spike to new highs … Even though theoretically it could.

Instead, I’m looking for a morning dip and resulting intraday rip. The pattern is called a dip and rip. There’s a tutorial video below:

Don’t try to play these runners without a pattern!

Otherwise you’re just gambling. And gamblers get eaten alive out here.

Performance Analysis of Selected Stocks

Evaluating the performance of penny stocks involves examining their price history, trading volume, and recent company developments. This analysis helps in understanding the stock’s volatility and potential for gains. Tools and resources like financial news websites, stock analysis apps, and penny stock newsletters can offer valuable information for this purpose.

Reasons for Investing in Penny Stocks

The allure of penny stocks comes from their low entry cost and the potential for significant returns. For traders willing to take on higher risks, penny stocks can provide a platform for learning about the stock market dynamics while potentially growing a small initial investment.

Strategies for Making Money in Penny Stocks

Successful trading in penny stocks involves a mix of thorough research, setting clear investment goals, and employing risk management strategies. Understanding the sectors you invest in, using stop-loss orders to manage risks, and keeping informed through reliable news sources are essential tactics.

Social media platforms have become influential in the world of penny stocks, creating unique opportunities and risks for traders. The collective power of online communities can drive significant price movements, making it essential for traders to stay informed about trending discussions. However, navigating this landscape requires a discerning approach to differentiate between hype and genuine investment opportunities. For insights into how Reddit impacts penny stock trading and tips on leveraging social media for informed trading decisions, explore the influence of Reddit on penny stocks.

Risks of Investing in Penny Stocks

The volatility of penny stocks introduces a heightened risk of loss. Issues like limited liquidity, less regulatory oversight, and susceptibility to market manipulation can pose significant challenges. Beginners must approach penny stock investments with caution, prepared for the possibility of losing their entire investment.

How to Avoid Penny Stock Risk

Navigating penny stock investments with minimized risk involves diligent research and strategic planning. Looking beyond mere stock price and delving into company performance, market trends, and financial health are critical steps.

Finding and Evaluating Penny Stocks

Effective evaluation of penny stocks requires accessing reliable data and analysis tools. Investors should look for companies with solid fundamentals, including growing revenues, manageable debt levels, and potential for market expansion. Utilizing resources like penny stock-specific newsletters and platforms can also provide curated insights.

Finding high-potential penny stocks is a challenge that requires the right tools. Penny stock screeners are invaluable for filtering through thousands of stocks to find those that meet your specific criteria, such as volume, price changes, and market sectors. These tools can significantly enhance your ability to identify investment opportunities quickly and efficiently. To discover the top penny stock screeners that can help you pinpoint the best trading opportunities, check out the best screeners for penny stocks.

Key Takeaways

Penny stocks offer a high-risk, high-reward pathway for investors willing to navigate their complexities.
Thorough research and strategic planning are essential for minimizing risks associated with penny stock investments.
Utilizing stop-loss orders, diversifying investments, and staying informed through reliable sources can enhance trading success.

There are a ton of ways to build day trading careers… But all of them start with the basics.

Before you even think about becoming profitable, you’ll need to build a solid foundation. That’s what I help my students do every day — scanning the market, outlining trading plans, and answering any questions that come up.

You can check out the NO-COST webinar here for a closer look at how profitable traders go about preparing for the trading day!

What stocks are YOU watching? Let me know in the comments!

Frequently Asked Questions

Can You Get Rich Buying Penny Stocks?

While penny stocks offer the potential for significant returns, they also come with a high risk of loss. Success in penny stock investing requires careful selection, patience, and a keen understanding of market dynamics.

Which Penny Stock Is Best?

The “best” penny stock varies over time, influenced by market conditions, company performance, and sector trends. Investors should focus on stocks with solid fundamentals, active trading volumes, and potential for growth.

What Are the Hottest Penny Stocks?

Identifying hot penny stocks involves looking for companies in emerging sectors with strong growth potential, positive financial indicators, and recent news that could positively impact stock prices. Regularly monitoring market trends and analyses can help pinpoint these opportunities.

What Are the Basics of Penny Stocks, and How Do Beginners Start?

Penny stocks are shares of small companies trading at low prices, often below $5. Beginners interested in these investments should start by understanding the nature of penny stocks and the securities market. Gaining knowledge about PE ratios helps assess the company’s valuation relative to its earnings. For those looking to invest, creating an account with a brokerage that offers a robust mobile app and browser platform is crucial for accessing penny stock markets.

How Can Investors Identify Promising Penny Stocks?

Identifying promising penny stocks involves researching gainers and IPOs, as these can indicate companies with potential for growth. Utilizing funds wisely and building a diversified portfolio can mitigate risks associated with penny stock investments. It’s important to track the performance of these stocks, using articles and reports from reputable sources, to maintain an up-to-date investment strategy.

What Should Beginners Know About Buying and Selling Penny Stocks?

Beginners should understand the dynamics between buyers and sellers in the penny stock market. The process involves analyzing when to buy or sell based on profits, losses, and the upside potential of a stock. Tools like a mobile app or browser-based trading platform can facilitate these transactions, allowing investors to act quickly on market movements.

How Important Are Resources and Tools for Penny Stock Investors?

Resources such as articles, YouTube tutorials, and LinkedIn groups can provide valuable insights into penny stock investing. Additionally, utilizing services like portfolio tracking apps and accessing financial reports through a site map or menu on a brokerage website can enhance investment decision-making. It’s also essential to heed the disclaimer provided by authors or platforms offering investment advice to understand the risks involved.

What Role Does Market Research Play in Penny Stock Investing?

Market research is crucial for understanding the track record of penny stocks and their issuing companies. This can include reading IPO analyses, examining gainers lists for recent performers, and considering commodities as alternative or complementary investments. Accessing this information through various channels, including mobile apps, dedicated financial news sites, and social media platforms like YouTube and LinkedIn, can provide a comprehensive view of potential investments.

How Can Beginners Navigate Financial Information for Penny Stocks?

Beginners should familiarize themselves with financial terminologies like PE ratio, securities, and commodities. Resources like YouTube for educational content, LinkedIn for professional advice, and financial sites for articles and reports offer a wealth of information. Understanding these basics helps in evaluating penny stocks and making informed decisions based on their financial health and market potential.

Understanding Penny Stocks in India: What Beginners Should Know?

For beginners interested in penny stocks within India, it’s essential to start with familiarizing oneself with the NSE (National Stock Exchange), where many penny stocks are listed. Look for names and symbols of companies that have shown potential as gainers. Researching these companies’ performance through their financial reports and tracking their stock prices on the NSE page can provide insights into their viability. Additionally, consider the volume (number) of shares traded, as this can indicate liquidity and interest in the stock. Using services like brokerage accounts that offer detailed analysis and results can significantly aid in making informed decisions.

How Do You Evaluate Penny Stocks for Investment?

Evaluating penny stocks requires paying attention to the amount of investment you’re willing to allocate and understanding the benefits and risks associated with these types of securities. Analyzing past profits and the potential upside of penny stocks can guide your sell or hold decisions. Utilizing tools like mobile apps or websites where you can find links to in-depth articles, YouTube channels for financial education, and platforms offering up-to-date market results can be invaluable. Always ensure you’re consulting a variety of sources to get a well-rounded view of the penny stock market.

What Resources Can Help Beginners Navigate Penny Stock Investing?

Beginners can navigate penny stock investing by leveraging a mix of products and services designed to simplify the trading process. Look for platforms that offer a comprehensive site map or menu, allowing easy access to various pages dedicated to penny stocks, including tutorials, symbols, and market trends. Engaging with financial communities on LinkedIn and following channels on YouTube that specialize in penny stock investing can offer practical tips and things to watch out for. Lastly, always cross-reference the information you find with links to authoritative reports and analyses to validate your investment decisions.

955500cookie-checkHot Penny Stocks to Buy in 2024

Tag: penny-stocks

Hot Penny Stocks to Buy in 2024

Top 7 Robinhood Penny Stocks to Watch in April 2024