5 Stocks Under 10 Cents in 2021

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5 Stocks Under 10 Cents in 2021

With the economic consequences of the COVID-19 pandemic beginning to subside, opportunities to trade penny stocks under 10 cents will open the door to anyone wanting to trade stocks.

Investors are always looking for the next best opportunity that will deliver the most profitable ROI. Nowadays, thanks to online brokers such as Robinhood Markets Inc (NASDAQ:HOOD), eToro, and many more, engaging in such a process can be quite easy in comparison to a few years ago.

Anyone can become an investor, especially in what the stock market has defined as a penny stock.

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This has opened up the chance for students and underprivileged people to engage face-first with the ample monetary opportunities that the stock market can provide in 2021.

But, are penny stocks under 10 cents worth investing? What are the risks under this very volatile Covid environment? Anyone even mildly interested in this alternative should continue reading.

The Penny Stocks Potential

A host of well-established companies once traded for less than $1 a share, including Ford Motor Company (NYSE:F), JD Sports Fashion PLC (LON:JD), and Monster Beverage Corp (NASDAQ:MNST). Those who invested in these companies during their trading days could have accrued substantial profit.

Penny stocks are generally highly volatile and riskier, but still represent the possibility of significant growth.

The appeal of a penny stock is easy to see, as if you have $1,000 to invest in the stock market, you can get a considerably higher percentage of shares in a smaller company whose shares trade for a few cents, rather than buying “blue chip” shares which can cost significantly more for an extremely small percentage of ownership.

Of course, if a penny stock becomes a blue chip, you could end up making big profits with the right trading strategy. Many pharmaceutical stocks that were considered small have reached blue-chip level.

Penny Stocks Under 10 To Watch

Company Name Market Cap
Mobil'nye Telesistemy PAO (MCX: MTSS) $9.6 billion
Banco Bradesco SA Preference Shares (BME: XBBDC) $54 million
VEON Ltd (NASDAQ:VEON) $3.02 billion
Secure Energy Services Inc (TSE:SES) $640.3 million
Annaly Capital Management Inc (NYSE:NLY) $13.01 billion

Stock Highlights

The first pool of penny stocks under 10 cents is Mobile TeleSystems –Mobil’nye Telesistemy PAO. The company is headquartered in Moscow, Russia, and primarily focuses on providing hardware and internet services for its expanding customer base.

A by-product of the privatization that followed the collapse of the Soviet Union, the company announced significant growth before eventually hitting roughly 80 million subscribers.

This can be both an incentive and a deterrent for some, but it should be noted that the company does come with a plethora of attractive features, including a long-term analytic share price history which shows very little price volatility.

As for Banco Bradesco SA Preference Shares, it is a banking and financial services company headquartered in the state of São Paulo, Brazil with a cheap stock price of $5.52.

It is currently one of the hottest penny stocks under 10 cents, and anyone overlooking this opportunity could miss a profitable trade.

Banco Bradesco is the third-largest banking company in the country as well as in Latin America, and it is ranked as one of the top 50 most valuable banks in the entire world.

The opportunities to trade 10 cents penny stocks are arguably reflected on the prolific third-party investment it has received, with over fifteen hedge funds investing in Banco Bradesco in its fourth quarter of 2020.

VEON Ltd is a Dutch telecom company with a current stock price of just over $ 1.7. Despite its very small market price, it is actually one of the largest companies on the list with annual revenue of just under $8 billion in 2020.

With a current market capitalization of over $ 3 billion, VEON Ltd. is certainly an option for those looking for strong penny stocks.

Secure Energy Services Inc is certainly another good option for penny stocks under 10 cents. This is a public energy services company specializing in solutions to upstream oil and natural gas corporations in the Canadian hemisphere and the U.S.

Its headquarters are based in Alberta, Canada, and its current stock price is just over $4. The company is categorized into several segments, all encapsulating different services.

Annaly Capital Management Inc, currently priced at $9.3, seems to come with a surprising number of advantages for penny stocks when considering its rather low market price.

The company is currently one of the largest mortgage investment trusts in the state of Maryland, with its main headquarters stationed in New York City, U.S. Annaly Capital Management penny stocks under 10 cents provide an astounding dividend of over 9%.

This is a massive incentive for individuals looking for a potentially sustainable source of income in the future, as its shares have risen by over 50% in the last 12 months, outperforming the S&P 500 Index by over 5%.

stock 1629675692
PIX1861 / Pixabay

What To Look For When Selecting Stocks

Product Viability

One of the key factors to invest in penny stock is to evaluate a company’s prospects. Thinking “what could go wrong?” before investing will give you an idea of what are the macro or internal issues that will affect the company’s ability to grow in the long term. Product viability is one key aspect in terms of, what could happen if an important patent expires? How could the firm react to a competitor launching a more innovative product? The more viable a product is the better chances of good long-term growth and short-term stock performance.

Potential Company Growth

Although product viability will let you gauge a company’s potential for growth, this is a metric that should be considered on its own. Within this aspect, potential investors should evaluate the firm’s business model, business strategy, and the actions and reputation of the CEO. Any of these three elements should be unique, difficult to imitate, or equal, and should have a direct impact on the brand’s value.

Other aspects to consider are the firm’s ability to innovate, research, and operational excellence. The harder it is for competitors to breach the company’s moat, the stronger the competitive advantage.

Assets vs. Liabilities

A firm’s balance sheet is essential to look at before investing. Assets could increase the value of an organization over time, while liabilities are debts that must be paid or goods and services obligations that must be fulfilled.

“The strength of a company’s balance sheet can be evaluated by three broad categories of investment-quality measurements: working capital, or short-term liquidity, asset performance, and capitalization structure,” according to Investopedia.

In this regard, you must do your research and evaluate the best balance sheet among your short-listed organizations.

Liquidity of the Market

Yes, liquidity matters. According to FS Investments, liquidity is “ the ease with which an investment can be bought or sold without significantly impacting the price of the security.” In this regard, those stocks that can be either bought or sold effortlessly are said to be “liquid” while the opposite means they are illiquid.

In this regard, private debt and private equity classes usually have fewer buyers and sellers than more-liquid investments “and tend to lack standardized terms, making it harder for investors to quickly analyze, value and, in turn, buy or sell them.”

trading 1629675764
geralt / Pixabay

Tips in Trading Penny Stocks

Only Trade Money You Can Afford to Lose

This is the golden rule for any stock under 10 cents and any stock in general. This rule is applied by people who are in the financial education world, and basically means –apart from the literal– if you are not willing to lose anything, do not invest.

Monitor the News Surrounding Your Stocks

Industry reports, breaking news, and any piece of information you can gather before investing in penny stocks is essential. Still, it is widely assumed that good data on economic growth or job creation are positive for stocks, but the price reaction will depend on the particular context. When traders are concerned about a possible rise in interest rates they may prefer these figures to be moderate rather than show great strength.

Be careful of using news too simplistically. In many cases, making a correct reading of certain news is more complex than thought and requires an extra vision of the market context.

Don’t Rely on Promotional Pumps

At times, prices increase simply because they are fashionable or because of future expectations with no real fundamentals. Euphoria causes you to buy based solely on the fact that the asset’s price is low or to sell because the price is high, without thinking that the low price can lead to even lower prices or higher prices can become even higher.

Steer Clear of Penny Stocks Listed in OTC

Several OTC-listed penny stocks are endorsed as the next big breakout. However, these large businesses that offer a near-guarantee of achievement start with a high-priced IPO, not on the penny stock market. Also, OTC stocks do not need to fulfill minimum standard requirements to remain on the exchange.

Only Trade With Volume

Penny stock requires you to trade with volume. According to Raging Bull, they have a volume of around thousands of shares a day, but penny stock firms with breaking news could have a high volume of millions of shares in a day.

“How do penny stocks make money for you? This is the time when you’re likely to cash in, and in the penny stock world, there’s some major event nearly every day.”

Never Over Trade – Buy Then Sell

The type of account you have, may or may not allow for day trading. For instance, if you are a starter, your account may enclose restrictions intended to stop you from advanced trading strategies “or investing in securities that are illiquid or extremely volatile.”

“If this is the case and you’re upset by it, then instead of viewing the restrictions as something negative, it might help to think of them as benevolent brakes –in place to keep you from causing yourself financial damage by overtrading without understanding the risks involved.”

Ensure Wins One Trade at a Time

Staying liquid is also a way to stay invested. You only have to take positions when the market situation requires it. Minimizing the turnover of the assets that make up the portfolio substantially minimizes management costs.

Further, controlling losses means that there is a limit in which they can be assumed to have a margin of recovery in the next trade. Compound interest, added over time, will allow you to achieve a higher return. An asset that is in a winning position can never lead to a losing position.

Best Online Brokers To Use When Trading

Online trading platforms are the primary investing tools users have within reach. Some of the best tools are scattered around the globe and can be used by users from every corner worldwide.

Degiro is great if you are going to put in little money, or you are going to leave it for a long time and not going to do constant operations. As it will ask for your data, you can do it in free mode, while it verifies the information. One of the drawbacks is that the price update is at night and does not allow you to see the price fluctuation in real time.

Capital.com is a broker that, unlike many, does not apply commissions to the operations you carry out. It is one of the most famous platforms, sporting several awards for its artificial intelligence management system used by roughly 788,000 clients.

Both eToro and Skilling allow you to copy other investors. As for eToro, the platform asks for a minimum investment amount of 200 euros. There are different conversation groups where users discuss upward trends, where to get more profitability, and what to look for.

Skilling explains the different hours of operations in the different markets, the cryptocurrencies that operate 24 hours a day, the schedules of the different world stock exchanges, and more. To start trading, you will have to deposit 250 euros.

Finally, Interactive Brokers is one of the most complete platforms, and it updates each value in real time. It operates in 135 markets, 33 countries, and 22 currencies. You have the possibility of making different accounts, individual, joint, family, fiduciary, and institutional. It also offers seminars to continue learning, an academy with courses and training.

stock 1629675867
Pexels / Pixabay

FAQs

Before launching into penny stock trading, make sure you answer yourself some key questions yourself.

Can you get rich off penny stocks?

The answer is “yes.” But most of the time, penny stocks can turn out to be quite risky. In fact, such actions can lead to many different types of scams. However, it is important to understand that penny stocks can earn you a lot of money, and this is the reason why most investors are always willing to invest in these stocks.

They believe that the advantages of stocks outweigh the disadvantages. Among courageous investors, these stocks have always been popular, and in simple words, they can offer impressive returns in a short amount of time.

Can I invest 500 dollars in stocks?

According to several expert stock traders, this amount is perfectly valid to begin our adventures in the world of the stock market. However, it is rather used to gain experience, not to try to get the most out of them.

In other words, you have a small amount to fine-tune your future investment moves, which is something very important since you cannot always hit the value that offers the best returns.

What is the most successful penny stock ever?

Several penny stocks have achieved incredible feats, but perhaps the most famous one is Apple Inc (NASDAQ:AAPL). While the company remained away from the spotlight for many years, it traded at $80 cents per share back in the early 2000s. As one of the largest tech companies worldwide, the share has hit up to $360 with a return of 46,750%. Still, for every tech company whose penny stocks become a success, hundreds fail.

What is the most shorted stock right now?

According to Seeking Alpha, the most heavily shorted stock is currently Workhorse Group Inc (WKHS) with a 33% short interest. The firm is working on electric-powered trucks and utility vehicles “although still in the early stages of development ahead of a mass-market launch.”

“There is skepticism on whether the company will be able to meet production targets and if it has the necessary cash for the required investments.”

A Final Take

Penny stocks are well known for being extremely volatile and price fluctuations are very common, reaching around 20%. Therefore, it is essential to perform a fundamental analysis while following your risk management strategy before deciding whether to proceed with any trading decision.

Also, it is good practice to operate in industries where there is great market growth compared to industries that are in decline.

Penny stocks tend not to have much daily trading volume on the stock markets, therefore a large buy or sell order is often not needed to move the price. If many people are talking about a pea, in internet forums, for example, that could also influence the price.

It’s important not to get caught up in an investment just because you’ve had a big one-day move and are afraid of losing it. What goes up quickly can go down even faster, so make sure your reasons for investing in the stock market are correct.

DISCLAIMER. The information provided in this article does not, and is not intended to be, legal, financial or credit advice; instead, it is for general informational purposes only.

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Jacob Wolinsky is the founder of ValueWalk.com, a popular value investing and hedge fund focused investment website. Jacob worked as an equity analyst first at a micro-cap focused private equity firm, followed by a stint at a smid cap focused research shop. Jacob lives with his wife and four kids in Passaic NJ. - Email: jacob(at)valuewalk.com - Twitter username: JacobWolinsky - Full Disclosure: I do not purchase any equities anymore to avoid even the appearance of a conflict of interest and because at times I may receive grey areas of insider information. I have a few existing holdings from years ago, but I have sold off most of the equities and now only purchase mutual funds and some ETFs. I also own a few grams of Gold and Silver
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