Penny stocks are often considered risky investments because they trade at low prices. However, some penny stocks can offer high returns. How much would you pay for these penny stocks?

In today's post I will be looking at the top 15 best penny stocks that could make you a fortune if picked correctly.

What Are Penny Stocks?

A penny stock is a stock that trades at a stock price lower than £1 per share (sometimes they may be a bit more). This type of stock is considered a "penny stock." Penny stocks are typically very small cap stocks. A small cap stock refers to a company with a market capitalization under £500 million dollars. Penny stocks are often used by investors looking to diversify their portfolio.

There are many different types of penny stocks. Some penny stocks are publicly listed while others are privately held. There are also penny stocks that trade over the counter and those that trade on exchanges. You'll find both large cap and micro cap penny stocks. Micro cap stocks are smaller than large cap stocks. Large cap stocks are larger than micro caps.

Penny stocks can offer some great investment opportunities. However, they can come with high risk. If you invest in penny stocks, make sure you do your research. Read up on the company and look into the background of the management team. Make sure you understand how the company operates and what its future plans are. Also, check out the competition. Find out whether or not the industry is competitive. Finally, don't invest more money than you can afford to lose.

High Volatility

Penny stocks are highly volatile, meaning that their share prices move up and down rapidly. This volatility causes penny stocks to be unsuitable for most investors because it makes it difficult to predict whether a penny stock will increase or decrease in stock price.

Because there are many penny stocks trading on the markets, some of them are bought and sold in huge volumes by big traders, who are able to influence the price of the stocks. These traders are called high frequency traders, and they use software programs to buy and sell millions of dollars worth of stocks within seconds. High frequency traders make money by taking advantage of tiny differences in price, buying low and selling high. They do this by purchasing massive amounts of shares at one moment in time, and then quickly reselling those shares at a profit later.

Penny stocks are generally considered risky, and they are usually avoided by professional investors. Because of their volatility, penny stocks are hard to analyze and understand, making them a challenge for even experienced investors.

Low Liquidity

The term "low liquidity" describes a situation where there are not enough buyers or sellers to satisfy demand. This can happen due to a number of reasons, including high volatility, market manipulation, or simply poor execution. In general, low liquidity situations make it harder to move stocks quickly, which increases risk.

Benefits of Investing in Penny Stocks

The benefits of investing in penny stocks are many. They may include:

• Higher Returns – Penny stocks tend to outperform traditional stocks because of their lower risk profile. This makes them a safer investment option.

• Lower Minimum Investment Amounts – Many penny stocks require smaller amounts of capital compared to larger companies. This makes them ideal for small investors.

Risks of trading penny stocks

The SEC warns investors about penny stocks, saying that many of them are fraudulent. In fact, since 2011, the agency has shut down nearly 4,500 penny stock scams. But it’s still easy for scammers to take advantage of people looking to invest in the market.

Top 15 Bests Penny Stocks in UK 2022 

The following list includes the best penny stock picks for 2020 based on my research. I am looking for companies that are undervalued compared to their growth potential. In addition, I look for companies that have strong management teams, solid products, and good financial statements.

In some cases, I might even include a few dividend plays. But the focus here is on the ones that offer the highest returns over the long term.

I do not recommend buying individual penny stocks because it is too difficult to predict whether the market will continue to move up or down. Instead, I prefer investing in ETFs like the iShares MSCI Emerging Markets Index Fund (EEM). This fund tracks the performance of emerging markets around the world.

1. Lloyds (LON: LLOY)

Lloyds Banking Group is one of the largest banks in the United Kingdom. It was founded in 1858 and operates as a bank holding company. Its banking activities include retail banking, corporate banking, asset management, and insurance services.

2. Eurasia  (LON: EUA)

Eurasia Mining Corporation is a Canadian gold exploration company. It focuses on precious metals such as copper, zinc, lead, nickel, silver, molybdenum, and uranium.

3. MGC Pharmaceuticals (LON: MXC)

MGC Pharmaceuticals is a clinical stage biopharmaceutical company focused on developing novel therapies for central nervous system disorders.

4. Greatland Gold (LON: GGP)

Greatland Gold is a gold mining company based out of Canada. The company explores for gold deposits in Western Canada.

5. AFC Energy (LON: AFC)

AFC Energy is an oilfield service provider. It provides drilling rig rental, well intervention, completion, production, and other related services.

6. Pineapple Power (LON: PNPL)

Pineapple Power International Inc. is a renewable energy company based in Ontario, Canada. It owns solar farms across North America.

7. Kanabo Group (LON: KNB)

Kanabo Group Ltd. is a Japanese construction materials company. It specializes in building materials, including concrete, steel, and asphalt.

8. Totally (LON: TLY)

Totally Group Holdings Limited is a Chinese manufacturer of consumer electronics. It produces electronic devices such as mobile phones, smart watches, tablets, and laptops.

9. Ebiquity (LON: EBQ)

Ebiquity is a software company that develops cloud computing solutions. It offers infrastructure, platform, application, and business process outsourcing services.

10. Coro Energy (LON: CORO)

Coro Energy is an oilfield services company based in Calgary, Alberta, Canada. It provides equipment rentals, maintenance, repair, and operation services.

11. Shoe Zone (LON: SHOE)

Shoe Zone is a footwear retailer with stores located throughout the United States. It sells athletic shoes, dress shoes, sandals, boots, and outdoor gear.

12. Argo Blockchain (LON: ARB)

Argo Blockchain is a blockchain technology company that builds decentralized applications. They are a global leader in cryptocurrency mining and are also listed on the NASDAQ.

13. Cineworld (LON: CINE)

Cineworld is an international cinema chain with more than 1,100 locations across Europe, North America, South Africa, Australia, New Zealand, India, China, Japan, Korea, Thailand, Malaysia, Indonesia, Philippines, Singapore, Vietnam, Hong Kong, Macau, Taiwan, and Sri Lanka.

14. Cellular Goods (LON: CBX)

Cellular goods or cellular phones are telecommunication devices used to make phone calls over a radio frequency carrier network.

15. Premier African Minerals (LON: PREM)

Premier African Minerals plc is a London-based mineral resource development company. This company has projects in Ghana and Zambia.

Summary

These 15 penny stocks may potentially do well in the future but it's important to remember that this blog is purely to give you ideas of what penny stocks are out there. Remember to do your own research and don't invest in anything you don't understand. I don't personally own any of these companies.

I am not a financial advisor and anything I say in my blog is not to be taken as financial advise. For any financial advise please contact a financial professional. My blog is based on my own opinions, research and understanding of the financial markets.

I hope you have found this blog post helpful. If you did enjoy the blog then consider leaving feedback below or sharing the post on social media. I regularly post content on the stock market, personal finance, and side hustles/entrepreneurship so if you would like to read more then consider subscribing to my blog through my website (www.portfolio-hub.co.uk) for free or follow me on Medium.com.

Thanks for reading

FAQ

What Are Penny Stocks?

Penny stocks, as the name suggests, are stocks that are traded at very low prices on the stock exchange. Although there is no specific definition of how low the price has to be for a stock to be called penny stock, it can be anywhere between 0 to Rs 10, or even Rs 20, 30. In general, they are available at a low price and can be bought in considerable quantities with very small capital. The best penny stocks are the ones that can give you multibagger returns, the reason why they are often called multibagger penny stocks. But why are we talking about such stocks in the first place? Let's go through the key features of penny stocks and get a better understanding of their meaning.

Source: indmoney.com

Where to Buy Penny Stocks?

If you're wondering where to buy stocks, you can review the popular stock brokers that support this asset class. The section below reviews a popular stock broker with which users can buy penny stocks.

Source: business2community.com

Can you get rich from investing in penny stocks?

The assumption that a cheap stock can make you rich quick is unfortunately by and large not true. More often than not, the reason a stock costs less than £1 is because it's worth less than £1.

Source: freetrade.io