Here’s a simple screener to find penny stocks under $1 per share and what to look for to narrow your list of the best stocks to buy.
It’s been four months since our last penny stock video. After penny stock returns like Tellurian, up 28% in just a few months and Bryna up 92%, it’s the most requested topic on the channel so I wanted to update our list. And we’re going after the smallest of the small cap stocks in this video, the penny stocks under $1 per share with the biggest upside potential.
In fact, the list of penny stocks I’ll reveal today have an average analyst price target 233% higher than the current prices!
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Investing Strategy to Get the Most of These Penny Stocks
In this video, I’ll show you a simple penny stock screener to narrow your list then an investing strategy to get the most from these stocks. I’ll share an extremely important warning about penny stocks and then reveal those seven stocks to buy for less than a dollar a share.
I’m going to start with a simple screener, just an initial screen to narrow down our list, so we’ll open up the stock screener in the Webull app and start a new screen. You can save these so you know you’ll always have a screen running to help find the best stocks in different themes.
First we’ll change the price filter to narrow it down to just those penny stocks under $1 per share. And with all of these, the screener filters potential stocks immediately so you can always see how many fit the criteria.
Next I like to use these ROA and ROE, so return on assets and return on equity, filters to narrow my list. This helps me find the penny stocks with management able to generate a positive return on assets and stockholders’ equity, so we’ll change these to only show us stocks with positive results.
There are a lot of other filters here you can play around with. I also like the analyst rating criteria which let’s you look for stocks only with buy and strong buy ratings by analysts. We’ve narrowed our list of penny stocks to 14 though so I want to start digging into these to find the best to buy.
I want to get to that list of penny stocks under a dollar so I’ll show you how I researched these later. First though, if you’re not using Webull yet, check out the link in the video description. I like the app for its in-depth research and easy screening along with zero-commissions. My favorite function though is the stock simulator where you get a million dollars to test out your ideas, follow stocks and just make sure you want to make the trade before you invest real money. It’s easy to use, just buy stocks in your paper portfolio and follow them until you want to invest for real.
Webull is running a special promotion to the end of the month, get two free shares of stock worth up to $1000 each when you fund your account and start investing, so click through the link below to take advantage of that.
Top 7 Penny Stocks Under $1
Our first penny stock on the list, Galiano Gold, ticker GAU, is one of the few profitable penny stock miners.
Galiano operates the Asanko gold mine in West Africa with 251,000 ounces mined in 2019 and a market cap just under $300 million. And gold miners have been hit recently with the price of gold suffering on fears that the Fed would start tapering its stimulus but I think it’s building a base for what could be another run higher. Gold was trading in that range of $1750 to $1950 for a long time and with inflation still a big worry in the market, you’re likely to see some strong support which is going to keep these miners cash flowing.
Management is guiding to 245,000 ounces for this year at an all-in-sustaining cost of $1,150 per ounce…which against even the lower prices on gold, that still leaves a lot of room for profit.
The company has a great financial position with $65 million in cash and receivables against no debt, so you’ve got a third of the stock price backed by cash. The shares were added to the junior miners index, the GDXJ, earlier this year which brings more investors into the company.
One last reason to like this one, on top of that low-cost production, management is finding ways to keep costs down and even lower them further. Mining costs were lowered 25% in the first nine months of last year versus 2019 and I think the company can come in under that $1,150 per ounce AISC estimate.
While I like Galiano on that run back up in gold, it’s actually got the lowest estimated return potential on analyst targets with a target of $1.86 per share which is still 106% higher than the current price, we see the ratings and average target price from analysts here, another reason I use the app, that level of detail for research!
We’ve still got six more penny stocks to highlight but there’s a big warning we have to talk about here before we go any further. You’ll notice a lot of these, and most stocks under $1 a share are going to be OTC stocks, or pink sheets. That means they don’t trade on the regular exchanges like the NYSE or the Nasdaq. It also means they aren’t regulated with as much oversight as the rest of the market.
Besides the fact that most OTC stocks have limited trading, so they don’t meet the number of shares traded daily to qualify for the exchanges, they also don’t have the same reporting requirements. In fact, really the only requirement is to register with the SEC but there aren’t the same financial disclosures or auditing you get with exchange-listed stocks. This all just means you MUST do your homework on these stocks and can’t rely on reported financials.
Also, not all investing apps give you access to OTC stocks, which is why I like using Webull for my penny stock trading. For brokers like Fidelity, you’ll have to pay a $50 fee just to buy or sell these small stocks.
We’re getting into the super-small companies here with Motus GI Holdings, ticker MOTS, at just $42 million market cap.
The company is a medical technology company in endoscopy procedures and focused on development and sale of its Pure-Vu System for early detection and prevention of colorectal cancer. Excluding skin cancers, colorectal cancer is the third most common diagnosed in the U.S. with more than 50,000 Americans dying from it each year.
Revenue isn’t spectacular on this one but it has been increasing to $110,000 last year from just $40,000 the year before. It’s also got $27 million in balance sheet cash against just $9 million in debt, so definitely the cash runway to keep growing.
Motus GI has six analyst ratings, all either a buy or strong buy, with an average analyst target of $2.24 per share…more than 157% above the current price.
Here $96 million Avinger, ticker AVGR, is right on the edge of $1 a share but I wanted to include it as a good pick in the medical device market.
The company developed an image-guided occlusion crossing system for intravascular imaging called the Tigereye along with several other products in development. The system is designed for patients with peripheral artery disease a 20 million-person market in the U.S. alone with an estimated $500 million spent on 200,000 procedures annually.
Avinger launched its Tigereye in the U.S. and Germany last quarter with plans to expand the U.S. release this year. Revenue was posting high double-digit growth before the pandemic and should bounce back to that pace soon. This year’s sales are expected to top $11.4 million for 34% growth over last year and keep building from there.
Now there’s only two analyst ratings here, so a reminder to always back up these analyst targets with your own research, but at a $2.50 target price, that leaves 150% upside return here.
I’m going to highlight those last three penny stocks to buy next but I also want to share an investing strategy, a way to think about these small cap companies.
Investing in Small Cap Companies
Now any one of these could be a 10X stock. Most of these stocks under $1 are around $100 million market cap or less, so even ten-times growth would only be a billion-dollar company. Even that would still put it at less than 1-700th the size of Tesla or less than 1-fourteenth the size of News Corp, the smallest company in the S&P 500.
But there’s also a chance many of these go nowhere or worse…that’s the nature of this kind of startup company, penny stock investing. Playing this game means you need a long-term portfolio approach on these. Invest in at least 10 to 15 penny stocks and give them time to play out, give them time to grow.
Even if eight out of ten stocks you buy do nothing, if just two produce a ten-times return, that comes out to a 23% annual return over five years. Enough to turn $500 a month into half a million dollars in less than 14 years.
Our next penny stock trades for just $0.55 a share, Baudax Bio, ticker BXRX, a late-stage biotech with growing sales.
Baudax, launched its ANJESO non-opioid medication for moderate to severe pain in mid-2020 and has additional pipeline indications testing for the drug. The company launched to just 1,400 hospitals, a fraction of the potential market for 11 million targeted procedures with sales jumping to $650,000 in the first four quarters.
It’s got an effective and inexpensive, single-dose non-opioid medication…now it just needs to market that to take share from competitors. As a single-dose, it’s easier on patients and is less expensive than most alternatives on the market.
Now the finances are a little shakier here. The company has $38 million in cash reserves against just $8.5 million in debt but it’s spending about $14 million a quarter in operating expenses so key will be increasing that revenue and managing costs. There’s no shortage of potential though with the average analyst target of $2.67 per share or 385% higher from here.
Surgalign Holdings, ticker SRGA, is a $127 million medical devices company that just comes in under our $1 or less share price.
The company sells a broad portfolio of spine implants for fusion and motion in the U.S. and 50 countries along with biomaterials and digital surgery systems with its ARAI platform. It’s targeting a $12.7 billion global spine market, plenty of size for a small cap penny stock to grow into.
The implants have helped it grow revenue to about $100 million a year but the real growth is in this ARAI platform and the potential in 3D visualization, data analytics and use of AI in spine surgeries. It’s filed the premarket submission with the FDA for its launch of the holosurgical technology and is just waiting on approval.
There are seven analyst ratings here, all buy and strong buy recommendations, with an average target of $4.35 per share or a 370% potential return on the stock.
One of the most promising penny stocks on the list, HealthLynked Corporation, ticker HLYK, is on one of my favorite industries.
The company provides a cloud-based network in healthcare connecting patients, doctors and data. Patients and doctors can check records, enter symptoms and schedule all online.
These kinds of virtual services and software are the future of healthcare. It may not replace all your doctor visits but it will replace many and I think a lot of these startup virtual health services companies start getting bought up by the big players eventually.
Mobile and telehealth is already an $18 billion market according to Bloomberg Analytics and growing at 30%-plus a year. Revenue jumped 52% last year to $6.1 million after nearly doubling in 2019 and the company books multiple revenue streams through reimbursement and marketing. This one doesn’t have quite the balance sheet with just $3.3 million in cash but that’s against just $1.5 million in debt so it’s still a net cash position for that safety we like to see in these smallest companies.
When you invest in penny stocks, it’s important to remember that even the best stock screener and analysis isn’t going to keep you from picking some bad investments. In fact, most of the time your majority of penny-stock will lose money but if invested correctly there can be enough higher shooting ones which means overall portfolio return could have a percentage rate as high as twenty or 30%. I recommend investing in a diverse portfolio of penny stocks. You should have at least 10-15, and give them time to grow.