What are Penny Stocks?
Are Penny Stocks Worth it??
Penny stocks have no exact definition, but generally those stocks that sell for under $5 over-the-counter (OTC) are the race cars of the stock market. Willing to take a gamble? It is tempting, plenty of big names started off small and had 100%, 500%, 1000% and even 10,000% gains.
The objective is to find the good from the bad. You can find penny stocks trading anywhere between 0.0001 and $5. Some penny stocks trade even higher into double digits $10-$50. The price is not what makes it penny stocks, its the market capitalization.
Market cap is the value of the company, you get it by multiplying the total amount of shares the company has by the last price of the stock.
As an example, if a stock has 30M shares outstanding at the last trade of $2, then the company is worth 2×30M = $60M market cap.
Generally most investors will group companies with less than $2B in value as small cap, but usually anything under $500M can be accepted as a penny stock.
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