Updated with Jan. 29 closing stock prices
By Jamie Dlugosch of
In the aftermath of the bear market, there is no shortage of companies priced under $3 per share, but to successfully take advantage of the abundance of opportunities, you need to pick stocks based on the following criteria
- Look for companies with market capitalizations that are less than $500 million. You want stocks trading on a U.S. exchange, not shell companies.
- Find stocks with a reasonable business behind the stock.
- From there, look at fundamental value combined with technical analysis. Volume is important, and you want to be buying on weakness and selling on strength. (See also: The 6 Rules of Penny Stock Trading.) Based on these criteria, then, here are five penny stocks that belong in any portfolio. Yes, there is a high degree of risk with these picks, but, so too, is the potential reward.