Updated with Jan. 29 closing stock pricesBy Jamie Dlugosch of
- 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.
I'll start my list of Top 5 Penny Stock to Buy with a commodity play. A weak dollar and a strong economy suggest that oil prices will be going higher in the next year. The higher the price of oil, the more advantageous it is for the oil sands business.
Ever dream of owning a monopoly? You can with Sirius XM Radio ( SIRI).
Denny's ( DENN) is primarily a stock picker's market at the moment after an impressive rise that lifted most boats in 2009. Going forward the best returns will come from owning small companies that can grow earnings quickly and yet trade for multiples of earnings that are below earnings growth rates. Denny's fits that bill perfectly.
The financial crisis has left many to scrounge for typical banking services like check cashing and wire transfers. Gladly filling the void are companies like MoneyGram International ( MGI).
Majesco Entertainment ( COOL)