This month’s biggest stocks include Ardelyx Inc., Snowline Gold Corp. and Quadian Inc., which have more than doubled in the past year.
Here are the top three penny stocks with the best value, fastest growth and most momentum. All data are as of June 13.
Best Value Penny Stocks
These are penny stocks with the lowest 12-month lag price to earnings (P/E) ratio. A low P/E ratio means you’re paying less for every dollar of profit that could be returned to you in the form of cash dividends or buybacks.
| Best Value Penny Stocks | |||
|---|---|---|---|
| Price ($) | Market capitalization (million USD) | 12-month trailing P/E ratio | |
| Mesoblast Ltd. (MEAT) | 3.59 | 584.2 | 0.1 |
| Saturn Oil & Gas Inc. (LAND.K) | CA$2.20 | CA$305.0 | 0.4 |
| Cemex SAB de CV (CXMSF) | 0.70 | 10,156.0 | 0.7 |
Source: YCharts
- Mesoblast Ltd.: Mesoblast is an Australian company that develops, markets and distributes regenerative medicine.
- Saturn Oil & Gas Inc.: Saturn Oil & Gas acquires and explores natural gas and oil properties in Western Canada. As of June 15, the company is now listed on the main board of the company Toronto Stock Exchange (TSX) under the ticker symbol LAND.K. It was previously traded on the TSX Ventrue exchange.
- CV Cemex SAB: Based in Mexico, Cemex produces construction materials such as ready-mixed concrete, asphalt products, roof tiles, barriers for drainage tanks and concrete pipes for sewage systems. In early May, Cemex announced first quarter results; net income increased 42% and total sales increased 8% compared to the prior year. Main role recently EBITDA growth is Cemex’s investment in their Urbanization Solutions business.
Fastest Growing Penny Stocks
This is the highest ranked penny stock and grow a model that rates companies based on their 50/50 year-over-year weighting revenues and earnings per share (EPS) growth in the last quarter.
Both sales and profit are decisive factors for the company’s success. Therefore, ranking companies by only one growth metric makes the ranking vulnerable to a given quarter’s accounting anomalies (such as changes in tax laws or restructuring costs) that can make one or the other number unrepresentative of the business in general. Companies with quarterly earnings per share or revenue growth of more than 1,000% were excluded as outliers.
| Fastest Growing Penny Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market capitalization (million USD) | EPS growth (%) | Income growth (%) | |
| SNDL Inc. (SNDL) | 1.44 | 374.4 | N/A (see company description) | 978 |
| LexinFintech Holdings Ltd. (LX) | 2.40 | 391.3 | 307 | 62 |
| WAVE Life Sciences Ltd. (WVE) | 4.22 | 415.1 | N/A (see company description) | 639 |
Source: YCharts
- SNDL Inc.: SNDL is one of Canada’s largest private sector spirits and cannabis retailers. It grows and processes cannabis for sale under the Sundial, Top Leaf, Palmetto and Grasslands brands, among others. SNDL’s net income grew more than 1,000% year-over-year in the first quarter thanks to the acquisition of the Alcanna, Valens and Zenabis brands in 2022. Net loss for the quarter decreased 5% compared to the prior year. On June 6, SNDL appointed Alberto Paredero-Quiros as CFO effective July 1 following the retirement of current CFO Jim Keough. Note SNDL Inc. does not have an EPS growth figure in the above table because the company reported a loss per share in the last quarter.
- LexinFintech Holdings Ltd.: LexinFintech operates online financial services in China. In the first quarter, LexinFintech’s net income quadrupled from the year-ago quarter. The company’s lending business grew by 41% and the number of registered users increased by 14% compared to the previous year.
- WAVE Life Sciences Ltd.: WAVE Life Science is a Singapore-based company developing medicines for the treatment of genetic disorders. Note WAVE Life Sciences does not have an EPS growth figure in the above table because the company reported a loss per share in the most recent quarter.
Penny Stocks with the greatest momentum
These are the penny stocks that have had the highest total return over the last 12 months.
| Penny Stocks with the greatest momentum | |||
|---|---|---|---|
| Price ($) | Market capitalization (million USD) | 12 month total return (%) | |
| Ardelyx Inc. (ARDX) | 4.06 | 870.7 | 660 |
| Snowline Gold Corp. (SGD.CN) | CA$3.23 | CA$451.6 | 271 |
| Qudian Inc. (QD) | 1.92 | 431.8 | 167 |
| Russell 1000 Index | ON | ON | 10 |
| Russell 2000 Index | ON | ON | 5 |
Source: YCharts
- Ardelyx Inc.: Ardelyx manufactures medicines for individuals with gastrointestinal diseases. Its primary product is Ibsrela, an oral medication to help treat irritable bowel syndrome, which was launched in March 2022.
- Snowline Gold Corp.: Snowline is a Canadian mining company that explores and develops gold-producing properties in the Yukon.
- Qudian Inc.: Qudian is a Chinese company that provides online consumer credit solutions. The company’s total revenue fell 89% year-over-year in the first quarter, mainly due to the termination of the loan portfolio. Qudian’s stock price fell 14% after its first-quarter results were released, but is still up more than 100% over the past year.
Advantages of Investing in Penny Stocks
High Return Potential: Most penny stocks are small market capitalization, meaning that it takes a small amount of money to move the share price significantly. Therefore, positive news such as signing a large customer or establishing a new one strategic alliance, can lead to substantial returns before the mainstream investment world discovers the stock. Conversely, negative news can lead to significant losses.
Influence: Penny stocks attract investors with small amounts of trading capital because their lower share prices allow them to buy thousands of shares. For example, if an investor has $500 to invest, they can buy 2,000 penny stocks for 25 cents. If this stock doubles in a month, the investor will quickly return 100% of their investment. However, with the same initial capital, the investor could usually only afford a small number of shares S&P 500 stocks, making it nearly impossible to achieve these gains over the same period.
Risks of Investing in Penny Stocks
Low liquidity: Penny stocks often trade on low volume, which means it can be difficult for investors to enter and exit their positions. In addition, these stocks usually have wide spreads between stocks offer and ask, which increases the cost of trading. For example, if a penny stock has a bid price of $1.00 and an ask price of $1.50, a trader looking to buy the market is caught paying 50 cents per share premium. Investors should therefore take advantage limit orders minimize trading costs when buying and selling penny stocks.
Extreme Valuation: Penny stocks that start to move rapidly higher in price appear on the stock market and may even gain media attention. This often attracts more speculators who push prices even higher, leading to unsustainability valuation. For example during dotcom bubble in the late 1990s, many penny tech stocks doubled and tripled in price despite generating no profits. But when the market turned bearish a few years later, many Nasdaq-listed penny stocks with unsustainable valuations fell substantially or were delisted.
Comments, opinions and analysis expressed on Investopedia are for informational purposes only. Read ours disclaimer of warranty and liability for more information.
As of the writing of this article, the author does not own any of the above stocks.