Penny Stocks - The Price And Market Capitalization

When we are talking about the penny stocks we can describe them as stocks that have very low value, highly speculative stocks, unlisted on the stock exchange, and with small market capitalization. If a stock has any of these it can be called penny stock.

Penny stocks does have very low value. But, it is very difficult to say how low the value should be for some stock in order to be described as penny stock. There are a lot of opinions about the price of the stocks.

Penny Stocks Have Low Value

So, in general, if the price is really low then we are talking about penny stocks. Some says that the stocks with a price below $5 per stock are penny stocks. Other people are saying that all stocks with value below $3 are considered as penny stocks. And also there are some other people which claim that a stock is penny stock if its value is below $1.

Penny Stocks Are Not Listed On The Stock Exchanges

Penny stocks are also not listed on the stock exchanges. Because of this, penny stocks are highly speculative and they bring you higher risk when investing in them. The risk is higher because if a stock is listed then there are some regulations that the company must satisfy. And, the penny stocks which are not listed do not meet the regulation. They are simply sold outside the stock exchange and the investors can be very cautious about them.

Penny Stocks Have A Low Market Cap

Another consideration of penny stocks is its market capitalization. Market capitalization is market value of a single stock from a certain company multiplied with the number of all stocks issued by the same company and can be found on the market. For example, if some company has issued 10,000 stocks and market value of the stocks is $10 than we can calculate market capitalization of 100,000.

So if some stock has market capitalization below $300 million than it is considered as penny stock. And if market capitalization of some stocks is below $50 million they can be considered as nano-cap stocks.

Penny Stocks Are Highly Speculative

In the previous example the stocks from the company can be considered as penny stocks because the market capitalization is below $300 million. They are also nano cap stocks although the price is not lower than $5. We should also state that there is high risk in investing in these stocks. They are not under regulatory control of stock exchanges, although the SEC does oversee their trading. These are highly speculative and this is why they are avoided by most conventional stock market investors.

5 Top Three-Digit Stocks - Motley Fool

5 Top Three-Digit Stocks Motley Fool - Nov 19, 2008 By Rich Duprey True penny stocks are a minefield, but the copper beauties we pick up in my weekly column "Making Cents in Penny Stocks" are often just ...

I'm so sorry about the money you lost... - Kansas City Star

I'm so sorry about the money you lost... Kansas City Star, MO - 15 hours ago Institutional money managers can’t attract a penny without publishing a performance composite for institutional investors like me to review. ...

The Motley Fool for Sunday, Nov. 23 - Kankakee Daily Journal

The Motley Fool for Sunday, Nov. 23 Kankakee Daily Journal, IL - 10 hours ago Between five and 15 stocks is manageable for most people. * Focusing inordinately on a stock's price. A "cheap" stock isn't necessarily a bargain. Penny ...

Paul Kangas' Stocks in the News - Nightly Business Report

Paul Kangas' Stocks in the News Nightly Business Report, FL - Nov 21, 2008 Gap (GPS) up $2.59. Higher third quarter earnings, $0.35 from $0.30 last year, a penny above the Street estimate. Citigroup upgraded it from "hold" to a "buy."

Stocks Mount Rally As Shorts Surrender The Day - Barron's Blogs

Stocks Mount Rally As Shorts Surrender The Day Barron's Blogs - Nov 21, 2008 5, 1996 - the day Alan Greenspan uttered his famous ”irrational exuberance” remark aimed at the giddiness of the bull market of the mid-90s. ...