Published on 13 Aug 2023 on Insider Monkey via Yahoo Finance
12 Best Quality Penny Stocks to Buy
In this article, we will take a look at the 12 best quality penny stocks to buy. To see more such companies, go directly to 5 Best Quality Penny Stocks to Buy.
Finding quality penny stocks has always been difficult. It’s like finding a needle in the haystack. There are thousands of penny stocks and a majority of them might fail and go to zero. Scams, pump and dump schemes, liquidity problems and lack of any business model are just a few of the long list of problems that keep an average, risk-averse investor at bay from penny stocks. Yet in these penny stocks are hidden the gems of the future. Small companies working on long-term growth catalysts, products and services provide investors a chance to become wealthy by investing in the stock market, something that’s becoming harder by the day. A report by Westcore Funds sheds some light on the importance of investing in quality penny, or micro-cap stocks, for long-term gains. The report said that micro-cap stocks usually remain under the radar because Wall Street analysts are not interested in covering them. The report cited a data point says on that on average each large-cap stock is covered by 26 analysts while on average each micro-cap stock is covered by two analysts.
The report said that this huge difference in analyst coverage of two categories creates a lot of mispriced stock opportunities in the micro-cap sector which could be used by investors. The report also cited data which shows the historical outperformance of micro-cap stocks. From 1992 to 2015, the Dow Jones U.S. Micro Cap posted a whopping 1199% in returns on a cumulative basis, compared to 696% for the S&P 500 index