Penny stocks are low-priced shares of companies that are generally smaller organizations. Though there can be exceptions to the rule, retail traders tend to lean toward these types of companies because of a history of significant potential. There aren’t many places you can go in the stock market today and find triple-digit moves within a matter of days or even hours.Click Here To Watch TTG Live On YouTube
Where these stocks were once considered scams, the last few years of market action have deemed them something else. Thanks to the historical rise of meme stocks like AMC Entertainment (NYSE: AMC) as well as GameStop (NYSE: GME) and many other household names, the term “penny stocks” is being seen as more than just an association with no-name companies.
The rise of retail traders has brought plenty of volatility to the market and stocks in general. It has also popularized taking on higher risk. There are even Reddit boards dedicated to traders who took on too much risk, and while you might think this would push people to shy away, it seems to have done the opposite. With 2023 off to a choppy start, penny stocks have become somewhat of a go-to for an asset class with predictability related to constant volatility.
In this article, we look at some of the most volatile stocks of the group: stocks under $3. All other things held constant and only focused on price, a move of just 30 cents from a stock priced below $3 can equate to a significant percentage change in value compared to higher-priced stocks like Tesla (NASDAQ: TSLA) or Apple (NASDAQ: AAPL). The question you need to answer is: does the risk outweigh the potential reward or not?