What are Penny stocks? How are they good for investors?

Penny stocks are low-priced stocks issued by companies with lower market capitalizations. These stocks are traded on smaller exchanges and are issued by companies with fewer assets, small business operations, or who have been in operation for a significantly shorter period of time.

The definition of a penny stock may differ from country to country. Different countries establish distinct price points below which stocks can be classified as penny stocks. For example, in the United States, stocks priced less than $5 are considered penny stocks, whereas, in the United Kingdom, stocks priced less than £1 are considered penny stocks.



 How are Penny Stocks good for investors?

Penny Stocks may seem like a risky investment for investors; however, there are reasons why they are listed on stock exchanges.

 

•     Some penny stocks may look like risky investments, but some of them can perform really well over time and have the potential to yield impressive returns.

•     Since they are inexpensive, even a low-budget investor can invest in these stocks.

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