Priced between Rs 1 to Rs 100, penny stocks offer a terrific entry point into the stock market and if chosen wisely, deliver spectacular gains to your portfolio.
However, they can also prove to be extremely risky. A lack of history and information about penny stocks, as well as low liquidity, can cause you to lose your money on what may seem like a bargain.
So, is there a penny stocks list that you should focus on?
Is there a low risk and high return strategy of investing in penny stocks which can lead you towards multibagger returns?
For the curated penny stocks list, we recommend you watch this video where co-head of Research at Equitymaster Rahul Shah shares the penny stocks list to focus on.
Also check out this framework for investing in penny stocks. This strategy is the easiest one to make money from penny stocks.
You can also checkout our playlist on Penny Stocks on Equitymaster's YouTube channel.
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With so many options out there, it can be challenging to find high-quality penny stocks that are worth adding to your portfolio.
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These penny stocks have a history of making regular payouts and they also have decent financials.
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Read on to find out why these low-risk penny stocks deserve your attention.
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A step-by-step method to pick the best penny stocks for the long term.
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Breakout penny stocks are famous for generating extremely fast returns. This makes them popular among investors who seek high-risk, high-reward investment opportunities.
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Penny stocks which have a decent balance sheet, low or zero debt and a track record for paying consistent dividend fare much better against their peers.
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Which penny stocks are the best for the long term?
Penny stocks are shares of listed companies priced below Rs 100. In the US market, these stocks trade for less than a dollar i.e. for pennies. Hence the name.
Penny stocks have the potential for above-average returns. However, they are extremely risky. Therefore, investing in them requires care and caution.
You can see the list of Indian penny stocks and how they are performing here...
Based on marketcap, these are the top high quality penny stocks in India:
You can see the full list of high quality penny stocks here.
And for a fundamental analysis of the above companies, check out Equitymaster’s Indian stock screener which has a separate screen for high quality penny stocks in India.
Penny stocks are usually issued by new or very small companies. These companies often don't have a proven track record, which is why their shares are sold for so little.
Larger, more established companies may also have stocks trading under Rs 100 when they are facing financial trouble or approaching bankruptcy.
Since they carry a high amount of risk, one must have a proper strategy in place.
Check out our framework for investing in penny stocks. This strategy is the easiest one to make money from penny stocks.
Penny stocks are not suitable for investors who have a low-risk appetite.
However, even if you have a high-risk appetite, we believe one should not invest more than 2-3% of one's stock portfolio in penny stocks.