Tag: penny stocks

What are Penny Stocks?

Penny stocks trade for under five dollars, and as the name implies, sometimes for pennies.

A penny stock typically trades for under five dollars, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or in speculative markets like mining exploration or concept technologies, or some newly emerging business.

Buying Canadian penny stocks can lead to a big payday when you make the right choice. But the odds against success are high. Penny stocks are almost always involved in riskier ventures, such as finding mineral deposits that can be mined at a profit, commercializing unproven technologies or launching new software.

What’s more, it’s hard for any new company to grow into a profitable business, and it’s even harder in pioneering fields. But it’s relatively easy to launch a stock promotion that purports to have answers to social problems or ways to profit from emerging technology.

That’s why penny stock promotions are always more common than legitimate start-ups. Penny stock promoters love to make deals—however small or indirect—with major, household name companies. They find it far, far easier to sell stock to the public if Teck, BHP Billiton or some other major mining company has agreed to finance exploration of their mining claims, or if Apple or Intel or some other household-name multinational has agreed to evaluate their revolutionary software or “cloud” application. The link with a major gives them instant credibility, especially with investors who are willing to buy penny stocks.

In fact, when a penny stock shoots up on the news of big-company involvement, and the property/program/revolutionary software is still in the early stages of development, it’s often a good time to sell.

There’s room for penny stocks in a small part of your portfolio, but at TSI Network we recommend using our three-part Successful Investor strategy:

  1. Invest mainly in well-established companies;
  2. Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; the Consumer sector; Finance; Utilities);
  3. Downplay or avoid stocks in the broker/media limelight.

The key to finding the “hidden gems” in penny stocks is to understand and avoid the risks that go with them. You get the benefit of Pat McKeough’s decades of experience—and his specific recommendations—in our special report, Canadian Penny Stocks: What You Need to Know about Handling the Risks and Reaping the Rewards.

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Penny Stocks vs. Blue Chip Stocks

Penny Stocks vs. Blue Chip Stocks
March 24, 2025||Blue Chip Stocks

When comparing penny stocks vs blue chip stocks, only one provides value and consistency. Here’s how to evaluate them and maximize your investment returns.
Penny stocks are generally riskier than other investments, and early success can (paradoxically) lead to big losses. On the other hand, blue… Read More

Pros and Cons of Renewable Energy ETFs

Pros and Cons of Renewable Energy ETFs
March 13, 2025||ETFs

Renewable energy ETFs have attracted popular approval, and not just with socially conscious investors. Still, are these ETFs good investments?
What are renewable energy ETFs?
Renewable energy ETFs are exchange-traded funds that invest in companies involved in clean energy production, distribution, and technology, including solar, wind, hydroelectric,… Read More