If you look at the market trends of 2021, you will see that equities have been quite generous to Canadians so far. With the COVID-19 pandemic, almost every industry is adjusting to the new normal. This is where it becomes quite confusing for a lot of people. They have a hard time deciding which companies to invest in. One of the go-to choices in such times for a lot of investors is a penny stock.
In this article, we have listed 10 penny stocks that are trading below $10 in Canada. One should definitely pay attention to these penny stocks as they might boom in the near future. Along with the list of the penny stocks to buy now, we will also discuss their advantages.
What is a penny stock?
Simply put, any stock with a trading value of less than $5 can be termed a penny stock.
Now, this is a very general definition for a penny stock, and a lot of popular stocks which are not penny stocks can be valued at less than $5 as well. So there are a few more points that you should keep in mind regarding penny stocks:
- Generally speaking, penny stocks are companies that are relatively small and it is not very easy to buy or sell their stocks.
- These stocks are out of the radar for major analysts and that is why they do not have a very big following.
- These stocks generally trade OTC (over-the-counter) and through pink sheets.
- Canadians often tend to confuse penny stocks with small-cap stocks.
Buying penny stocks in Canada
Because of the internet and a slew of advisors, you will see a lot of people wanting to buy penny stocks but that is not something that we recommend if you are new to the stock market or if you do not like to handle market volatility.
Let’s say that despite everything, you have made up your mind to invest in penny stocks. In that case, it is recommended that you start trading through pink sheets. The golden rule of thumb here should be to invest about 10% of your total portfolio in penny stocks so that even if you lose a substantial amount of capital, it won’t cause significant damage.
To start investing in penny stocks, one needs a brokerage account. The important thing to note here is that pretty much all of the brokerage accounts will charge you more than their defined standard commission if you buy penny stocks. The reason is that penny stocks are traded OTC (over-the-counter) which raises some costs.
Why are penny stocks so cheap?
We are talking about stocks that cost less than $10. So, what makes them so cheap? Well, these are the companies that do not have the funding or resources that could help them in listing on the major exchanges. That is why they have low market capitalization and trade at lower prices.
However, the important takeaway here is that in order to judge the size of a company, you shouldn’t just see the stock price, you should also see its market cap.
Are penny stocks worth It?
Can you become rich by investing in penny stocks? Well, YES! But here is a little thing that you have to understand. There are more failure stories of people investing and losing penny stocks than success stories of people investing and getting rich from these stocks.
Now it does not mean that you shouldn’t invest in penny stocks. If you are interested in penny stocks, then you should only invest the amount that you are comfortable losing, if everything does not go according to the plan. So, just allocate a small fraction of your portfolio to penny stocks, say 10% of your total portfolio, and then see if it earns you something valuable. If yes, you can expand your territory in penny stocks, otherwise, just invest in large-cap stocks or blue-chip companies.
Some more tips penny stock investors should consider
- One of the things that you will notice while buying penny stocks is that small-size companies are often not required to file documents with the SEC (Securities and Exchange Commission). This makes it nearly impossible to determine their financial health. So, ultimately, it is a form of gamble.
- To avoid huge risks, try to invest in companies that are listed on OTCQX and OTCQB exchanges.
- If you are a high-risk, high-rewards person, try OTC Pink. These are very volatile stocks and give you high profits. But there are high risks too.
- You need a good knowledge of technical analysis as there is little or no financial information available on the companies.
- One should also pay attention to the management teams of such companies. Because their small decisions can have a very big impact on the value of the company.
10 Canadian penny stocks trading below $10
Now that we have a general idea about penny stocks, let’s take a look at the options.
FP Newspapers (TSXV:FP)
The first thing that you should know is that FP Newspapers has terrible liquidity. The price for one stock of FP Newspapers is currently $0.91 and the good part about the stock is that it is just crazy cheap and it won’t put a huge load on your pocket.
There are talks about FP Newspapers selling its headquarters in Winnipeg which could boost the stock price in the near future. Again the good part about this is that the stock is very cheap and has a good potential for growth in the near future.
WELL Health Technologies(TSX:WELL)
WELL Health Technologies is one of Canada’s top tech stocks. The good part about this one is that while most of the tech stocks are over $10, this one is relatively cheap at $7.55 per stock. What’s more, it has a strong future.
The company works in the field of telehealth and it is growing at a commendable pace. They have been acquiring businesses, and as a result, investors are attracted to the company. So, if you are looking to invest in a relatively safe stock below $10, this one should be your choice.
HIVE Blockchain Technologies (TSXV:HIVE)
The crypto market is very hot right now. While we do not suggest that you invest in Bitcoins, the other thing you can do is invest in a cryptocurrency stock. Hive is a Canada-based cryptocurrency miner and seller. The company is valued at a whopping $2 billion, but its shares are relatively affordable. You can get HIVE Blockchain stock for $3.93 right now. The stock has a lot of potential.
Just Energy Group (TSX:JE)
It is no surprise that the oil and gas sector is facing a rebound. However, as a long-term investor, you should be looking at this stock with a lot of potential. The price for one Just Energy stock currently is $4.92. The company provides electricity and natural gas to the US, Canada, and a lot of other countries as well.
If you are an investor who is looking for some steady revenue, this is the stock that you should invest in.
CloudMD is one of the biggest rivals of WELL Health Technologies. It is expanding its business at an attractive pace and has started its operations in the US as well. Right now, one stock of CloudMD costs about $2.12 and it also has a lot of potential for future growth.
This is a very cheap and safe stock to invest in as the demand for healthcare is growing immeasurably during the pandemic.
Kodiak Copper (TSXV:KDK)
Kodiak Copper is trending right now because of the increasing price of copper. For those who didn’t pay attention, the price of copper has gone up to $4.5/lb in 2021, compared to $2.10/lb in 2020. This is a high-risk stock but you can earn a lot of profit if you just invest at the early stages. As of now, the Kodiak Copper Corp stock is trading at $1.60. As mentioned earlier, this is high-risk stock but one can earn a profit if invested smartly.
To give you context, Organigram is one of the biggest companies in Canada that produces medical and recreational marijuana. The wholesale price for cannabis has been falling lately and Organigram faced the consequences for it.
However, the company is bouncing back strong as it got a $221-million infusion from British American Tobacco (BAT) in 2021. As of now, OGI stock is trading at $3.37. There is a lot of potential for the company’s future given the cannabis market is expected to grow at a rapid clip over the upcoming decade.
Namesilo Technologies (CSE:URL)
Namesilo is a company that provides internet services in Canada. The services include hosting, email services, and other services that are required to run a website.
It is 2021 and a lot of people are making websites for their businesses as those are important to reaching customers amid the pandemic. And that is why Namesilo is growing at a very good rate. As of now, you can get Namesilo shares for about $0.20 which is very cheap, and if Namesilo can maintain the growth, this stock can definitely give exponential returns.
Redishred is one of the best penny stocks to buy now. Redishred owns and runs the Proshred brand. Now the interesting thing is that Proshred has two different business models. The company has a very clean balance sheet and it has almost zero debt. It also generates a good amount of cash flow. As of now, you can get a stock of Redishred at $0.65 which is quite cheap.
Goodfood Market Corp
Goodfood is one of the companies that has gained a lot of popularity and recognition in the area of the online grocery and meal solutions sector. The company is quite volatile, but it is growing now, and people are subscribing to the company more than ever. The good part about this company is that it has a very strong cash position with about $163 million.
As of now, the stock price of Goodfood Market is $8.14 and analysts believe that it will increase up to $12.44 in the future.