Penny stocks are usually trading for less than $5 per share. Though the definition isn’t that narrow across investors, stocks that are trading around that price (even a bit higher) can be characterized as penny stocks.
Another characteristic of penny stocks is that they are usually traded via over-the-counter transactions; that is, not through big exchanges like the New York Stock Exchange.
Another essential factor that contributes to the definition of penny stocks is that they are often issued by companies with very small capitalization.
Penny stocks are very “thinly” traded, meaning that there is very low liquidity in the market. For that reason, such stocks pose a very high risk for investors.
Here are 3 stocks that fit the definition of penny stocks:
- Arcos Dorados Holdings Inc
- Regis Corp
- Invacare Corp