Penny stock investors are their own breed of traders, and I am certainly not one of them. For the record, risky penny stocks aren’t even on my radar in this crazy stock market. But as Tesla Motors Inc. (TSLA) made a huge splash yesterday, racing up +40% after its IPO, I stumbled across plenty of information on the electric car maker and purported competitors – including a few penny stocks that caught my eye.
Most notable was penny stock Electric Car Companies (ELCR). This limousine-turned-EV outfit (seriously) has a stock price of about 1/10th of a penny and a market cap of about $100,000 (serious again). But that’s not the most interesting part – this penny stock traded 130 million shares in one day in mid June! If you do the math that’s still only $130k, but it was shocking to see that a penny stock that would be worth zero if you only had two decimal places for share price could see that kind of volume. Sure, the low stock price allows investors to buy in massive lots but the high risk has to act as just as much of a deterrent as the share price is incentive.
But this is the mind of a penny stock investor, I guess. Penny stocks are one of the most exciting ways to invest money in the stock market today because with great risk also comes the potential for great reward. After all, it doesn’t take a lot for a pick to jump from one penny in stock price to two pennies and double your money.
You can protect yourself in a few simple ways when buying low-priced stocks (read my full related article on 7 penny stock investing rules for details), but low priced stocks trading for a few bucks are vastly different than true penny stocks that are microcap pink sheets with a company value that’s less than most investors’ house is worth. When you trade in companies worth less than a single cent, you’re really rolling the dice.
So please don’t take the following information as a recommendation – because in my mind a trip to the craps table is less risk than these penny stocks. But I did a little research and uncovered some penny stocks with massive volume that are worth pointing out:
Penny Stocks With High Daily Trading Volume
Electric Car Companies (ELCR) regularly trades tens of millions of shares a day, with an average volume just south of 100M in the last 10 days. Though it got its start as a limousine and specialty vehicle manufacturer, as the name implies Electric Car companies is developing a zero emissions pure electric vehicle. If the Tesla (TSLA) IPO is any indicator ELCR could be in a growth industry. Then again, shares are less than 1 cent and the company’s value is estimated at around $100,000. That’s the price of a single Tesla roadster, so don’t bank on this penny stock breaking out anytime soon.
TBC Global News Network (TGLN) is a television production company and formerly a video game and DVD rental outfit titled GameZnFlix. In March 2010 the Company acquired Sterling Yacht Sales, however, so who knows where TGLN will be in the months ahead. Maybe yachts with their own broadcasting towers? Anyway, Wall Street seems to be interested in TBC Global News judged by the daily volume, however, with over 5 million shares of this penny stock traded daily in the last two weeks or so and a spike of about 30 million in the first two days of this week alone. But volume aside, the company’s miniscule market cap of about $130,000 doesn’t inspire confidence. Especially if you’re in the yacht business.
Citadel Broadcasting (CTDBQ) is a veritable giant compared to these previous two companies, with a market cap that actually tops $1 million, but it’s still a very small penny stock pick with shares trading around 1 cent. Citadel Broadcasting owns and operates radio stations and holds FCC licenses in 27 states and the District of Columbia.In June 2010 the company, announced that it has completed its financial restructuring and emerged from Chapter 11 – so who knows what the future holds.
IDO Security Inc. (IDOI) is engaged in the design and sale of devices for homeland security and anti-theft uses – including metal detectors. IDOI has a market cap of over $1 million though its shares haven’t traded for more than a few pennies since late 2008. This OTC penny stock is an example of how risky these investments can be – IDOI has givengup 85% of its value year-to-date. But with shares at less than a penny, every tenth of a cent that IDOI moves is a dramatic change in value so a swing trade of a few days or a few hours could net massive profits (or losses, of course, if your’re on the wrong end).
Artfest International, Inc. (ARTS) markets and sells paintings (both original and works reproduced on canvas as lithographs). The company also deals in autographed memorabilia, sports memorabilia and collectibles. ARTS stock has a market cap of less than $1M as of this writing, but regularly trades tens of thousands of shares each day. Since ARTS stock is less than a penny, it’s not hard to understand why this pick has such high volume. In a “letter to shareholders” just days ago, Artfest touted growth strategies such as the launch of a marketing campaign targeting the Hispanic market, among other things. We’ll see if the plan pays off for this penny stock. But it’s hard to imagine the company trafficking in high-end art collectibles with a value that’s so low.
Hopefully the earlier disclaimer was enough to scare you off these picks, but one final warning about penny stock investing – these companies and all other similar penny stocks are volatile and risky no matter their volume, so know what you’re getting in to. Also understand that as tiny companies it’s very difficult to get current or deep research on them — so I could be way off on what these companies actually do. In that case, please email me at the link below and I will post a correction. Finally, as OTC stocks or “pink sheets,” many online brokerages will limit your trading or charge very high commissions on your trades.
In a nutshell, these investments are not for the faint of heart, and can be complicated and costly if you’re not up to the task. But if you don’t get enough excitement already out of this volatile market, by all means – pull up to the penny stock gallery and take a shot. Just make sure you’re willing to part with whatever money you pony up.
As of this writing, Jeff Reeves did not own a position in any of the stocks named here.
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