Looking for the best penny stocks? Many penny stocks are only available over the counter through the OTC Bulletin Board (OTCBB). But is this the best place to trade penny stocks? Not necessarily. Fraud can be an issue.

Penny stocks that are available on stock exchanges, on the other hand, are a lot safer — even if some of them cost a little more than $5 a share. So, below we review ten of the best penny stocks to invest in 2022 with the emphasis on those that you can buy from the safety of a regulated brokerage.

Best Penny Stocks to Buy in 2022

Many of the best penny stocks today can be bought safely and easily with reputable broker eToro, with a few of them available elsewhere:

  1. Lucky Block – Better Penny Crypto Alternative to Penny Stocks
  2. DeFi Coin – Best Penny Stock for Exposure to the DeFi Sector
  3. Inpixon – California-based software business 
  4. Gevo Inc – Colorado-based renewable fuels developer
  5. Nano Dimension Ltd – Israeli technology manufacturer
  6. Sunworks Inc. – California-based solar power company
  7. Globalstar – Louisiana-based satellite operator
  8. Zynerba Pharmaceuticals Inc. – Pennsylvania-based therapeutics producer
  9. Tilray Brands Inc. – Canada-based medical cannabis firm
  10. Lloyds Banking Group Plc – London-based top UK bank

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A Closer Look at the Best Penny Stocks to Invest in

The cheapest penny stocks are available OTC (over-the-counter). This means buying outside the main exchanges, which is risky. All of the penny stocks we feature are listed on either the Nasdaq Capital Markets Exchange or the New York Stock Exchange.

Those looking for the best penny stocks are also likely to be interested in gaining exposure to the best cheap stocks on the market right now. Read our guide on the cheapest stocks to invest in today for more details.

Let’s get started with the top penny stocks to buy as we move further into 2022.

1. Lucky Block (LBLOCK) – Better Penny Crypto Alternative to Penny Stocks

lucky block logoOur number one pick right now when it comes to penny stocks is Lucky Block. The first thing to note is that Lucky Block is not actually a penny stock – it is a cryptocurrency with exceptional growth potential due to its inventive use cases. Due to this, the coin can be a great addition to your equity portfolio to boost its level of diversification.

Put simply, Lucky Block is a crypto gaming platform hosted on the Binance Smart Chain (BSC) that leverages blockchain technology to provide a fairer and more transparent gaming experience. This experience is facilitated by using LBLOCK – Lucky Block’s native token. LBLOCK plays a vital role in the Lucky Block ecosystem, being used to purchase lotto tickets and for jackpot distribution.

As highlighted in Lucky Block’s whitepaper, LBLOCK holders will also receive a recurring revenue stream simply for holding the token, with an estimated yield of over 19% per year. These factors helped the price of LBLOCK surge by over 3,000% when it listed on PancakeSwap earlier this year, hitting an all-time high of $0.009617. However, since then, LBLOCK’s value has dropped to $0.001950 at the time of writing – around 5x lower than February’s highs.

Lucky Block price chart

Ultimately, this provides an exciting opportunity to buy Lucky Block while trading at a discount. There are numerous upgrades planned for the near future, such as additional centralized exchange listings and a FIAT ramp so that investors can use regular currencies to purchase LBLOCK.

Lucky Block’s iOS app is also currently undergoing review by Apple, ahead of the launch of Lucky Block’s first crypto game. Finally, given that Lucky Block’s Telegram group now has over 55,000 members, the hype is already building regarding these upgrades – hinting that further bullish momentum could be coming soon.

Your capital is at risk.

2. DeFi Coin (DEFC) – Best Penny Crypto for Exposure to the DeFi Sector

DeFi Coin logoAnother excellent asset to consider if you’re looking for huge returns potential is DeFi Coin. Much like Lucky Block above, DeFi Coin isn’t actually a stock. Instead, it is a decentralized finance (DeFi) token native to the brand new DeFi Swap exchange.

Within this exchange, users can swap, stake, and farm in a completely decentralized manner. DEFC plays a vital role in the DeFi Swap ecosystem, so its value is closely tied to the exchange’s growth. After some development delays, DeFi Swap finally went live in early May – which was met with triple-digit returns for DEFC holders.

The development team behind DeFi Coin have implemented an innovative transaction tax of 10% on buy and sell orders, which incentivizes investors to hold long term. A total of 5% of the accumulated tax amount is distributed back to DEFC holders via regular income payments – creating a pathway to earning passive income.

DeFi Coin price chart

Another significant aspect of the DeFi Coin project is that the development team have burned all of their coins. This highlights that the team isn’t interested in making a quick buck and is instead focused on the project’s longevity.

Finally, DeFi Coin also has a built-in manual burning mechanism, where the management team and community will decide when is the best time to burn a specified number of tokens. Ultimately, this reduces the overall supply of DEFC and helps drive price upwards due to the laws of supply and demand. This characteristic, combined with DeFi Coin’s other use cases and the buzz from the project’s Telegram group, means the future is exceedingly bright for this project.

Your capital is at risk.

3. Inpixon (INPX) – California-based software business

From its HQ in Palo Alton, Inpixon provides location-based services and big data analytics to a worldwide client base. It provides a variety of sensor products which allow clients to optimise indoor spaces with Wi-Fi and Bluetooth. The firm has a market capitalisation of almost $37m, with 220 employees under the leadership of CEO Nadir Ali.

INPX is a stock that has seen hard times over the last year. In 12 months the price has fallen by almost 80%, from over $1.20 to its current level of $.024. So why invest? Well, many write off Inpixion as a rubbish stock. But having fallen so far, the price is at a low level where Inpixon might be worth a small investment as part of a diversified portfolio. It will not take much a price movement to reap high proportional rewards to the investor, so it could be one of the best stocks under $5.

Critically, certain key fundamentals suggest that Inpixon is undervalued. Over 4 years, revenues have increased from $3m to $16m. INPX revenues were up 15% in Q4, 2021. And analysts WallStreenZen make no bones about it: based on Discounted Cash Flow modelling, ‘INPX ($0.24) is significantly undervalued by 65% relative to our estimate of its Fair Value price of $0.69.’

Undervalued with rising revenues, Inpixon could well be one of the best penny stocks to buy now. The firm has over 71,000 followers on eToro.

Your capital is at risk.

4. Gevo Inc. (GEVO) – Colorado-based renewable fuels developer

Based in Englewood, Colorado, Gevo is at the forefront of the green movement. The firm produces clean alternatives to gasoline and diesel, with particular success in supplying energy-dense liquid hydrocarbons to the aviation industry.

Despite its price falling drastically over the course of 2021 from almost $15 to less than $5, this is a company on the up.

Since February 2nd, 2022 — when the GEVO price was $2.93 — the stock has risen 60% in just two months to arrive at its current price of $4.71. Why? Largely because of US President Joe Biden New Green Deal, which pledges backing for green energy companies like Gevo.

Gevo has plenty of competitors. But it also boasts an expanding client base.  Prior to 2022, Gevo had approximately $1.5bn of future revenue locked into supply contracts for renewable jet fuel and gasoline products. And now March 2022 has seen two major deals:

  1. Major US commercial airline Delta Airlines signed a 7-year agreement to buy 75 million gallons of sustainable aviation fuel (SAF).
  2. Oneworld Alliance, a network of airlines including American Airlines and British Airways, announced its plan to buy 200 million gallons per year of SAF from Gevo.

Gevo has 149,000 followers on eToro.

Your capital is at risk.

5. Nano Dimension Ltd (NNDM) – Israeli technology manufacturer

Based in Israel, Nano Dimensions is a 3D printing specialist that provides software and hardware to speed up electronics manufacture. The company specifically targets the prototyping phase of traditional production timelines using Deep Learning AI.

A single Nano Dimension share is currently priced at $3.27. Since its meteoric rise early last year to hit $15.54, the share price has fallen a long way to its present level. This is a common issue with hi-tech companies coming to market. What has not helped the price are the acquisitions of Global Inkjet Systems and Essemtec in the last 12 months.

The question for the canny investor is: has the price fallen low enough to make Nano look undervalued?

Certainly encouraging from a technical charting point of view is that the stock price has bounced twice this year. This means it has ‘double-bottomed’ at a resistance platform of $3. On 24th January and again on 14th March the price dipped to just under $3 and then rocketed upwards to exceed $3.90.

This is therefore certainly a volatile stock. If it is forming a channel between $3 and $4, then now (with the price at just $3.27) would be a good time to buy for a short-term hold, and sell at $4.

Nano Dimensions has 95,000 followers on eToro.

Your capital is at risk.

6. Sunworks Inc. (SUNW) – California-based solar power company

Based out of Roseville, California, Sunworks is involved in the booming solar power sector. The firm sells photovoltaic systems to local companies in the industrial and agricultural sectors.

Sunworks employs over 500 staff and has a market capitalisation of $66.5m; this is a  high ratio of staff-to-market cap, and suggests that a restructure might be one of many ways to improve company profitability.

Total Sunworks revenues increased by over 150% between 2020 and 2021, from $37.9m to $101m. But this had no impact on the stock price, which has endured a steady decline since its January 2021 high of over $25. Since the third week of February, 2022, the price has hovered above the $2 mark, bouncing sharply from a low of $1.72 on 24th March. The current price for one Sunworks share is $2.24.

The good news for Sunworks is that a potentially-disastrous ruling by the California Public Utilities Commission (CPUC) called NEM 3.0 has been put on ice indefinitely. NEM would have brought new fees for customers of solar and reduced credits for excess solar production.

Ultimately, investing in Sunwork represents a bet on a small solar energy company that may not boast the best management or financial performance. But this is a volatile stock with good short-term potential; on the 8th March this year, the stock price soared to above $5 during market hours, only to fall back to $3.76 by close of business. Buy now for a short-term punt at $2.24 and possibly benefit from future good news in the solar energy sector.

Your capital is at risk.

7. Globalstar (GSAT) – Louisiana-based satellite operator

Founded in 2003 and based out of Covington, Louisiana, Globalstar is a US satellite communications company. The firm has a network of satellites and ground stations that serves roughly 775,000 subscribers across a range of sectors including energy, forestry and public safety.

Unusually for a penny stock, Globalstar has a significant market capitalisation of $2.5bn. It has a reasonable price/earnings ratio of 11.5. Quarterly revenues increased by almost 6% in Q4 2021 to $34.48 and net income increased by 22%. We can therefore characterise this penny stock as an established company that is enduring hard times, rather than a startup with an uncertain future.

Recording, though, net income deficits of over $100m in 2020 and 2021, Globalstar is clearly in some trouble. The GSAT price hit a 2022 low of $0.92 on 24th February. Since then the share price soared to $1.52 by 29th March. It has since fallen back to a current level of $1.33.

What is encouraging from a technical charting point of view is that the price appears to have double-bottomed this year; on the 24th January and again on 24th February, the price bounced after hitting a level of $0.92. After a slow decline over Q3 and Q4 2021, the price has thus stabilised and begun to pick up.

72,000 eToro investors follow Globalstar.

Your capital is at risk.

8. Zynerba Pharmaceuticals Inc. (ZYNE) – Pennsylvania-based therapeutics producer

Headquartered in Pennsylvania, US, Zynerba is a specialist cannabis-related company. The firm exclusively serves the US healthcare sector. Zynerba tackles rare diseases through developing formulations that are applied to a patient’s skin and provide pain relief. For example, Zynerba has developed an experimental treatment called Zygel which is a patent-protected gel containing pain-relieving cannabinoids.

Despite massive initial interest in cannabis stocks from the markets, the enduring problem for all cannabis-related companies in the US is that cannabis remains illegal at a federal level. This may (or may not) change with Senate rulings this year.

Since 2018, Zynerba has been in a research and development phase. It thus recorded no revenue and significant net income deficits for 2018-2021. This is usual for a company engaged in product development in a new sector.

Zynerba stock is currently priced at $1.84 per share. Investors who got in during Q2 2019 (when the price rocketed to $15.50 on 8th July, 2019) will now be disappointed. But for the rest of us, perhaps there is potential for upswing?

Whatever the challenges facing the company, the fact remains that if its products do take off and US regulatory pressure on the cannabis sector relents, the only time to benefit from these developments is now. Leave it too late, and the price will have taken off already!

Zynerba has 70,000 followers on eToro.

Your capital is at risk.

9. Tilray Brands Inc. (TLRY) – Canada-based medical cannabis firm

Founded in 2013, Tilray Brands is headquartered in Nanaimo, Canada. Unlike fellow cannabinoid provider Zynerba, the firm produces and exports medical cannabis as well as cannabis foods and beverages for general consumption. Tilray Brands was the first licensed producer of medical cannabis in the world to gain certification in line with European Medicine Agency standards. The firm has operations in Canada, the US, Europe, Australia and Latin America.

Tilray is looking very cheap currently. At a price of $6.65, this is not strictly speaking a penny stock. It is rather a normal stock that has hit hard times. A Tilray share was valued at an all-time high of $243 in September 2018. But since 2020, it has traded largely under $25 apart from a spike in Q1 2020 above $50.

What makes Tilray stand out, though, amongst its many competitors is that it is an established firm with firmly-rooted international operations. In other words, this is no super-risky startup.

Over the short-term, Tilray offers plenty of upside potential. In just eleven days this year, the price rose from $4.85 on 14th March to hit $8.52 on 25th March. Expect a rocky ride with Tilray, but consider it as short-term prospect with long-term potential too.

Tilray has 747,000 followers on eToro.

Your capital is at risk.

10. Lloyds Banking Group PLC (LYG)

Now here’s a surprise: who knew you get hold of prime UK banking stock Lloyds Banking Group for less than $3 a share? As one of the top 4 UK banks, Lloyds is numbered amongst the UK FTSE 100 companies with a share price of £44.66 ($58.40). But it is also traded on the NASDAQ with a current price of $2.28.

Penny stocks are generally small-cap companies. But not this one. Lloyds Banking Group is a giant company, with 325 years of history and £5.9bn ($7.8bn) in statutory profit after tax in 2021. Lloyds owns key UK brands like the Halifax Bank, Bank of Scotland and Scottish Widows, as well as a raft of insurance outfits. Unlike many penny stocks, there is little chance of Lloyds failing completely as a business.

Lloyds, however, has faced challenges. From the price chart above, you can see the disastrous impact of the pandemic on the share price in Q1 2020. The price fell from just over $3.25 in January 2020 to sink to $1.16 in late September. Since then, the price has recovered strongly through 2021 to nudge the $3 mark. 2022 has seen the price decline, largely due to the Ukraine crisis.

As a top 4 UK bank, however, Lloyds is well-placed to benefit over the long-term from the series of interest rate rises planned for coming years.

Your capital is at risk.

What are Penny Stocks?

The old-fashioned definition of a penny stock is a share in a company that is valued at less than a UK penny. Nowadays, such stocks are few and far between, and must be bought outside the safety of the big stock exchanges.

The modern definition of a penny stock is a share in a company that is priced at less than $5 — or features on the NASDAQ Capital Markets tier as a small-cap company.

Are Penny Stocks a Good Investment?

Penny stocks can be a good investment if you bear two factors in mind:

Be Clear About Your Risk Profile

Penny stocks are less risky than cryptocurrencies, but more risky than large-cap stocks. With penny stocks, you can lose a lot and win a lot. So, to invest in penny stocks safely, you need to be clear about your risk strategy. Are you looking for high returns in a short time, but are prepared to lose all your money? If so, you are a high-risk investor. Or are you seeking long-term stability and are prepared to accept a slower rate of return? If so, you are a low-risk investor. Most investors are somewhere in-between. And that’s why diversification is so important.

Diversify

Use penny stocks to dedicate only a small part of your portfolio to high-return potential. You must diversify across different types of asset to have a balanced risk profile. That means investing the majority of your money in lower-risk assets like Exchange-Traded Funds and large-cap stocks. Otherwise you stand to wipe out your portfolio.

Things to Consider Before Investing in Penny Stocks

Penny stocks offer high rewards only because they come with substantial risks.

Check for Quality

Penny stock companies generally have low market capitalisations. That means they are small. Taking each company in turn, you will need to decide why:

  • On the positive side, does the company have a small valuation because it is just starting out? Does it maybe have revenues coming through in the next few years that have yet to hit the balance sheet? Has it faced a major scandal that has rocked its share price, but is offering credible ways to regain healthy business operation?
  • Or, on the negative side, does the company have a small valuation because it has a broken business model/terrible management/an obsolete product or service range?

Low Liquidity

One of the major advantages of buying penny stocks with a regulated broker is that you can avoid the problem of low liquidity. Low liquidity means that few shares in a particular company are being traded. This means that you can get stuck with shares when you want to sell them. A broker like eToro only sells shares that are listed on major exchanges where liquidity is usually (but not always) a problem.

High Volatility

Compared to large-cap stocks like Amazon, General Motors and Apple, penny stocks are high-risk investments. Because of their small size, it does not take much trading to dramatically impact the price of penny stocks. This volatility can work in the investor’s favour. But it can also wipe them out.

Consider Fractional Share Alternatives

Nowadays you can buy fractions of a share. In the past, this was not possible. Penny shares were thus popular because you could buy into them with only a small amount of money, whereas the price of a single share in an established, large-cap company offering less risk was too much.

Nowadays you can buy into large-cap companies with low risk profiles by buying a fraction of a share. For example, a share in computer giant Apple (AAPL) currently costs $171. But, with regulated broker eToro, you can buy a fraction of a share in Apple for just $10:

Where to Buy Penny Stocks

If you’re wondering where to buy stocks this year you’re not alone. Over 20 million traders have registered accounts with the leading social trading platform eToro.

With a plethora of investing features, low fees and tight spreads, this stock broker has everything a trader needs to build a diversified investment portfolio from the comfort of their own home. eToro is a great option for beginner traders as it provides access to a broad spectrum of stocks including the best dividend stocks such as Coca Cola and Johnson and Johnson.

1. eToro – Best Broker to Buy Penny Stocks at 0% Commission

eToro-logoWith top broker eToro, you can browse through the best penny stocks to buy now and net them at zero commission.  The broker also boasts some pretty tight spreads on certain stocks, as well as zero charges for USD deposits.

As a full-service broker, eToro offers 1145 stocks on the New York Stock Exchange, 854 on the NASDAQ, and 900+ on overseas exchanges, including London’s FTSE and Hong Kong’s KEX. That’s almost 3,000 stocks to choose from. Plus, if you keen on diversification, you can get your hands on 264 ETFs (Exchange-Traded Funds) — as well as commodities, indices and a selection of 59 major cryptocurrencies.

Established in 2006 and now boasting 23m investors, eToro is a strong contendor for the best place to trade penny stocks for two reasons:

  1. Most importantly, eToro boasts heavy regulation. If a broker is regulated, it means that investors can be sure they are dealing with a business that conducts itself properly. eToro is regulated by FINRA and registered with FinCEN in the US. In the UK, it is the stringent FCA that does the honours. In Europe, regulation is covered by CySEC and, in Australia, by ASIC. When eToro says it is a safe place to trade, it means it — and this is important with low-cap stocks.
  2. eToro is at the forefront of social trading. This means you can buy into Smart Portfolios with particular investment strategies; you don’t have to figure out anything. Best of all, you can use the CopyTrader function to copy successful traders free of charge — learn how to invest in penny stock the easy way!

Pros

  • Buy penny stocks at zero commission
  • Almost 3000 stocks to choose from including the best oil stocks and best metaverse stocks
  • Wide range of other asset types to diversify with
  • No USD deposit fee
  • Social Trading: Smart Portfolios and CopyTrader

Cons

  • $5 flat withdrawal fee
  • Email ticketing help system rather than telephone assistance

How to Buy Penny Stocks on eToro

You can go read in more detail how to buy stocks with eToro, but below is a simple four-step guide to getting your hands on penny stocks with this reputable broker:

1. Sign up with eToro

  • Go to eToro.com.
  • Supply some personal details.
  • Create a user name and password.
  • Tick the boxes showing that you have read the legal information.

Or sign in with Facebook or Google.

2. Verify your ID with eToro

eToro Verify Account Verification ID

All investors with eToro need to verify their identity and their place of residence. This process is part of KYC (Know Your Customer) regulations. All regulated brokers must enact KYC protocols to keep everybody safe from fraud.

Have your passport or government ID card handy, as well as proof of address (utility bill).

3. Deposit Funds with eToro

Once your account is verified, you are ready to deposit funds with eToro. Press the blue ‘Deposit Funds’ button at the bottom left of the eToro interface.

You can deposit as little as $50 with eToro. As a US investor depositing USD, you will not be charged a deposit fee. You can deposit with credit/debit card, bank transfer or a range of e-wallets including Skrill and Neteller.

The quickest way to deposit funds with eToro is to sign up for the eToro Money wallet and transfer funds from there.

4. Buy a Penny Stock with eToro in Seconds

First, find your penny stock on eToro. Simply enter its name in eToro’s top toolbar.

Click on the stock’s logo to access its homepage on eToro. Here you can browse a newsfeed full of opinions and news on the stock. You can also access stats, research and powerful charting options.

When you are ready to trade, press the blue ‘Trade button’.

Simply enter how much money you want to spend.

With some stocks, you can gear your trade so it produces higher returns/losses. This involves a great deal of risk, and is not suitable for beginners. Also note that gearing your trade involves using Contracts-For-Difference (CFDs), and small overnight fees are charged.

When you are ready to buy, press the blue ‘Open Trade’ button (or ‘Set Order’ if you are setting up a trade to open with the market). Done! Your trade will usually go through in seconds.

You will receive onscreen notification. You can now review your stocks in your eToro portfolio.

Conclusion

Where to buy penny stock? We sincerely recommend broker eToro as the best place to buy penny stocks. Compared to other online platforms, eToro has a very friendly, simple feel and prides itself on supporting the newcomer to stocks with its Social Trading programme.

Best of all, eToro offers zero commission on stock trades and offers the protection of being highly-regulated in the US and overseas.

eToro-logo

Your capital is at risk.

FAQs on the Best Penny Stocks to Buy Today

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