Best penny stocks to buy

Screening Filters

1. Market Capitalization: 50M – 1B USD

   • Purpose: Focus on smaller companies typical of “penny stock” territory while avoiding the most illiquid micro/nano-cap names.
   • Rationale:
     • Penny stocks are generally small-cap companies; this range captures true small caps and some larger micro caps.
     • A floor of $50M weeds out the tiniest, often extremely illiquid and easily manipulated companies.
     • A cap of $1B keeps the results in the “small company” universe rather than mid/large caps.

2. Share Price: $0.20 – $5.00

   • Purpose: Directly implements the user’s request for penny stocks.
   • Rationale:
     • In the U.S., “penny stock” is commonly interpreted as stocks trading under $5.
     • The lower bound of $0.20 avoids ultra-low-priced “sub-penny” names, which are usually highly speculative and often trade on very thin volume.

3. Monthly Average Dollar Volume: ≥ $500,000

   • Purpose: Ensure minimum liquidity so the stocks are actually tradable.
   • Rationale:
     • Penny stocks often have very low liquidity, making it difficult to enter or exit positions without large price impact.
     • Requiring at least $500k in average monthly dollar volume helps filter out the most illiquid and risky tickers, making the results more practical for real trading.

4. Beta: ModerateRisk, HighRisk

   • Purpose: Focus on stocks with some volatility, which is typical of penny stocks and often sought by traders looking for upside potential.
   • Rationale:
     • Penny stocks are rarely low-volatility; including Moderate and High risk beta buckets aligns with the idea that these are more speculative, higher-risk opportunities.
     • It avoids ultra-stable, low-beta names that don’t fit the “penny stock” trading profile.

5. Listed Exchange: XNYS, XNAS, XASE (NYSE, NASDAQ, NYSE American)

   • Purpose: Limit results to major U.S. exchanges.
   • Rationale:
     • Many penny stocks trade OTC, where disclosure and regulation can be weaker.
     • Focusing on NYSE, NASDAQ, and NYSE American improves reporting standards, governance, and transparency relative to OTC markets.
     • This aligns with finding “better quality” penny stocks within a risky category.

6. Region: United States

   • Purpose: Match the user’s request for U.S. market penny stocks.
   • Rationale:
     • Restricts the universe to U.S.-domiciled companies or those primarily traded in U.S. markets, ensuring relevance to the user’s geographic focus.

7. EPS (TTM) ≥ 0

   • Purpose: Require companies to be at least currently profitable on a trailing 12-month basis.
   • Rationale:
     • Most penny stocks lose money; filtering for non-negative earnings helps identify relatively stronger or more established businesses within this risky group.
     • This is a quality filter intended to align with the word “best” in the user’s question, not just “cheapest.”

Why Results Match:

• The price and market cap filters define a universe of small, low-priced U.S. stocks—what most investors mean by “penny stocks.”
• The exchange and liquidity filters aim to keep the list to more tradable and better-regulated names, improving practicality and reducing some extreme risks.
• The EPS ≥ 0 and beta filters refine the list toward penny stocks that are both potentially dynamic (for upside) and at least minimally supported by current profitability.

Together, these filters produce a focused list of U.S. penny stocks that are relatively higher quality and more investable within an inherently risky segment.