Penny stocks used to be stocks that actually sold for less than $1 a share. But those days are over, especially after the massive run in stocks we’ve seen in the past decade.
The concept now is basically small stock that have a low market capitalization – at least under $1 million or often smaller – and a low price. The highlighted stocks here have these two characteristics in common. They’re also all “A”-rated in my Portfolio Grader.
That means they are both fundamentally and technically strong right now.
Most institutional investors won’t invest in stocks with less than $500 million or $1 billion market caps. That means they can be a bit volatile since momentum traders can drag them up and down since they don’t trade large volumes of shares regularly.
But the payoffs can be big. Sometimes penny stocks climb the ladder. Sometimes they get bought out. This is a quality selection and a good time to step in, just don’t chase them.
The post 6 A-Rated Penny Stocks to Buy In May originally appeared at InvestorPlace.