The technology sector consists of businesses that develop, build, and market consumer electronics, electronic components, and software. Companies in the tech sector may also provide information technology (IT) services such as cloud computing. While the best-known companies are giants like Apple Inc. (AAPL) and Microsoft Inc. (MSFT), there also are tech businesses that could be classified as penny stocks. Penny stocks typically trade at $5 per share or less. Some examples are Support.com Inc. (SPRT), an online customer service platform; and hydrogen fuel cell developer Plug Power Inc. (PLUG). Investing in penny stocks can be especially risky, especially in times when the stock market is already highly volatile. Investors should therefore be careful when considering whether to invest in these or similar securities.
There is no widely-used benchmark for technology penny stocks, and their performance has varied significantly over the past 12 months. During that period, the S&P 500 posted a total return of 16.6%. Here are the top 3 technology penny stocks with the best value, the fastest earnings growth, and the most momentum, respectively. All figures are as of June 5, 2020.
Best Value Technology Penny Stocks
These are the technology penny stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Technology Penny Stocks|
|Price ($)||Market Cap ($M)||12-Month Trailing P/E Ratio|
|Weidai Ltd. (WEI)||1.64||115.2||3.1|
|China Index Holdings Ltd. (CIH)||2.09||187.6||5.1|
|GreenSky Inc. (GSKY)||5.00||898.2||12.5|
- Weidai Ltd.: Weidai is a China-based online lending company. Through its proprietary platform, Weidai connects investors with creditors. These investors seek loans by using their cars as collateral. In their 2019 annual report, Weidai reported that they had a material weakness due to lack of qualified professionals to ensure that their financial statements conformed to U.S. GAAP requirements. To remedy this, the company hired two qualified accounting personnel, and created a dedicated team to ensure compliance with U.S. reporting standards.
- China Index Holdings Ltd.: China Index Holdings operates a real estate information platform connecting lenders, developers, buyers, and other participants in the Chinese real estate market. On May 29, the China-based company announced that it had acquired controlling shares of two Chinese credit rating agencies to bolster its portfolio of data analytics services.
- GreenSky Inc.: GreenSky is a financial technology company that offers consumer financing and payment solutions at the point of sale.
Fastest Growing Technology Penny Stocks
These are the technology penny stocks with the highest year-over-year (YOY) earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
|Fastest Growing Technology Penny Stocks|
|Price ($)||Market Cap ($M)||EPS Growth (%)|
|Smith Micro Software Inc. (SMSI)||4.65||192.6||11,100|
|ASE Technology Holding Co. Ltd. (ASX)||4.35||9.3||105.1|
|United Microelectronics Corp. (UMC)||2.69||5.9||74.3|
- Smith Micro Software Inc.: Smith Micro Software specializes in wireless solutions for mobile systems, including connectivity and data traffic. On May 6, the company announced GAAP net income of $2.0 million for its first quarter ended March 31.
- ASE Technology Holding Co. Ltd.: Taiwan-based ASE Technology offers testing and packaging services for the semiconductor manufacturing industry.
- United Microelectronics Corp.: United Microelectronics is a semiconductor manufacturer based in Taiwan. In addition to its semiconductor manufacturing business, the company also makes components for the burgeoning solar electricity sector.
Technology Penny Stocks with the Most Momentum
These are the technology penny stocks that had the highest total return over the last 12 months.
|Technology Penny Stocks with the Most Momentum|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|LightPath Technologies Inc. (LPTH)||2.31||59.7||135.5|
|Research Frontiers Inc. (REFR)||4.96||155.8||68.1|
|Smith Micro Software Inc. (SMSI)||4.65||192.6||58.7|
|S&P 500 (SPY)||N/A||N/A||16.6|
- LightPath Technologies Inc.: LightPath Technologies is a designer and manufacturer of optical components for applications such as defense systems, telecommunications, and medical devices. On May 7, the company announced its Q3 FY 2020 results, posting 10% revenue growth.
- Research Frontiers Inc.: Research Frontiers is best known for its Smart Glass technology, which enables the tint of glass to be increased or decreased electronically. This technology is used in the automotive, eyewear, electronics, and other sectors.
- Smith Micro Software Inc.: See above for company description.
Weidai Ltd.. “Form 20-F,” Page 161. Accessed June 7th, 2020.
China Index Holdings. “China Index Holdings Announces Investment in Controlling Stakes of Credit Rating Companies,” Accessed Jun. 7, 2020.
GreenSky Inc. “GreenSky, Inc. Reports First Quarter 2020 Financial Results,” Accessed Jun. 7, 2020.
Smith Micro Software Inc. “Smith Micro Reports First Quarter 2020 Financial Results,” Accessed Jun. 7, 2020.
LightPath Technologies Inc. “LightPath Technologies Reports Financial Results for Fiscal 2020 Third Quarter,” Accessed Jun. 7, 2020.