Top Penny Stocks for September 2022

PBI, SB, and BORR were top for value, growth, and momentum, respectively

Penny stocks are those which typically trade at $5 per share or less. Most penny stocks represent small companies that likely trade via over-the-counter (OTC) transactions, although some do trade on primary exchanges. Because of this, many penny stocks lack liquidity relative to larger peers. Investing in penny stocks can thus be especially risky and may also entail higher trading costs. Some examples of penny stocks include software company ironSource Ltd. (IS), biotech firm VistaGen Therapeutics Inc. (VTGN), and cannabis company Sundial Growers Inc.

There is no single penny stocks benchmark. Penny stocks include companies across all industries and sectors. These stocks are typically small-cap stocks, and so the Russell 2000 Index of small-cap stocks can be a useful, if not an exactly perfect guide for performance. The Russell 2000 has underperformed the benchmark Russell 1000 Index in the past year, providing total returns of -13.1% compared with -9.7% for the Russell 1000. These figures and all of those below are as of Aug. 26, 2022.

Here are the top three penny stocks across all industries with the best value, the fastest growth, and the most momentum, respectively.

Best Value Penny Stocks

These are the 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 that you're paying less for each dollar of profit generated.

Best Value Penny Stocks
  Price ($) Market Cap ($M) 12-Month Trailing P/E Ratio
Pitney Bowes Inc. (PBI) 3.05 530.3 1.3
BGC Partners Inc. (BGCP) 4.11 1,534 4.6
Genworth Financial Inc. (GNW) 4.35 2,191 7.6

Source: YCharts

  • Pitney Bowes Inc.: Pitney Bowes is a shipping and mailing services company. It offers logistics, financial services, and technology products to businesses. Its offerings include domestic parcel services and digital delivery, among others.
  • BGC Partners Inc.: BGC Partners is a brokerage and financial technology company. It offers brokerage services for government bonds, corporate bonds, equities, energy, commodities, and more. On Aug. 22, BGC announced it had won a lawsuit filed against the company alleging that BGC overpaid to acquire Berkeley Point Capital LLC in 2017. The trial was in October 2021, and the Delaware Court of Chancery ruled on Aug. 26 that the purchase was fair. The court said the price BGC paid for Berkeley Point was at the "lower end" of the range and that BGC's Special Committee was "independent, fully empowered, and well-functioning."
  • Genworth Financial Inc.: Genworth Financial is a private mortgage insurance company offering products through subsidiaries. It operates through three business lines, including Enact, U.S. Life Insurance, and Runoff. On July 22, Genworth reported that Moody's Investors Service had upgraded its senior unsecured debt rating from B1 to Ba2. Moody's said Genworth's rating outlook was stable.

Fastest Growing Penny Stocks

These are the top penny stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax laws or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Fastest Growing Penny Stocks
  Price ($) Market Cap ($M) EPS Growth (%) Revenue Growth (%)
Safe Bulkers Inc. (SB) 3.35 404.2 48.2 12.3
UWM Holdings Corp. (UWMC) 3.60 333.3 28.6 14.9
Qurate Retail Inc. (QRTEA) 3.15 1,204 1.9 -15.7

Source: YCharts

  • Safe Bulkers Inc.: Safe Bulkers provides, through subsidiaries, marine drybulk transportation services. The company transports cargoes including coal, grain, and iron ore across worldwide shipping routes. Safe Bulkers reported Q2 2022 earnings on July 27. Net income climbed by 55.2% YOY on rising revenue.
  • UWM Holdings Corp.: UWM Holdings is a holding company operating through the subsidiary United Wholesale Mortgage LLC. Through this subsidiary, UWM is a major wholesale mortgage lender in the U.S., providing services across all 50 states and Washington, D.C. On Aug. 9, UWM released earnings results for Q2 2022. Net income climbed by 55.3% YOY on rising total revenues. UWM said that an increase in new brokers and loan officers as well as accelerating traffic to its BeAMortgageBroker.com site had contributed to performance.
  • Qurate Retail Inc.: Qurate Retail is a retail group comprising brands including QVC, HSN, Frontgate, and Garnet Hill, among others. The company focuses on video commerce, ecommerce sites, and digital streaming. On Aug. 15, Qurate declared a quarterly cash dividend of $2.00 a share on its 8.0% Series A Cumulative Redeemable Preferred Stock. The dividend is payable Sept. 15 to shareholders as of Aug. 31, 2022.

Penny Stocks With the Most Momentum

These are the penny stocks that had the highest total return over the past 12 months.

Penny Stocks With the Most Momentum
  Price ($) Market Cap ($M) 12-Month Trailing Total Return (%)
Borr Drilling Ltd. (BORR) 4.01 611.5 190.8
ADMA Biologics Inc. (ADMA) 2.70 530.2 95.7
Geron Corp. (GERN 2.39 903.0 77.0
Russell 1000 Index N/A N/A  -9.7
Russell 2000 Index N/A  N/A -13.1

Source: YCharts

  • Borr Drilling Ltd.: Borr Drilling is an international drilling contractor that is incorporated in Bermuda. It owns and operates jack-up rigs to serve the offshore oil and gas industry around the world.
  • ADMA Biologics Inc.: ADMA Biologics is a biopharmaceutical company that manufactures, develops, and markets biologics for the treatment of immunodeficient patients. Its treatments target individuals with immune-compromised or immune-suppressed systems. On Aug. 10, ADMA reported earnings results for Q2 2022. It net loss narrowed as total revenues nearly doubled YOY. The company said growth was driven in part by several drugs, including Asceniv.
  • Geron Corp.: Geron is a late-stage clinical biopharmaceutical company that focuses on the development and commercialization of drugs that treat blood cancers, including treatments that enable the recovery of bone marrow and normal blood cell production.

Advantages of Investing in Penny Stocks

Potential for High Returns: Most penny stocks have tiny market capitalizations, meaning it only takes a small amount of money to move their share price substantially. Therefore, positive news, such as signing on a major customer or forming a new strategic alliance, can lead to sizeable returns before the mainstream investing world discovers the stock. Conversely, negative news can lead to significant losses.

Leverage: Penny stocks attract investors with a small amount of trading capital as their lower share prices allow them to buy thousands of shares. For example, if an investor has $500 to invest, they can purchase 2,000 shares of a penny stock trading at 25 cents. If that stock doubles over a month, the investor makes a quick 100% return on their investment. However, with the same starting capital, the investor could afford only a small number of shares in most S&P 500 stocks, making it almost impossible to achieve those gains over the same period.

Risks of Investing in Penny Stocks 

Low Liquidity: Penny stocks often trade on thin volume, meaning it can be difficult for investors to enter and exit their positions. Moreover, these stocks typically have a wide spread between the bid and ask, which increases trading costs. For example, if a penny stock has a bid price of $1.00 and an ask price of $1.50, a trader wanting to buy at market gets caught paying a 50 cents-per-share premium. Therefore, investors should use limit orders to minimize trading costs when buying and selling penny stocks.

Extreme Valuations: Penny stocks that start moving rapidly higher in price show up on stock screeners and may even get media attention. This often attracts more speculators who push prices up even higher, leading to unstainable valuations. For instance, during the dotcom bubble in the late 1990s, many penny technology stocks doubled and tripled in price despite not generating any earnings. However, when the market turned bearish a few years later, many Nasdaq-listed penny stocks with unsustainable valuations fell substantially or were delisted.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. Though we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended to be a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Article Sources
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  1. YCharts. "Financial Data."

  2. BGC Partners Inc. "BGC Wins Lawsuit Challenging Purchase of Berkeley Point."

  3. Genworth Financial Inc. "Genworth Financial Receives Rating Upgrade from Moody's."

  4. Safe Bulkers Inc. "Safe Bulkers, Inc. Reports Second Quarter and Six Months 2022 Results and Declares Dividend on Common Stock," Pages 1-2.

  5. UWM Holdings Corp. "UWM Holdings Corporation Announces Second Quarter 2022 Results."

  6. Qurate Retail Inc. "Qurate Retail, Inc. Declares Quarterly Cash Dividend on 8.0% Series A Cumulative Redeemable Preferred Stock."

  7. ADMA Biologics Inc. "ADMA Biologics Announces Second Quarter 2022 Financial Results and Provides Business Update."

  8. TheBalance. "The Pros and Cons of Penny Stocks."

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