Penny Stocks - The Price And Market Capitalization

When we are talking about the penny stocks we can describe them as stocks that have very low value, highly speculative stocks, unlisted on the stock exchange, and with small market capitalization. If a stock has any of these it can be called penny stock.

Penny stocks does have very low value. But, it is very difficult to say how low the value should be for some stock in order to be described as penny stock. There are a lot of opinions about the price of the stocks.

Penny Stocks Have Low Value

So, in general, if the price is really low then we are talking about penny stocks. Some says that the stocks with a price below $5 per stock are penny stocks. Other people are saying that all stocks with value below $3 are considered as penny stocks. And also there are some other people which claim that a stock is penny stock if its value is below $1.

Penny Stocks Are Not Listed On The Stock Exchanges

Penny stocks are also not listed on the stock exchanges. Because of this, penny stocks are highly speculative and they bring you higher risk when investing in them. The risk is higher because if a stock is listed then there are some regulations that the company must satisfy. And, the penny stocks which are not listed do not meet the regulation. They are simply sold outside the stock exchange and the investors can be very cautious about them.

Penny Stocks Have A Low Market Cap

Another consideration of penny stocks is its market capitalization. Market capitalization is market value of a single stock from a certain company multiplied with the number of all stocks issued by the same company and can be found on the market. For example, if some company has issued 10,000 stocks and market value of the stocks is $10 than we can calculate market capitalization of 100,000.

So if some stock has market capitalization below $300 million than it is considered as penny stock. And if market capitalization of some stocks is below $50 million they can be considered as nano-cap stocks.

Penny Stocks Are Highly Speculative

In the previous example the stocks from the company can be considered as penny stocks because the market capitalization is below $300 million. They are also nano cap stocks although the price is not lower than $5. We should also state that there is high risk in investing in these stocks. They are not under regulatory control of stock exchanges, although the SEC does oversee their trading. These are highly speculative and this is why they are avoided by most conventional stock market investors.

Higher Open Seen For Australia Stocks (Nasdaq)

(RTTNews) - Australia stocks are expected to show strength at Thursday's open, following moderate gains on Wall Street overnight. Modest gains in commodity prices are likely to provide an opening lift to resources stocks.

Opening Gains Expected For New Zealand Shares (Nasdaq)

(RTTNews) - New Zealand stocks are poised for modest gains at Thursday's open, in the wake of Wall Street's higher close overnight. New Zealand stocks bounced back from early-session losses to end Wednesday with modest gains.

A Bull on Energy, a Bear on Nearly Everything Else (Barron's Online via Yahoo! Finance)

Sprott has been criticized for betting on high-risk penny stocks, most recently Timminco, a company that claims to have an inexpensive method of producing silicon for solar panels. But it's undeniable that many of his calls on uranium and gold have been on the money.

Oil jumps $6 on US-Russia tensions, sliding dollar (AP via Yahoo! News)

Oil prices shot up $6 a barrel Thursday, rising to the highest level in over two weeks as escalating tensions with Russia stoked fears of a disruption of energy shipments to Western countries.

Oil prices rise ahead of inventory report (6:44 a.m.) (The Record)

Oil prices rose above $116 a barrel today as investors awaited a weekly crude inventory report which was predicted to show a drop in U.S. gasoline stocks.