As we mentioned before, due to rising inflation and low interest rates, investing in equity markets is a must for everyone. While index funds and index ETFs are great for passive investing over the long term, penny stocks and individual stock investing are great for massive wealth creation.
Investing is a mix of art and science, and investors must understand the businesses that they are investing in.
Why Should You Invest in Penny Stocks?
Penny stocks are companies with very small-scale operations. They are small/micro-cap companies usually new to the stock market; picking the right ones can lead to exponential returns. They are called penny stocks because, in most cases, their shares are very cheap. The general thumb rule is stocks that you can buy for under C$5. Penny stock investing is risky because the success rate of these companies is low, but the ones that do succeed can give up to triple-digit times returns.
How To Pick The Right Penny Stocks?
The entire premise of penny stock investing revolves around finding small or micro-cap companies that will scale over time to become mid or large-cap companies. The first and most important thing an investor needs to look for to find these companies is scale. A multibagger penny stock will have to be in a sector or industry with a very bright future. This is crucial for the company to grow.
The second is the quality of the company’s management. Most companies give a detailed background of their key employees on their website. Investors should look for companies with key employees who have substantial experience in that or a related field.
How to Invest in Penny Stocks?
Penny stocks are listed on the most popular exchanges like the TSE and the CVE. They are also available on the TSX.V, which is specifically for small companies. To buy these stocks, investors have to go through a stockbroker. The most popular brokers in Canada are Questrade, QTrade, Interactive Brokers, and TD Direct. There are no specified minimums on penny stocks; we recommend that new or novice investors start small as the success rate is low.
Best Penny Stocks to Buy in Canada Right Now –
Below we have shared some of the best penny stocks in our opinion and discussed why their businesses have a probability of success.
Kodiak Copper (CVE: KDK)
Kodiak Copper is a Canadian mining company that owns copper porphyry projects in Canada and the USA. The company is currently developing its fully-funded copper mine in British Columbia, which recently reported very optimistic results in initial drilling.
While the company has no operational performance yet because its mine is still in development, it has a very bright future due to the importance of copper in sustainable energy. Copper is an integral input in solar panels, wiring, wind turbines, and EVs. Furthermore, it is expected that copper demand will grow about 10x by 2030 due to the substitution of fossil fuels with renewables.
Kodiak Copper has delivered a stellar performance for investors recently due to the recent bull-run in commodities from massive spending on infrastructure by developed economies such as the US and China. As a result, Kodiak has gone up 145% over the past 12 months.
Athabasca Oil (TSE: ATH)
Athabasca Oil is a Calgary headquartered developer of thermal and light oil assets. The company has a massive oilfield in the Western Canadian Sedimentary Basin. Thermal oil is used in engines and other electronic/mechanical devices for cooling purposes because it has a higher boiling point and higher thermal capacity. On the other hand, light crude oil derives refined petrol, diesel, jet fuel, and rocket fuel. Athabasca also produces natural gas and natural gas liquids increasingly used to replace thermal power plants that use coal to reduce emissions.
The company owns drilling and development permits to a combined 1.2 million acres of land across Canada. Of this, 600000 acres are owned in the form of oil resource leases in Athabasca, 356000 acres in petroleum leases, and 242000 acres of natural gas leases across Northern Alberta.
The company has witnessed a revival of fortunes over the last 12 months as the global economy started recovering from COVID and fuel demand gradually started recovering. Over the past 12 months, Athabasca Oil has returned 273%. However, the company has a long way to go as demand is still very far from recovering to pre-COVID levels, and there is a big potential for growth beyond that. Natural gas also has a very bright outlook as a low-emission substitute to coal.
Redishred (CVE: KUT)
Redishred is the holding company of the Proshred platform. The company offers a range of services to commercial and retail customers, including document shredding, hard drive destruction, data privacy, electronic waste recycling, etc. Redishred has operations in the US and Canada. As the business environment gets more competitive, the value of business secrets is getting more important. Most small businesses do not want to invest in shredders due to the infrequency of use. Also, businesses are increasingly going digital, meaning that data safety is more important than ever. Proshred tries to solve these pain points by providing on-site and on-demand document shredding through specialized trucks and secure hard-drive destruction. The company also offers electronic waste recycling, which is a growing trend.
The company’s newest offering, which is very exciting, is data-breach reporting. As we mentioned earlier, companies are increasingly going digital, meaning businesses are now dealing with massive amounts of customer data that are subject to breaches or hacks. Proshred helps companies regularly assess the effectiveness of their safety systems and ensure best practices are always in place. Further, it helps clients correctly file any data breaches that happen with the relevant authorities in a hassle-free manner.
In Q1 2021, the company reported a revenue of C$7.3 million, up 11% YoY, and an operating income of $1.02 million, up 98% YoY. However, net income was negative due to a one-time foreign exchange loss. The stock is up nearly 25% over the past year.
5N Plus (TSE: VNP)
5N Plus is a Canadian specialty metal and chemicals company. This company is probably one of the safest bets on this list due to the end-uses of its products. 5N plus stands for five decimal nines after 99, which is the range of purity in which it offers its products.
The company offers a range of pure metals such as zinc, cadmium, antimony, tin, gallium, indium, tellurium, etc. Metals such as zinc, cadmium, and tellurium have extensive use in solar panels, and the growth potential is immense as renewable energy becomes more popular.
5N is also involved in producing semiconductor wafers and semiconductor materials such as germanium and indium wafers. This is a high potential market for the company as we are entering an era of ubiquitous computing. IoT products such as smart refrigerators, smart toasters, self-driving cars, etc., are getting more popular. In the years to come, this will create an insatiable demand for semiconductors and their raw materials in turn.
Last but not least, the company also manufactures engineering powders from low melting point alloys for use in additive manufacturing. The 3D printing market is maturing at a very rapid pace, and over time the cost of 3D printing will go down dramatically. Therefore, additive manufacturing/3D Printing is a tremendous opportunity for the company because of its increasing applications in specialized manufacturing, commercial manufacturing and rapid prototyping.
In Q2’21, 5N reported $47.7 million (up 16% YoY) in revenue and YTD revenue stood at $94.6 million (up 3.8% YoY). Net earnings were $2.2 million (up 29.4% YoY). 5N is up 38% YTD.
Lithium Americas Corp. (TSE: LAC)
Lithium Americas Corp. is a Canadian mining company with assets in Argentina and the US. Lithium is perhaps the most important material concerning the ongoing EV revolution. Road vehicles are one of the highest carbon emissions sources globally, and their electrification is crucial to decarbonization.
Lithium is the most used metal in EV batteries due to its lightweight and high energy density. High-performance battery anodes are made out of lithium. A major problem facing decarbonization ambitions is that lithium supply is almost certainly going to lag its demand.
It is projected that lithium demand will grow 14x by 2030, which will lead to a massive increase in its price. This is great news for lithium miners as they will benefit from operating leverage, meaning that their selling prices will go up along with growing demand, but their cost of production will stay the same.
The company is still developing its mines that are expected to be operational by 2023, thus no operating performance of the company presently. However, the company’s projections look very promising. The company’s all-inclusive per tonne operating cost of production is about $3500 in Argentina and $4100 in the US. Given that the current selling price of lithium is $14000+, the company has a massive profit margin, and that is before the run-up in prices expected from the explosion in demand. The company has an ample supply of lithium, too, as its Argentina mine has 1.6 million tonnes and its Nevada mine has 3.1 million tonnes.
Lithium Americas Corp. has been a stellar performer for investors with a 109% return over the past year.
CloudMD Software (CVE: DOC)
CloudMD is a technology software company that provides digital medical consultancy services. The company’s software helps Canadians connect with registered and qualified doctors digitally for consultations without going to the clinic in person.
The company benefited from a massive tailwind during COVID as people were forced to stay home. However, while coronavirus took over all headlines over the past several months, it doesn’t mean that people didn’t fall sick from regular illness.
The company saw a significant growth in adoption and user registration as ill people were stuck at home due to lockdowns, and most hospitals were cordoned off to prevent the spread of COVID. Further, most hospitals were forced to focus all resources on the pandemic. This helped the company’s product catch traction as it solved a pain point for doctors and patients alike. It also happens to be free for the patient in some districts of Canada.
Apart from providing a medium for a virtual consultation, the company’s software also facilitates timely follow-ups, directly sends your prescription to a pharmacy of your choice, appointments at odd times, and saves time on rudimentary issues like prescription renewals, etc.
The tailwind from COVID is very evident in the company’s financials. In Q1 2021, the company reported a revenue of $8.7 million (up 180% YoY), and gross profit was $3.59 million (up 220% YoY). While the company reported a net loss of $5.2 million, this is very common among new-age tech companies that prefer aggressive growth and scale over short-term profitability.
The company has delivered 89% to investors over the last year.
Drone Delivery Canada (CVE: FLT)
Drone delivery is one of the most exciting sectors in tech at the moment. E-commerce got a huge tailwind from the pandemic as people were stuck at home due to social distancing and lockdowns. The rise of e-commerce has created a massive industry in the logistics space.
Due to the rapid growth of e-commerce, there is a need for infrastructure to support large supply chains and innumerable delivery points. Drones have emerged as a front-runner for short-medium distance delivery because of their speed and ever-increasing capability. Moreover, as battery technology gets better and cheaper, the payload of drones and their market appeal is growing.
Apart from e-commerce, there are various applications for drones, such as in medical care, for obscure location delivery of medicines, in agriculture, for monitoring of crop and airborne fertilizer deployment, etc. Moreover, due to super low shipping times and cheap electricity, drones hold the ability to disrupt logistics.
Drone Delivery Canada (DDC) has the aim of becoming the premier logistics company in the world. Apart from manufacturing and designing state-of-the-art drones, DDC provides a complete turn-key solution with software to organizations that want to integrate drones into their operations. The drones combined with their proprietary software are situationally aware of their surroundings as it integrates navigation, air traffic control, and weather into one system. The company also offers lease and rental solutions to companies.
Like most tech companies, DDC is currently operating at a loss but growing rapidly. In Q1 2021, the company reported a revenue of $196000 (up 7500% YoY) and a net loss of $4.4 million (up 7% YoY). The reason for the loss is that this business has high fixed costs relating to manufacturing costs. However, the company will benefit from economies of scale over time as the drone business matures. DDC has delivered 78% to investors over the past year.
Exro Technologies (TSE: EXRO)
Exro Technologies is an electronics company that specializes in control mechanisms for electric motors, wiring, and batteries. As we have mentioned before, climate consciousness is at an all-time high and rising. However, complete decarbonization’s major issue is that current electronics technology is not advanced enough to replace conventional fossil fuels.
At present, there are two main important avenues of decarbonization, grid energy and electric mobility. While solar is a great solution for grid energy, the problem with solar is its unreliability and that it only works during the day. Therefore, we have to use batteries to store solar energy when the weather is bad or at night. The problem with batteries is that they are currently too expensive for grid applications, thus making efficiency very important. The same goes for EVs; while battery prices are dropping rapidly, they are still pretty expensive, charge slowly, and are very heavy, thus making the efficiency of systems essential.
This is where Exro Technologies steps in; the company designs and manufactures control systems that significantly use data and sensors to increase efficiency. The company has two products, the coil driver for EVs and Battery Control System for the grid and EV batteries. These systems use data from sensors such as energy use and load to optimize energy usage and increase capacity whilst extending the life of batteries.
The company is on the cusp of bringing its product to market, so there are no operational financials available at present. However, Exro stock has delivered 154% to investors over the past year.
High Tide (CVE: HITI)
High Tide is a chain of cannabis retail stores. The company has two main lines of business; the first is a portfolio of retail chains in Canada with an annual footfall of 20 million people. The second is an e-commerce platform that sells cannabis consumption accessories with 100 million annual site visits.
Cannabis has been one of the biggest wealth creators for investors over the past 5 years due to increasing legalization across the globe. Unfortunately, cannabis has been treated as a banned drug over the past few decades, even though it has no major negative health effects. In fact, it even has some applications in health care; for example, it is used as a pain reliever. However, the off-late commercialization of cannabis in some countries has shown that legal status actually helps reduce criminal activity, and people have very well received the legalization.
Under High Tide’s retail portfolio, the company has a vertically integrated business that includes wholesale, distribution, and production. The company also combines this with its consumption merchandise to give customers a one-stop shop. The company has operations in the US, Canada, and Europe.
In Q2’21, the company reported a revenue of $40.9 million (up 99% YoY) and a gross profit of $15 million (up 93% YoY). EBITDA for the quarter was $4.7 million (up 160% YoY). However, due to aggressive customer acquisition in their online business, the company reported a net loss of $12 million, mainly advertising and promotional expenses.
High Tide has delivered a mammoth 220% to investors over the past 12 months.
Ventripoint Diagnostics (CVE: VPT)
Ventripoint Diagnostics is a medical technology company that uses a combination of data, sensors, software, and custom hardware for health diagnostics and analytics. Healthcare is an ever booming field due to a growing population, rising health issues from pollution and other reasons, and it is agnostic to the state of the economy.
As the global population grows along with the global economy, there has been an increase in disposable incomes worldwide, which has led to growth in health issues. The increase in incomes has led to spending on alcohol, cigarettes, fast food, etc., which can lead to heart issues. Unfortunately, this trend is expected to continue in the years to come.
Ventripoint has two main products: a sensor system that healthcare technicians can use with existing ultrasound machines/probes, and the second is a software product. The purpose of both is to use a 2D echocardiogram or MRI and construct a 3D model of the patient’s heart. A 3D is far more informative than 2D MRIs and echograms and provides doctors with actionable insights into a patient’s heart condition.
Ventripoint is still in the process of gaining regulatory approval to bring its product to market, so there are no operational financials available as yet, as is common with medical technology companies. However, the company reported a net loss of $1.4 million for the first half of FY2021.
Ventripoint has generated a staggering 290% gain for investors over the past 12 months.
We hope you enjoyed this read and consider these stocks. However, investors should always be mindful of the risks involved in penny stock investing. There are way more people who risked too much or invested without thorough understanding than those who could create massive wealth. While the success rate is low, prudent and disciplined investing increases the odds dramatically. That being said, we advise investors who are interested and are willing to put in some effort to allocate a small part of their portfolio to penny stocks.
If you’re looking for the best penny shares in Canada today and the 3 best penny shares you should buy Now, By 2020, you are in the right place. Sources: 5
Penny shares are defined as shares that are generally traded at a low price and are referred to as penny shares. These are the best penny shares we buy now and should be looking out for in 2020. Tier 3 penny shares are sub-penny stocks traded for one cent per share, and these shares are usually traded at a lower price. Fourth, Penny stocks are triple zero shares, meaning they are traded at the same price as the penny shares of the top tier 3 in Canada. Sources: 4, 11, 13
Penny shares are small companies normally traded at a lower price than the top tier 3 shares in Canada. Penny Shares can be listed and sold on the Toronto Stock Exchange (TSX Venture Exchange) or the U.S. Securities and Exchange Commission (SEC) and may be traded for as little as one cent per share or up to three cents per share. Sources: 0, 3, 7, 14
Investors can trade penny shares through other discount brokerages such as Questrade. Still, if you want to find a brokerage that allows you to trade Canadian penny shares, you need to stick to the one that deals with off-exchange transitions, such as Questrade. To find the brokerage that best suits your needs, you can browse our list of the best Canadian penny stock brokerages in Canada and Canada’s best penny stocks to find out more about how to find a brokerage that best suits your needs. Sources: 1, 5
Penny Stocks is committed to providing information about penny stocks to investors of all levels of experience. On PennyStocks.com, you can find a comprehensive list of Penny St shares, discover the best Penny shares you can buy in Canada and Canada, and learn more about buying good Penny St shares in Canada best. Penny shares related applications, software and tables, and the latest news and information on the most popular penny shares in the world. Sources: 2, 4, 14
Please look at our free content, which includes a regular list of the most actively traded penny-St shares in Canada and the other Canadian countries. Sources: 14
This penny stock list is useful for short-term traders looking for penny stocks to watch. Start by buying your first penny stock and searching for shares on the major stock exchanges (NYSE and NASDAQ). If you can’t find a cent share on a major exchange like the New York Stock Exchange or the TSE, you’ll find that your brokerage, especially a small discount broker, doesn’t have a cent of the stock. If the penny stock is not listed on the NYSE or T SE, you can find it at one of the smaller discount brokers or even at a broker near you. Sources: 3, 4, 8, 12
If you want to pay just one cent per share, then just2trade is by far the better deal as it is cheaper than most other options on this list. Sources: 9
To buy penny shares in Canada, you need to go through a broker, and the best way to do this is through an online discount broker. Optionsxpress is one of the most popular online penny brokerage firms in the country. The only downside is that there is no good brokerage for a Canadian penny stockbroker. While you can trade penny shares on your phone, you should resort to a legitimate broker to make sure you really get what you pay for. If you want to invest in stocks, this could be a good place to start! Sources: 1, 5, 6, 8
A normal share is charged $9.95 per trade, but a penny share is charged at $10.00, higher. If you have a million shares and trade carefully, it will only be $20k if you trade all the shares, and for ordinary shares, you will be charged about $8.50 per share. Sources: 6, 12
So remember, don’t just buy what other people say is a penny of shares on Robinhood or another financial site. Penny shares are cheap to buy, and although they can help you make money, you shouldn’t expect to drive a bright yellow Lamborghini to invest in a few penny shares. So invest a solid blue-chip stake in the majority of your portfolio, or, if you want, spend some outgoing capital in Canadian penny stocks. For more information on buying these shares, read Best Penny Stock Canada, Best Canadian Penny Stock in Canada or buy them here. Sources: 0, 5, 10
In this eBook, you will learn the secret strategies that professionals use to exploit the blue penny stocks – chip stocks that are the best money – to make penny stocks and make incredible profits so that you can make a living trading penny stock. Read our top tips and tricks for Penny – share dealing that sounds like the right choice for you. Sources: 13
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