The stocks that trade at less than $1 per share are known as under $1 stocks. With the sharp appreciation in stock prices, it is not quite easy to find stocks that trade at less than $1; however, if investors look at the right places, they can still find valuable under $1 stocks.
Under $1 stocks usually belong to new and small companies, including startups. These companies and stocks are considered too undiscovered and too risky by many investors, while the experienced players look at under $1 stocks as significant opportunities.
Factors to Consider Before Investing in Under $1 Stocks
The most significant factor to consider before investing in under $1 stocks is that they are highly volatile and risky. They follow a high-risk high-reward profile, with an almost equal probability of shooting up and dropping down.
Investors must analyze the inherent potential of the new companies and they’re under $1 stocks before investing in them. Not all startups end up big; however, the ones that do generate massive returns.
Therefore, investors must exercise due diligence while investigating the sector the companies belong to, the expertise of the management team behind the companies, and the revenue-generating potential.
At the same time, investors must also not fall for frauds that under $1 stocks are highly susceptible to. Under $1 stocks get largely affected by pump and dump schemes and, therefore, should not be bought or sold based on mere tips.
Which All Under $1 Stocks Should I Buy?
Despite the stock price appreciation trend in recent times, many under $1 stocks trading on the stock exchanges. We have aggregated a list of the best under $1 stocks for easy reference of investors.
Investors must only buy under $1 stocks of companies that have a market capitalization of more than $50 million, and the current volume should be more than 100,000. Investors must be aware that investing in under $1 stocks is a risky business and may lead to the loss of the entire investment.