Top Tech Penny Stocks

Tech Penny Stocks with the Best Performance

 
Price ($)
Market Cap ($M)
12-Month Trailing Total Return (%)

Conduent Inc. (CNDT)
4.19
904.7
-19.7

SunHydrogen Inc. (HYSR)
0.04
181.0
-24.1

Edgio Inc. (EGIO)
1.53
339.0
-44.4

Russell 1000
N/A
N/A
-10.9

S&P 600 Information Technology Sector Index
N/A
N/A
-11.5

Source: YCharts

• Conduent Inc.: Conduent sells human resources and other business services to customers in the industrial, transportation, and government sectors, including more than 500 government entities. The company recently launched a series of fraud-prevention services as well as a cloud-based service aimed at accelerating the eligibility and enrollment process for government social services and aid programs.

• SunHydrogen Inc.: SunHydrogen develops technology to produce green hydrogen using only sunlight and water. The company recently announced that it received a $45 million investment from GHS Investments LLC to support further technology development.

• Edgio Inc.: Edgio’s delivery network and related services distribute content over the Internet. Edgio says its products drive about 20% of worldwide internet traffic for movies, TV shows, sports, and other entertainment.

Advantages of Tech Penny Stocks

Growth Potential: Tech penny stocks provide significant growth potential due to their micro market capitalizations and product adoption prospects. For example, in December 2021, shares in video streaming and linear TV company SeaChange International, Inc. (SEAC)—which had a market cap of just $36.86 million at the time—spiked 359% after rumors surfaced that it would merge with video-sharing social networking service Triller. Although the merger failed to eventuate, it highlights the rapid growth potential of tech penny stocks.

Smaller Investment: Investors don’t need much capital to start trading tech penny stocks. A few hundred dollars can buy thousands of shares, allowing investors to profit quickly if the price moves in their favor. For instance, a trader who invests $200 into a 5-cent stock receives 4,000 shares. If the stock doubles in price, the trader has made a 100% gain on their small initial investment. By comparison, if the trader invested the same amount in a large-cap tech stock like Apple Inc. (AAPL), they could buy only one share, making it difficult to generate significant returns on their starting capital.

Risks of Technology Penny Stocks

Less Regulation: Tech penny stocks that trade over-the-counter (OTC), such as pink sheet listings, carry significantly higher risks than those that trade on regulated exchanges. Smaller tech companies may choose to sell their shares OTC to avoid the higher costs and regulatory requirements of listing on a major exchange like the Nasdaq. Fewer reporting obligations could make it difficult to find the necessary financial information to make informed decisions before investing in these stocks. Those who trade via OTC networks should ensure that they conduct their due diligence on the tech penny stocks they invest in to reduce the chance of getting scammed.

Low Liquidity: Tech penny stocks typically trade significantly less volume than their larger-cap counterparts due to fewer market participants following these smaller companies. Lower volume can make it difficult to enter and exit positions, especially when the stock price falls sharply and traders are looking to exit their positions as quickly as possible. Insufficient liquidity can also increase trading costs through wider bid/ask spreads. For instance, a trader wanting to purchase a tech penny stock with a 50-cent to 75-cent bid/offer faces a 50% spread to execute a market order. Finally, thinner trading volumes make it easier for bad actors to manipulate the prices of tech penny stocks, which can cause sudden volatility spikes.

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