The Best Penny Stocks in Canada for 2021
Several investors have a single trading strategy, while others have more than one. Some may focus on growth companies. Others focus on dividend-paying companies. There are a few investors who consider themselves to be penny stock traders as well.
In this Wealth Rocket article, we’ll explore the best penny stocks in Canada, with additional information covering everything new beginners need to know before they delve into trading penny stocks.
The Best Penny Stock Trading Platform in Canada
While there is no best stock to invest in, we’ve found some hot penny stocks to watch.
Remember, all investors should do their due diligence before making any form of investment, as the stocks below are highly speculative compared to large Canadian dividend-paying stocks.
Here’s what we consider to be the best penny stocks in Canada.
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1. 5N Plus
Symbol: VNP (TSX)
Montreal-based 5N Plus produces engineered materials and specialty chemicals for customers in the Americas, Europe, and Asia. The company’s products are essential components in creating smartphones, detectors for medical imaging, and solar cells for satellites. This is a stock that trades on the TSX. Its price ranged between $1.01 to $4.80 over the last 12 months.
2. American Lithium Corp
Symbol: LI (TSX Venture Exchange)
Located in Vancouver, British Columbia, American Lithium engages in the purchase, exploration, and development of lithium resources in the Americas. The company is currently exploring and developing a project in Nevada and recently acquired some real estate there. Lithium is a key component for rechargeable batteries in electric cars. American Lithium has been a top penny stock as its shares have traded between $0.14 and $4.21 over the last 12 months.
3. CloudMD Software & Services
Symbol: DOC (TSX Venture Exchange)
Vancouver-based CloudMD offers health technology solutions to medical clinics in North America that allows patients to see a doctor through an app on their phone or computer. The company provides services to more than 500 clinics and 4,000 licensed practitioners. Over the last 12 months, CloudMD’s stock has traded between $0.54 and $3.43.
4. Drone Delivery Canada
Symbol: FLT (TSX Venture Exchange)
This Vaughan, Ontario-based company focuses on designing, developing, and implementing a logistics software platform for using drones. Its platform uses a Software as a Service (SaaS) model for governments and organizations worldwide. The stock price has ranged between $0.50 and $2.55 over the last 12 months.
5. Exro Technologies
Symbol: EXRO (TSX Venture Exchange)
Exro is a clean technology company based in Vancouver, British Columbia that has developed control technology to expand the capabilities of batteries, electric motors, and generators. In other words, its technology enables applications to achieve more while also using less energy. In the last 12 months, the stock has traded between $1.22 and $7.55.
6. Good Natured Products
Symbol: GDNP (TSX Venture Exchange)
Good Natured Products is based in Vancouver and creates products out of plant-based materials. Some of its products include food packaging, compostable takeout containers and cutlery, and recycling containers. The stock price has ranged between $0.09 and $1.98 over the past 12 months.
7. High Tide
Symbol: HITI (TSX Venture Exchange)
Calgary’s High Tide is a cannabis retailer with stores in Alberta, Manitoba, Ontario, and Saskatchewan. The company’s stores feature the Canna Cabana, KushBar, Meta Cannabis Co, NewLeaf Cannabis, and Meta Cannabis Supply Co. banners. Over the last 12 months, the stock has traded between $0.17 and $1.13.
8. Numinus Wellness
Symbol: NUMI (TSX Venture Exchange)
This Vancouver-based company focuses on using psychedelics for treating mental illness, substance abuse, and trauma. The company expects that safe, legal access will become available to treat those conditions in the future. The stock price has ranged between $0.19 and $2.45 over the last 12 months.
9. Supreme Cannabis
Symbol: FIRE (TSX)
The Toronto-based company considers itself a premium producer of recreational, wholesale, and medical cannabis products. Supreme Cannabis gets the majority of its sales from Alberta, B.C., Ontario, and Quebec, and it also ships its products overseas. Over the past 12 months, shares have traded between $0.12 and $0.60..
10. Ventripoint Diagnostics
Symbol: VPT (TSX Venture Exchange)
Toronto-based Ventripoint produces a heart analysis system that combines artificial intelligence with echocardiography (an ultrasound of the heart). The device provides accurate heart measurements that are equivalent to an MRI without having to use one. The stock has traded between $0.065 and $0.52 over the last 12 months.
*Closing price on March 5, 2021
Keep in mind that not all penny stocks have revenue or produce positive cash flow. When evaluating penny stocks to buy, it’s different than evaluating large cap stocks because they’ll have a longer track record and can be easier to compare with one another.
What are Penny Stocks?
Penny stocks are stocks typically traded at less than $1 each, although many investors consider stocks that trade for less than $5 apiece to be considered penny stocks.
Most companies whose shares trade at less than $5 each aren’t usually well known. They’re often small companies in terms of market capitalization and don’t have a lot of trade volume. However, there are some exceptions to the rule.
While penny stocks do trade on larger exchanges like the TSX and NYSE, they’re usually associated with smaller and lesser-known exchanges.
When a Canadian publicly-traded company grows large enough, it typically graduates by moving to the TSX from the TSX Venture Exchange.
A company will move to the TSX to increase liquidity, to improve the chances of receiving analyst coverage, and to raise its profile among small and large investors.
How Are Penny Stocks Different from Regular Stocks?
Penny stocks usually trade below $5 each, while regular stocks trade for $5 or more. Regular stocks also tend to trade on larger exchanges such as the TSX, NYSE, and Nasdaq. They rarely trade on small exchanges.
Penny stocks may have higher volume than regular stocks. For instance, it’s common to see penny stocks among the top 10 most active stocks on the TSX on any given day.
However, some of the less popular penny stocks don’t have a large trading volume or may have no volume for many days in a row.
Depending on what exchange a stock trades, the listing requirements vary. For instance, the disclosure requirements and corporate governance requirements for TSX-listed companies are stricter than those listed on the TSX Venture Exchange.
Companies listed on the NYSE and Nasdaq also face a lot more regulation than they would if they traded on other exchanges. Even firms that trade on the OTCBB have to file financial statements with the Securities and Exchange Commission (SEC ). However, companies listed on the Pink Sheets don’t have to make SEC filings.
Like other traders, those that trade penny stocks may be in it for the short-term or long-term investors. Because penny stocks can be a lot more volatile, there’s the opportunity to make large sums of money in a shorter period of time. There’s also the potential to lose a lot of money very quickly, too.
Our Final Thoughts
Penny stocks aren’t for the faint of heart. They can be both risky and volatile. Before buying any stock, you have to do some in-depth research. If you’re a new investor, penny stocks probably aren’t for you.
Frequently Asked Questions
Penny stocks aren’t ideal for those who are new to investing in the stock market. They may have low trading volume, which means they can be difficult to sell. Penny stocks can also be quite volatile, as an increase or decrease of 10% or more in a day isn’t unlikely.
If you want to invest in penny stocks, they should make up a small portion of your portfolio. It’s best only to invest an amount you can afford to lose.
You shouldn’t be investing a large chunk of your retirement savings in penny stocks.
Yes, penny stocks are often considered high risk for several reasons. First, they’re often quite volatile and can rise or fall in value by a large percentage in a single day. A $1 decrease for a $100 stock is a 1% loss, while a $1 decrease for a $2 stock is a 50% loss.
Second, some companies may be dependent on a few customers or one product. That can leave them susceptible to a drop in business if one of those customers leaves or a competitor releases a better product.
Third, penny stocks are easy to manipulate by other investors or employees.
Some may be promoting stocks in newsletters and on social media, passing it off as investment advice and hoping others will buy.
As the stock rises, the promoters get out before the stock drops. In other cases, fraud isn’t off the table, and investors may hold on until it’s too late. That’s what happened to Bre-X investors in 1997.
You can buy penny stocks on a number of different exchanges, such as the Toronto Stock Exchange (TSX), TSX Venture Exchange, or the Canadian Securities Exchange.
To trade penny stocks, you need to have an online brokerage account. You’ll likely want to use a broker that charges a low commission or no commission at all since fees will eat into your overall returns.
You’ll also want a brokerage that offers real-time quotes as the price of penny stocks can fluctuate wildly throughout the trading day.