Nasdaq is one of the two biggest stock exchanges in the world. This exchange is known for listing stocks from technology and biotech companies. You can also find some of the most tradeable penny stocks on the Nasdaq.
Which ones should you keep an eye on, and how do you make a penny stock watchlist? Read on to learn more!
Table of Contents
- 1 What Are Penny Stocks?
- 2 Advantages of Trading Penny Stocks
- 3 Risks of Trading Penny Stocks
- 4 What to Consider Before You Trade Penny Stocks
- 5 Where to Buy Penny Stocks
- 6 How to Find Penny Stocks on Nasdaq Under $1
- 7 6 Penny Stocks to Watch on the Nasdaq
- 7.1 1. Meta Materials Inc. (NASDAQ: MMAT) — The Pumped Penny Stock
- 7.2 2. Toughbuilt Industries Inc. (NASDAQ: TBLT) — The Recovered Reverse Split Penny Stock
- 7.3 3. TuanChe Ltd. (NASDAQ: TC) — The Diluted But Still Intriguing Penny Stock
- 7.4 4. Polestar Automotive Holding (NASDAQ: PSNY) — The EV Penny Stock Spiker
- 7.5 5. COMSovereign Holding Corp (NASDAQ: COMS) — The Not-Yet-Delisted Penny Stock
- 7.6 6. Cosmos Holdings Inc. (NASDAQ: COSM) — The Dip Buy Breakout Penny Stock
- 8 Explore the Nasdaq Penny Stock List
- 9 Learn How to Create Your Own Watchlist
- 10 Key Takeaways
What Are Penny Stocks?
By definition, penny stocks are stocks traded at less than $5 per share. You can find stocks with low share prices on major exchanges like the New York Stock Exchange (NYSE) and Nasdaq — the truly sketchy penny stocks are traded through over-the-counter (OTC) transactions.
Penny stocks are cheap, but many are sketchy, unstable, or even outright scams. Why do I like them? The volatility of penny stocks can quickly build your trading account.
Penny stocks tend to be volatile and unpredictable, so you can’t trade them like other stocks. If this is your first exposure to penny stocks and you want to win big, you need a custom-made strategy for penny stock trading.
Advantages of Trading Penny Stocks
Penny stocks get a bad rap. So, why do people like me trade them? Here are a few convincing reasons:
Faster Trading Account Growth
Penny stock gains might be small, but they eventually add up. Plus, penny stock trading is much more volatile than pricier stocks — if you know how to trade them, you can ride their short-term swings to quick gains.
Less Wall Street Interference
Major investors and financial advisors don’t like penny stocks because they think they’re high-risk and sketchy. Because they typically don’t trade in these stocks, you don’t have to worry about a big investment firm suddenly unloading its shares and crashing penny stock prices.
That said, these firms are right about penny stock trading being high-risk. You’ll encounter lots of scams and scummy people trying to make money at your expense, so tread carefully.
There’s not as much attention paid to penny stocks because of their shadiness. Plus, fewer people trade these low-volume stocks, resulting in moves that play out over days, not minutes.
This means you can find good entries at different points — or even multiple points — during a multi-day run. This is one of the reasons that it pays to really invest in building your watchlists. These stocks are rarely one-and-dones.
- 6 Penny Stocks on the Rise for Q2 2023
- 8 High-Volume Penny Stocks That Should Be on Your Radar Now
- TD Ameritrade & Penny Stocks: Is It the Top Broker?
- Top Penny Stocks List and Weekly Update
Risks of Trading Penny Stocks
I won’t sugarcoat this: trading penny stocks is high-risk, high-reward. To help you understand how, here’s a breakdown of some of the big risks when trading penny stocks:
Penny Stocks Are Volatile
Penny stocks are volatile and often have low liquidity. This is a bad combo that makes them harder to unload when you’re experiencing losses.
On the other hand, you can turn this risk into reward if you’re disciplined. One of my favorite penny stock patterns is the panic dip buy. I’ll wait for a stock to panic, then enter a position when it starts its recovery. Many times this leads to a quick bounce — when it doesn’t I cut my losses quickly.
Almost All Penny Stocks Fail
99% of penny stocks will ultimately fail — and when they fail, they fail fast. The key to mitigating this risk is having a solid trading plan and not getting greedy.
Penny Stocks Have Higher Fraud Potential
America’s financial and securities regulatory organizations keep themselves busy issuing warnings about penny stock scams. They’re right, too — the penny stock market is a playground for scammers and market manipulators.
Most news or social media posts about penny stock companies are created by people trying to pump the stock up. Never believe the hype, and do your due diligence before trading any penny stock.
What to Consider Before You Trade Penny Stocks
I always check the companies on my penny stock watchlist for unusual daily trading volume and news before trading. When I combine this with their charts, I have a good idea of when the stocks on my watchlist will start their run and when to buy them.
What kind of stocks make it onto my watchlists? Many are low float stocks — stocks whose publicly tradable shares total less than 10 million. Since their supply is so limited, changes in demand can cause big price swings.
Former runners also make it on my watchlists. These stocks have made runs before, so I know big moves are possible under the right conditions.
Where to Buy Penny Stocks
You can buy penny stocks on major exchanges like NYSE and Nasdaq, as well as via over-the-counter market transactions.
NYSE and Nasdaq don’t specifically list penny stocks, but you can find stocks there that trade for under $5 or even under $1.
Listed stocks on exchanges like Nasdaq and NYSE usually have to follow lots of regulations to stay there. Some of these regulations include a minimum listing price and reporting requirements for their financials — which the scammier companies are hesitant to provide.
OTC or unlisted stocks fall into one of three tiers:
- Pink sheets
Each of these tiers has different regulations, with pink sheets being the loosest and OTCQX being the strictest. So naturally, pink sheets are where most of the sketchier OTC stocks reside.
Best Place to Buy Penny Stocks
Which market is best for you? That depends on many factors — like how much liquidity you want, your experience level, and your risk appetite. I trade both listed and unlisted stocks because I don’t see why I should limit my trading options.
How to Find Penny Stocks on Nasdaq Under $1
Nasdaq doesn’t have a specific category for penny stocks, so you have to search for them yourself. You should use a powerful stock screener for this, like the one in StocksToTrade.
I helped design and fund StocksToTrade, so it perfectly fits my trading method.
There are lots of other stock screener tools out there, but StocksToTrade has everything I need for my trading strategy — and it’s all in one place. Some of my favorite features include its Breaking News Chat add-on and its trader-focused charts.
Wanna to unlock your trading with StocksToTrade? Try our 14-day trial and see how it helps you improve — it’s only $7!
6 Penny Stocks to Watch on the Nasdaq
These are my top penny stocks to watch on the Nasdaq:
- (NASDAQ: MMAT) — Meta Materials Inc. — The Pumped Penny Stock
- (NASDAQ: TBLT) — Toughbuilt Industries Inc. — The Recovered Reverse Split Penny Stock
- (NASDAQ: TC) — TuanChe Ltd. — The Diluted But Still Intriguing Penny Stock
- (NASDAQ: PSNY) — Polestar Automotive Holding — The EV Penny Stock Spiker
- (NASDAQ: COMS) — COMSovereign Holding Corp — The Not-Yet-Delisted Penny Stock
- (NASDAQ: COSM) — Cosmos Holdings Inc. — The Dip Buy Breakout Penny Stock
This is important: I’m only watching these stocks. I won’t trade them unless they fit my preferred setups. Measure twice, cut once.
The best traders watch more than they trade. That’s what I’m trying to model here. Pay attention to the work that goes in, not the picks that come out.
1. Meta Materials Inc. (NASDAQ: MMAT) — The Pumped Penny Stock
My first Nasdaq penny stock pick is Meta Materials Inc. (NASDAQ: MMAT).
MMAT has an interesting situation going — its preferred shares, which trade under the ticker MMTLP on the pink sheets, have squeezed over 700% in the past two months.
MMAT, with its 300 million share float, is in no danger of a short squeeze, but is still benefiting from sympathy momentum. This has sent its share price up by about 300% in the past two months.
MMTLP — and by extension MMAT — is the beneficiary of one of the most frenetic promotions I’ve seen recently. It’s my sworn duty to expose promoters for the liars they are…
Penny stock promoters, & now Discord/Reddit promoters, lead newbies to believe it's good to follow others, but even those who made $ during this latest bubble are now learning the hard way that self-sufficiency is the key to lasting not fleeting success. NEVER RELY ON ANYONE ELSE
— Timothy Sykes (@timothysykes) January 27, 2022
Why We’re Watching
Promoters help prop up the crappy stock they pump. They don’t want it to fall apart before the promotion is over.
And since my favorite pattern in this market is the panic dip buy, these promoters have helped ME. They can help you too if you go for small gains, and tune out the hype.
MMTLP is the stock I’m targeting right now. But when December 14 comes around and MMTLP shares convert to stock in their soon-to-be-overvalued oil and gas spin-off, I’ll switch my focus to MMAT.
2. Toughbuilt Industries Inc. (NASDAQ: TBLT) — The Recovered Reverse Split Penny Stock
My second Nasdaq penny stock pick is Toughbuilt Industries Inc. (NASDAQ: TBLT).
TBLT started 2022 in a swan dive. In April, it carried out a 1-for-150 reverse stock split to maintain compliance with Nasdaq’s $1 minimum share price. Knowing that it dipped below $1.50 in June should give you an idea of what a sorry state this stock was in.
Then something unexpected happened in July. TBLT dropped some positive news about their Amazon sales, and the market responded. Some said a short squeeze was also afoot.
Why We’re Watching
The stock gained around 400% over the course of the month. Then it did a $20 million private placement at a discount to its then-current price, killing the rally. The momentum died down… until now.
With TBLT dropping below $2 at the start of November, Amazon sales once again caused TBLT to spike. Then it diluted again, but still held onto around 30% of the move.
This stock is always a threat to dilute, but the market seems to like it anyway. Does TBLT have another move in it?
3. TuanChe Ltd. (NASDAQ: TC) — The Diluted But Still Intriguing Penny Stock
My third Nasdaq penny stock pick is TuanChe Ltd. (NASDAQ: TC).
This was an exciting stock from the end of September to mid-November… and then it diluted.
TBLT gives us a good example of stock dilution killing a rally. That’s exactly what happened to TC on November 21.
READ THIS BLOG POST: https://t.co/ss9Y3ZiD5f The Dangers of Penny Stock Dilution & Stock Pumps, while companies put out PRs to be pumped on $TWTR they're also working to sell stock at MASSIVE discounts to the pumped up prices, funds don't pay retail prices so neither should you!
— Timothy Sykes (@timothysykes) July 28, 2020
I can’t say I was surprised. This is part of the game for penny stocks. Pump a stock up, get it fat and juicy — and then do a new share offering so that the company can benefit too.
Why We’re Watching
TBLT also gives a glimpse at a stock’s post-dilution potential. TC might have some of that in its future as well.
TC is in the Chinese auto sector, and the market is cautiously optimistic about China’s economy coming back online… although that’s definitely not a sure bet.
TC provides a marketplace for auto manufacturers and service providers to connect with consumers. That’s good for trading, as new partnership news is what the company runs on.
If TC puts its cash infusion to work in growing the company, it might have some more life in it yet.
4. Polestar Automotive Holding (NASDAQ: PSNY) — The EV Penny Stock Spiker
My fourth Nasdaq penny stock pick is Polestar Automotive Holding (NASDAQ: PSNY).
Polestar climbed nearly 50 percent into late November before pulling back slightly. Some say the pullback was China related — one of its backers is the Chinese carmaker Geely.
The other backer is Volvo, and Polestar has been making good on its parental advantage.
Why We’re Watching
While other EVs struggled, Polestar turned its first profit. It’s on track to deliver 50,000 cars by year end.
It’s also an incredibly good looking car. This will be important when the EV sector gets hot again…
Right now, EVs are plagued by supply chain issues and the burden of actually delivering on their promise. But we all know they’re the future. With gas prices rising again, it may come sooner than we think.
5. COMSovereign Holding Corp (NASDAQ: COMS) — The Not-Yet-Delisted Penny Stock
My fifth Nasdaq penny stock pick is COMSovereign Holding Corp (NASDAQ: COMS).
This is fun for me. A true penny stock that can trade 400 million shares in one day because it’s listed on a major exchange? Count me in!
The latest spike came on December 1, courtesy of Nasdaq extending the deadline for COMS to meet their listing requirements to February 2023. 200 million shares were traded from 9 a.m. to 10 a.m. EST — all to celebrate a stock that will almost definitely do a reverse split in the future.
Why We’re Watching
COMS is a former drone operator that has expanded into the wider world of “telecom solutions.” Some of these solutions seem to be used in espionage related activities.
I don’t really care what they say they do. Only price pays — and as long as COMS is a threat to have 100% spikes, I’ll be watching.
6. Cosmos Holdings Inc. (NASDAQ: COSM) — The Dip Buy Breakout Penny Stock
My sixth Nasdaq penny stock pick is Cosmos Holdings Inc. (NASDAQ: COSM).
Here’s another spikey stock in danger of being delisted from the Nasdaq… hey, where have I heard that before?
Why We’re Watching
COSM’s business is in health products, and they’ve gotten a good response from their recent partnerships. The news that they got the rights to distribute SpongeBob and PAW Patrol vitamins in Greece and Cyprus woke COSM out of a post-dilution lull…
A week later, news that their products were featured in Iberian Airlines’ in-flight magazine made COSM go parabolic! The stock gained about 900% over the course of the month.
What I liked most was the way it climbed to its highs. There were plenty of panics to trade through.
You know I love my morning panic dip buy pattern: https://t.co/4lKUY5B6aw & I'm proud to say it's been wroking like a charm lately on OTC runners like $DPLS $RSHN so the question is will you be prepared for next time it comes around? YOU CHOOSE YOUR LEVEL OF DEDICATION & SUCCESS!
— Timothy Sykes (@timothysykes) June 17, 2021
The more volatility a penny stock gets, the more short-term tradeable moves it yields. That’s why I’m still watching COSM.
Explore the Nasdaq Penny Stock List
Curious about which stocks I’m watching each week? Subscribe to my FREE weekly watchlist! You’ll get my preferred stock picks in your inbox weekly so you can learn the process I follow for every stock.
Don’t take my list of penny stocks as “stock picks.” Always do your due diligence and own research before trading any stock. You also need a trading plan because trading without a plan is basically gambling. Don’t be a gambler — trade smart!
Learn How to Create Your Own Watchlist
With over 4,000 stocks on NYSE and Nasdaq plus another 12,000 OTCs, it’s impossible to keep up with everything. Building and maintaining stock watchlists is one of the most basic skills for a profitable trader.
A watchlist helps you stay focused on the penny stocks that you think have the best potential for future trades. With a watchlist, you’ll be prepared to enter a trade when you spot unusual volume or news about your picks.
Want to learn more about creating a stock watchlist and get access to my personal daily watchlist? Join my Trading Challenge! I share the things I’ve learned during my 20-plus years as a trader to help you become a safe, self-sufficient, and smart trader.
Here’s what you get from my class:
- Interactive webinars with me and my top students
- 7,000+ video lessons
- Entry to my community chat room
- Access to my 30-Day Bootcamp, my DVD collection, and much more!
You can earn a lot of money from trading penny stocks on Nasdaq. However, you can’t just trade randomly — you have to build and maintain your own watchlists so that you’ll be prepared when the right trade comes along.
I’m not trying to give you stock picks here. Pay attention to HOW I built my watchlist and put the same thought into your own.
Are there any Nasdaq stocks that you’re watching? Let me know in the comments!