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Watchlists-Penny Stock Investment Strategy

Top Penny Oil Stocks in Canada for 2024

Written by Tim-bot
Reviewed by Friedrich Odermann Fact-checked by Ed Weinberg
Updated 12/5/2023 20 min read

When it comes to trading, especially in the dynamic world of penny stocks, the oil sector presents unique opportunities. In 2024, the Canadian market is ripe with potential, especially in the realm of penny oil stocks. These stocks represent companies in the oil industry whose share prices are relatively low, often trading for less than $5. But don’t let the price fool you; these stocks can offer significant returns due to their high volatility and potential for rapid growth.

You should read this article because it provides a comprehensive guide on the top penny oil stocks in Canada for 2024, highlighting their potential and risks, and offering insights into market patterns and movements.

I’ll answer the following questions:

  • What are penny oil stocks?
  • How do penny stocks differ from regular stocks?
  • What are the typical traits of penny stocks?
  • What risks and challenges are associated with penny oil stocks?
  • How can investors choose the right penny oil stocks?
  • What factors should be considered when assessing a company’s growth potential?
  • How do penny stock scams operate, and how can they be avoided?
  • Are penny stocks safe investments compared to traditional stocks?

Let’s get to the picks!

What Are Penny Oil Stocks?

Penny oil stocks are shares of small oil and gas companies trading at low prices, typically under $5. These stocks are often found on smaller exchanges and can include companies involved in exploration, production, and development of oil and natural gas resources.

While they offer high potential for growth due to their low share price, they also come with higher risks. Volatility is a key characteristic here, making them suitable for traders who can handle rapid price fluctuations and are looking to capitalize on short-term movements.

Understanding Penny Stocks

Penny stocks are a unique breed in the stock market, as often trading over-the-counter (OTC) as on major exchanges. Their low price point, typically under $5, makes them accessible to a wide range of investors, including those with smaller brokerage accounts.

However, this accessibility comes with a caveat: penny stocks often lack the stability and dividends of established dividend stocks. Their earnings and EPS (earnings per share) can be unpredictable, making them a speculative investment.

Traders often use screeners to filter through numerous penny stocks, seeking those with potential for profit. While penny stocks are not typically part of a conservative investment strategy for a TFSA or RRSP, they can offer a high-risk, high-reward scenario for those willing to delve into this volatile segment of the market.

Typical Traits of Penny Stocks

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Penny stocks are known for their low market capitalization, limited liquidity, and often, lack of extensive financial history. They’re not usually listed on major exchanges like the NYSE or Nasdaq, but rather on over-the-counter markets or pink sheets. This lack of visibility and regulation can lead to less transparency. However, for traders who do their due diligence, these stocks can present unique opportunities for significant returns, especially when a company strikes it big in terms of resource discovery or technological advancements.

Rewards and Potential of Penny Stocks

The allure of penny stocks lies in their potential for substantial gains. A small increase in share price can translate to a high percentage return on investment. However, it’s crucial to approach these trades with a strategy, focusing on patterns and market reactions, rather than getting swayed by the hype. Remember, with high potential comes high risk, and it’s essential to have a risk management strategy in place.

Top Canadian Penny Oil Stocks for 2024

My top Canadian penny oil stock picks are:

Athabasca Oil Corp (TSE: ATH), Trican Well Service Ltd (TSE: TCW), Tellurian Inc. (AMEX: TELL), Baytex Energy Corp (TSE: BTE), and Crescent Point Energy Corp (TSE: CPG) are some of the top penny oil stocks to watch in Canada for 2024. These companies, involved in various stages of oil and gas exploration and production, present interesting trading opportunities. Their stock prices are influenced by factors like oil prices, exploration successes, and operational efficiencies, making them volatile yet potentially rewarding for the astute trader.

Before you send in your orders, take note: I have NO plans to trade these stocks unless they fit my preferred setups. This is only a watchlist.

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.

Sign up for my NO-COST weekly watchlist to get my latest picks!

Athabasca Oil Corp (TSE: ATH)

My first Canadian oil penny stock pick is Athabasca Oil Corp (TSE: ATH).

Athabasca Oil Corp has been tearing up the charts, up 77% in 2023 so far. That’s a performance that’s hard to ignore, especially when it’s outpacing the S&P/TSX Capped Energy Index significantly. But here’s the deal: while the company’s balance sheet looks stronger, thanks to selling off some non-core assets and the uptick in Canadian heavy oil prices, the stock’s valuation is getting a bit stretched, hovering at the higher end for Canadian oil stocks. And let’s not forget the big question mark over increasing production, which could mean shelling out a lot of capital.

So, while Athabasca Oil Corp might have a bright future, the current valuation suggests the stock’s rapid ascent might be cooling off. For traders, this means keeping an eye on the stock for potential volatility, but not necessarily jumping in headfirst.

Trican Well Service Ltd (TSE: TCW)

My second Canadian oil penny stock pick is Trican Well Service Ltd (TSE: TCW).

Trican Well Service Ltd is making some serious waves in the Canadian oil and gas industry. With a 50% jump in revenue to $866.3 million in the last quarter of 2022, it’s clear that the company is riding high on stronger industry activity and better pricing. But here’s what you need to know as a trader: while these numbers are impressive, they don’t automatically translate into a green light to buy.

Revenue growth is just one piece of the puzzle. The real question is whether this growth is sustainable and if it can translate into long-term profitability.

For now, Trican is a stock to watch, especially for any signs of continued growth or shifts in the industry that could impact its performance. Remember, in trading, it’s not just about the big gains, but understanding the underlying factors that drive a stock’s movement.

Tellurian Inc. (AMEX: TELL)

My third Canadian oil penny stock pick is Tellurian Inc. (AMEX: TELL).

Tellurian Inc. is a player to watch in the natural gas and LNG market. After quadrupling its natural gas production in Q4 2022, thanks to some strategic acquisitions, the company is showing some serious muscle. Its EPS (earnings per share) also went from negative to positive.

For traders, this means Tellurian is a stock that demands careful analysis. It’s not just about the growth in production; it’s about how this translates into sustainable earnings and market position.

As a trader, I’m keeping an eye on Tellurian for any signs of consistent profitability or factors that could affect its market standing. Remember, in trading, it’s all about patterns and performance, not underlying value.

Baytex Energy Corp (TSE: BTE)

My fourth Canadian oil penny stock pick is Baytex Energy Corp (TSE: BTE).

Baytex Energy Corp’s story is a rollercoaster. A 1,600% surge in share price over the past three-and-a-half years is nothing short of spectacular. But it’s also down 42% from its peak. Like the other stocks on this list, this isn’t one you should hold onto. Once you realize that, there’s money to be made.

It’s not about believing in the stock; it’s about trading the pattern. Baytex’s transition to profitability in the last three years is a key factor here. This kind of fundamental change often drives strong share price gains, as we’ve seen. But remember, trading is about timing and trends, not just long-term growth.

Crescent Point Energy Corp (TSE: CPG)

My fifth Canadian oil penny stock pick is Crescent Point Energy Corp (TSE: CPG).

Crescent Point Energy Corp is turning heads with its upgraded revenue forecasts for 2024. Analysts are now eyeing a substantial 36% jump in sales compared to the last 12 months. But here’s what’s interesting for traders: despite this upbeat revenue forecast, there’s no change in the consensus price target.

Despite its modest share price, CPG’s market cap of $5 billion puts it solidly in the mid-cap category. That means

Look for any shifts in market sentiment or changes in earnings performance that could signal a trading opportunity. Remember, it’s not just about the numbers, but how the market reacts to them.

The Landscape of Penny Oil Stocks in Canada

The Canadian penny oil stock market is a dynamic segment of the energy industry, encompassing a range of businesses from mining companies to those focused on gold, silver, and even cannabis. These stocks, often part of the OTC markets, are influenced by global economic trends, fluctuating commodity prices, and changes in the finance sector, including interest rates and credit policies. Analysts and investors closely monitor these stocks, using data and information from articles, newsletters, and analyst reviews for insights.

However, the speculative nature of these stocks requires careful consideration of risks and rewards. The landscape is shaped by various factors, including acquisitions, new discoveries, and shifts in energy demand, making it a challenging yet potentially rewarding market for those with a keen eye for speculation and market trends.

Canadian penny stocks offer a diverse range of opportunities, each with its own set of challenges and rewards. Understanding the Canadian penny stock landscape, from regulatory environments to market trends, is key for traders looking to navigate this volatile yet potentially lucrative market. For an in-depth understanding of penny stocks in Canada, including strategies and insights, explore this detailed guide on Penny Stocks in Canada: A Comprehensive Guide.

Rise of Penny Oil Stocks in the Canadian Market

The Canadian market has seen a growing interest in penny oil stocks, partly due to the country’s vast natural resources and the global demand for energy. These stocks have become attractive for traders looking to leverage the volatility in the oil and gas sector.

It’s important to understand that this market segment is influenced by a lot of factors, including global oil prices, geopolitical events, and technological advancements in energy extraction and production.

Risks and Challenges in the Penny Oil Stock Market

Penny oil stocks come with their own set of risks and challenges. Their low liquidity can lead to higher bid-ask spreads, making it harder to execute trades at desired prices. Additionally, these stocks are often subject to less regulatory scrutiny, which can lead to less transparency and higher susceptibility to market manipulation. It’s crucial for traders to conduct thorough research and stay informed about the companies and the broader market trends.

Future Prospects of Penny Oil Stocks in Canada

The future of penny oil stocks in Canada looks promising, especially with the ongoing advancements in extraction technologies and the global shift towards diverse energy sources. However, traders should be aware of the cyclical nature of the oil and gas industry and the impact of external factors like environmental policies and global economic conditions. Staying informed and adaptable is key to capitalizing on the opportunities these stocks present.

How To Choose Penny Oil Stocks

Selecting the right penny oil stocks involves more than just looking at the price. It’s about understanding the business, its place in the industry, and its potential for growth and recovery. Investors should consider the company’s products, services, and any recent acquisitions that might boost its standing. Financial health is key, so reviewing earnings reports, profit margins, and analyst opinions is crucial. Additionally, factors like the company’s response to economic changes, its adaptability in the face of new regulations, and its ability to innovate can all play a role in its success.

While some investors might be drawn to the speculative nature of penny oil stocks, including those in sectors like cannabis or crypto, it’s important to balance this with a solid understanding of the company’s fundamentals and the broader market context. Remember, speculation should be a part of a diversified investment strategy, not the sole focus.

Historical Performance

When selecting penny oil stocks, it’s crucial to look at the historical performance of the company. This includes examining past stock price movements, financial stability, and how the company has navigated market cycles. While past performance is not indicative of future results, it can provide valuable insights into how the stock might react under different market conditions.

Growth Potential

Assessing a company’s growth potential involves looking at its operations, resource reserves, and future exploration plans. Companies with a solid track record of resource discovery and efficient operations are more likely to experience growth. Additionally, consider the company’s strategy in adapting to technological advancements and environmental regulations, as these factors can significantly impact its future prospects.

Management Team

The management team’s experience and track record can be a critical factor in a penny oil stock’s success. Look for companies led by teams with a history of making strategic decisions that have positively impacted the company’s growth and stability. Experienced leadership can navigate the company through volatile markets and make pivotal decisions that can lead to significant gains for investors.

Financial Health

Evaluating a company’s financial health involves analyzing its balance sheet, income statement, and cash flow. Look for companies with manageable debt levels, consistent revenue streams, and efficient cost management. A financially healthy company is better positioned to weather market downturns and capitalize on growth opportunities.

Recent News and Advancements

Staying updated with recent news and advancements in the company and the broader oil and gas sector is crucial. This includes monitoring exploration results, production updates, and any regulatory changes that could impact the industry. News can significantly influence stock prices, and being informed can help traders make timely and strategic decisions.

Key Considerations for Investors

Oil stocks in Canada present a unique blend of opportunity and challenge. With the global energy landscape evolving, Canadian oil stocks are becoming increasingly attractive for their potential growth and market dynamics. Understanding the nuances of these stocks, from market trends to company-specific factors, is crucial for traders aiming to capitalize on this sector.

For a deeper dive into the top oil stocks in Canada and their potential in the current market, check out this comprehensive guide on Top Oil Stocks in Canada.

Are Penny Stocks Safe Investments?

Penny stocks are not typically considered safe investments due to their high volatility and lower liquidity. They are more suitable for traders who are willing to take on higher risks for the potential of higher returns. It’s important to have a clear understanding of your risk tolerance and to never invest money you can’t afford to lose. Diversifying your portfolio and having a solid risk management strategy are key to mitigating potential losses.

Watch my millionaire student Jack Schwarze recap one of his missteps in an oil stock:

Penny Stocks vs. Regular Stocks

The main difference between penny stocks and regular stocks lies in their price, market capitalization, and liquidity. Penny stocks are cheaper, often have lower market capitalizations, and are traded less frequently. This can lead to higher volatility and risk. Regular stocks, typically listed on major exchanges, are generally considered more stable and are subject to stricter regulatory standards.

Penny Stock Scams and How To Avoid Them

Penny stock scams are a real concern, often involving pump-and-dump schemes where prices are artificially inflated before being sold off by insiders. To avoid these scams, conduct thorough research, be wary of unsolicited stock tips, and look for red flags like unusually high trading volumes without any significant news. Always trade through reputable brokers and platforms.

While discussing key takeaways in penny stock trading, it’s important to consider the perspectives of various market participants, including the vibrant community of Reddit users. Reddit has become a hub for traders to share insights, tips, and personal experiences with penny stocks. These discussions often highlight under-the-radar stocks and unique trading strategies. For traders looking to gain insights from the Reddit community on the best penny stocks in Canada, this article offers a curated selection of top picks and discussions: Best Penny Stocks in Canada According to Reddit Users.

Key Takeaways

Trading penny oil stocks in Canada can offer significant opportunities for gains, but it comes with inherent risks. Understanding the market dynamics, conducting thorough research, and having a disciplined trading strategy are crucial. Remember, it’s not about believing in the long-term potential of these companies; it’s about recognizing and capitalizing on market patterns and movements. Stay informed, stay disciplined, and always manage your risks.

Trading isn’t rocket science. It’s a skill you build and work on like any other. Trading has changed my life, and I think this way of life should be open to more people…

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What Canadian oil stocks are on your watchlist? Let me know in the comments — I love hearing from my readers!

Frequently Asked Questions

What Sectors Are Penny Stocks Usually In?

Penny stocks are commonly found in sectors like technology, biotechnology, mining, and energy, including oil and gas. These sectors often have companies that are in the early stages of development or are exploring new markets and technologies, leading to higher volatility and potential for growth.

How Risky Are Penny Stocks Compared to Traditional Stocks?

Penny stocks are generally riskier than traditional stocks due to their lower liquidity, higher volatility, and less regulatory oversight. They are more susceptible to market manipulation and can experience significant price fluctuations. Traders should approach penny stocks with caution and a well-thought-out risk management strategy.

What’s a Better Alternative to Penny Stock Investing?

For those looking for less risky alternatives to penny stock investing, consider diversified mutual funds or exchange-traded funds (ETFs). These options provide exposure to a broader range of assets, reducing the risk associated with individual stocks. Additionally, investing in well-established companies with a proven track record can offer more stability and lower risk compared to penny stocks.

How Do Credit Cards and Banks Influence Oil Penny Stocks in Canada?

The influence of credit cards and banks on oil penny stocks in Canada often revolves around the financing of industries, including energy stocks and mining companies. Banks provide necessary capital for these companies, while credit card transactions can reflect consumer spending trends, impacting the economy and, subsequently, these stocks.

What Are the Key Reporting Rules for Oil Penny Stocks?

Oil penny stocks in Canada must adhere to specific reporting rules and disclaimers. These include mandatory disclosure of financial health and stakeholder interests in the company. Such information is crucial for investors, as it provides insights into the company’s performance and potential risks.

How Do You Learn About Oil Penny Stocks Through Website Content?

To understand oil penny stocks, investors should explore site content that offers a definition, example, and basis of how these stocks function within the energy industry. Links to partners, industry reports, and social media updates can also provide valuable insights and advice.

Why Size and Economy Matter in Oil Penny Stocks Investment?

The size of an oil penny stock company and its stake in the economy are significant for investors. A larger stakeholder position might indicate a more substantial influence on industry trends, while the overall health of the economy can affect the costs and profitability of these stocks.

What Goals and Reasons Drive Oil Penny Stocks Trends?

The goals of a mining company or an energy stock, such as expansion or cost-cutting, can drive trends in oil penny stocks. Investors should consider these reasons alongside the half and whole of a company’s business model and concept to make informed decisions.

How Many Oil Penny Stocks Should You Consider for Diversification?

Diversification is key in investing in oil penny stocks. While there’s no one-size-fits-all answer, considering many different stocks across most or all segments of the industry can help spread risk. It’s essential to balance this approach with a clear investment goal and understanding of each stock.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

Millionaire Media 66 W Flagler St. Ste. 900 Miami, FL 33130 United States (888) 878-3621 This is for information purposes only as Millionaire Media LLC nor Timothy Sykes is registered as a securities broker-dealer or an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Millionaire Media LLC and Timothy Sykes cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Millionaire Media LLC and Timothy Sykes in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Millionaire Media LLC and Timothy Sykes accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.

Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”