Personal digital devices such as smartphones and tablets have revolutionized life across the globe. Small and microtechnology companies are innovating change at an unprecedented pace and being an early investor in these penny stocks can help you grow your wealth. While cheap tech stocks might not soar overnight, they can provide you with some options that you would not have otherwise enjoyed.
Are you looking for low-cost stocks with high returns? Take a look at these tech penny stocks that are thriving in the market.
The Best Tech Penny Stocks
Overview: Tech Penny Stocks
There is no doubt that technology has transformed the lives of people across the globe. But, most of the tech companies that have helped build that modern infrastructure to make digitalization possible started out small. Remember, many of these companies stayed small because they serve niche markets that may not offer the same results as a business like, for example, IBM.
There’s nothing wrong with that, but the affordable tech stocks you buy will not all turn into gold mines. What you’re investing in is a company that has a strong use-case for its products, serves a niche that can pay for and requires their technology and a firm that can grow their niche over time. So, the company will continue to make more money, but they won’t explode and necessarily gain worldwide appeal like Apple.
Privately-held tech companies will often make their initial public offering (IPO) before making big price moves in the market. Apart from cutting-edge product launches, new approvals from governing bodies like the Federal Trade Commission or the Federal Communications Commission can drive its stock value to exponential prices. At the same time, some penny stocks linger or only gain slightly. Other stocks could lose their value altogether. Tech is an exciting space, but companies need to grow reliably and be governed properly to remain relevant and valuable.
Everything from artificial intelligence to hardware, SaaS and even research is available for investors. The only question for you is which segment of the market you would prefer to invest.
Tech stocks are also good for buy-and-hold trading strategies. These tech firms gain value over time by growing their yearly revenue and maintaining a high degree of customer satisfaction. But be careful as investing in these micro-cap companies can be more volatile compared to bigger tech companies. If you’re not comfortable with holding these stocks for too long, you might want to consider swing trading these assets.
Best Online Brokers for Tech Penny Stocks
Online brokers let you trade pink sheet stocks, stocks, mutual funds, exchange-traded funds (ETFs) and foreign currencies at the click of a button. These platforms are equipped with tons of educational resources and professional trading tools to help you research your investments better. When you have more information, you’re more likely to make good choices. Additionally, you may want to change brokers if you ever feel your current broker isn’t giving you what you need.
Here’s a rundown of the top online brokers to get you started, but remember that you want to choose a broker that suits your investment style.
Features to Look for in Tech Penny Stocks
- Positive earnings per share: The earnings per share (EPS) of a company is a measure of its profitability. You can calculate the EPS of a stock by dividing the price of a stock by its total number of outstanding shares. Remember, too, that the stock could have a low price and an impressive EPS. You must balance the 2 figures for best results.
- Low price-earnings ratio: The price-earnings (P/E) ratio can help you determine if a stock is undervalued or overpriced. The P/E ratio can help you assess the performance of a stock compared to similar tech companies in the same price range.
- Tech innovations: Tech stocks are among the most innovative companies out there. Keeping a close watch on new tech developments and product launches can give you powerful insights about when to buy or sell shares. Remember, too, that technical innovations could be outdone by competitors, rendering one tech penny stock obsolete and another profitable, allowing some to develop into growth stocks.
- Market potential: When you invest in tech stocks, you don’t want to buy in just because “it’s a tech company” that sounds cool. The parameters for a tech investment should include that company’s market potential. For example, does the company serve a large or small segment of the population or business world? How much growth do you see in that segment of the population or business community? When you better understand how the company will make money, you can make a much wiser decision.
- Positive news: You want to make sure that a stock in the tech sector is surrounded by good press. If the company has been battered by bad press, it’s hard to believe that that stock can improve. In fact, it may be in danger of being delisted. These assets cannot become defense stocks overnight.
- Investment options: If you can use technology stocks for a range of investment styles like swing trading, day trading, etc., you have a much better chance of making money and growing your portfolio. Of course, all those investment styles are not foolproof, and you should do your research first.
Small Investments for Big Returns
More affordable stocks give you an easy entry into the tech industry at incredibly low costs. These micro-companies are dedicated to improving their technology solutions and most of these firms serve global customers. You can consider investing in these tech stocks to diversify your portfolio with global stocks at unbelievable prices. Remember, though, these unbelievable prices come with risks that you must weigh carefully.
Tech penny stocks are shares in low-volume companies related to tech.
Because tech is constantly changing and is an integral part of society, tech stock is considered a good investment.
Benzinga provides a list of the best penny stocks on the list above.