Penny stocks have a bad reputation, and most of it is earned. The phrase usually brings to mind tiny shell companies and pump-and-dump schemes on the OTC markets. But not every stock under $5 a share is a lottery ticket. Some are large, established companies that run real businesses and simply trade at a low share price.
The best penny stocks to watch right now include Ambev, Banco Bradesco, Grab Holdings, Gerdau, B2Gold, Plug Power, and Kosmos Energy. All seven trade for less than $5 on a major US exchange. Five of them are profitable. Two are not. We screened for that difference on purpose, because it is the line between a cheap stock and a cheap gamble.
How We Picked These Stocks
Hundreds of companies trade under $5 on the New York Stock Exchange and the Nasdaq. We started there and ignored the OTC pink sheets, where disclosure is thin and fraud is common. Stocks on the major exchanges have to file regular financial reports, which gives investors something real to read.
From that pool we filtered for three things: a real business with actual revenue, a market cap above $1 billion (market cap is the total value of all a company's shares), and daily trading volume in the millions of shares so you can buy and sell without moving the price. We threw out pre-revenue story stocks and anything carrying a going-concern warning. What remained were seven companies, five of which already turn a profit.
The Best Penny Stocks to Watch
Ambev (NYSE: ABEV)
Why it made the list: Ambev is one of the largest beverage makers in the Americas and the company behind Brahma, Skol, and the local Budweiser. It earns a net profit margin near 18%, meaning it keeps about 18 cents of every sales dollar as profit. It carries almost no debt.
The bull case: A defensive consumer business that sells beer and soft drinks in good times and bad. It pays a steady dividend (a dividend is a cash payment to shareholders) and generates strong free cash flow, the cash left after running and maintaining the business.
The risk: Most of its sales come from Brazil and Argentina, so a weak Brazilian real or Argentine peso shrinks its results once they are converted to dollars.
Key number: Net profit margin near 18% with debt at about 3% of shareholder equity.
Banco Bradesco (NYSE: BBD)
Why it made the list: Banco Bradesco is one of Brazil's biggest private banks, with tens of millions of customers and a large insurance arm. It trades at roughly one times book value, meaning its market price is close to the net worth of the business on paper.
The bull case: Falling Brazilian interest rates could lift loan demand and profits. The stock pays a high dividend yield (the annual dividend as a percentage of the share price), and the bank earns far more than it pays out.
The risk: Brazilian banks rise and fall with the local economy and central bank policy. A recession or a spike in bad loans would hit earnings.
Key number: A dividend yield around 7% at about one times book value.
Grab Holdings (NASDAQ: GRAB)
Why it made the list: Grab runs the dominant ride-hailing, food delivery, and digital payments app across eight Southeast Asian countries. After years of heavy losses, it has strung together profitable quarters and now posts a positive annual profit.
The bull case: Southeast Asia has a young, fast-growing, increasingly online population. Grab's revenue has climbed every quarter, and its fintech and advertising arms carry higher margins than the core delivery business.
The risk: Regional competition is fierce, and the stock trades at a high price-to-earnings ratio (P/E, how much you pay for each dollar of annual profit), so any slowdown could hit the shares hard.
Key number: About $3.4 billion in annual revenue and its first full year of profit.
Gerdau (NYSE: GGB)
Why it made the list: Gerdau is the largest steel producer in Brazil and a major player in North America, where it makes rebar and structural steel for construction. The stock trades below book value, near 0.8 times.
The bull case: US infrastructure spending and Brazilian construction both support steel demand. Gerdau runs lower-cost mini-mills and pays a dividend. For investors hunting cheap cyclical names, our guide to the best value stocks covers the same playbook.
The risk: Steel is deeply cyclical. Prices and profits swing with the economy, and cheap Chinese steel imports pressure margins.
Key number: Shares trade at about 0.8 times book value.
B2Gold (NYSE American: BTG)
Why it made the list: B2Gold is a mid-size gold miner with three producing mines in Mali, the Philippines, and Namibia. It is profitable, with a net margin around 15%, and trades at a P/E under 10.
The bull case: Gold has been near record highs, and a profitable miner gives you exposure to the metal with extra upside when prices rise. B2Gold pays a dividend and is bringing a large new gold mine in Canada online. For more on the sector, see our guide to the best gold stocks.
The risk: A big share of production comes from Mali, where the government has clashed with miners over taxes and ownership.
Key number: Three producing gold mines and a price-to-earnings ratio under 10.
Plug Power (NASDAQ: PLUG)
Why it made the list: Plug Power builds hydrogen fuel cells and green hydrogen plants for warehouses, trucks, and backup power. It belongs here as the high-risk name. It has real revenue, around $700 million a year, but it loses far more than it earns.
The bull case: If green hydrogen scales, Plug is one of the few pure-play public companies positioned for it. Government clean-energy support and large customers like Amazon and Walmart give it a foothold.
The risk: Plug burns cash and has repeatedly sold new shares to stay funded, which dilutes existing owners. It is a bet on a future that may take years to arrive, if it arrives at all.
Key number: About $700 million in revenue, but it still spends far more than it brings in.
Kosmos Energy (NYSE: KOS)
Why it made the list: Kosmos Energy is a Dallas-based oil and gas producer with assets offshore Ghana, Equatorial Guinea, and the US Gulf of Mexico, plus a new gas project off West Africa. It is the second speculative pick, a real producer carrying heavy debt.
The bull case: A new liquefied natural gas project off Mauritania and Senegal is ramping up, which could lift cash flow. Higher oil prices would help it pay down debt quickly. Our guide to the best energy stocks covers steadier names in the sector.
The risk: Debt sits near 5.8 times equity, so a drop in oil prices would squeeze the company hard. It does not pay a dividend.
Key number: Around $1.4 billion in annual revenue against debt near 5.8 times equity.
What Penny Stocks Really Are
"Penny stock" describes a share price, not a kind of company. A stock under $5 can be a fragile startup, a giant that fell on hard times, or simply a company with a lot of shares outstanding. Ambev and Bradesco are each worth tens of billions of dollars. They trade cheap per share because they are foreign companies with huge share counts, not because the businesses are weak.
That split is the whole point of this list. Five of the seven names (Ambev, Bradesco, Grab, Gerdau, and B2Gold) are profitable companies you could hold for years. The other two, Plug Power and Kosmos Energy, are speculative bets on hydrogen and oil that could double or could keep falling. Sizing those two small matters far more than picking them.
Low-priced stocks also move faster than blue chips. A 20-cent move is a big percentage swing when the stock costs $3, and that cuts both ways. Investors drawn to this space often look at small-cap stocks too, which carry similar risk and reward.
What to watch:
- Brazilian interest rates: Rate cuts would help Bradesco's lending and lift Ambev and Gerdau, all three heavily tied to Brazil.
- Grab earnings: Each quarterly report now shows whether the company's new profitability is holding as it keeps growing.
- Oil and gas prices: A sustained move higher would ease Kosmos Energy's debt load, while a drop would deepen the risk.
Bottom Line
A low share price is not a strategy. The names worth watching here are the profitable businesses that happen to trade under $5, led by Ambev, Bradesco, and Grab. The two speculative picks, Plug Power and Kosmos Energy, belong only in a small, high-risk slice of a portfolio. Treat the share price as a starting point, then look at whether the company actually makes money.
Frequently Asked Questions
Are penny stocks a good investment?
Penny stocks can be, but most are not. The majority of stocks under $5, especially on the OTC markets, are unprofitable or outright fraudulent. The exceptions are established companies that trade cheap per share for structural reasons, like a large share count or a weak home currency. Focus on real revenue and profits, not the low price tag.
What is the difference between penny stocks on the NYSE and OTC penny stocks?
Stocks listed on the New York Stock Exchange and Nasdaq must meet listing standards and file regular, audited financial reports. OTC (over-the-counter) penny stocks trade off the major exchanges with far less disclosure, which is where most penny stock fraud happens. Sticking to major-exchange names like the ones on this list lowers the risk, though it does not remove it.
Can you make money with penny stocks?
Yes, but it is harder and riskier than with larger stocks. Low-priced stocks swing sharply in both directions, and many lose money over time. Investors who do well usually treat penny stocks as a small, speculative part of a larger portfolio and stick to companies with real businesses behind them.
What is the safest penny stock on this list?
Ambev is the most defensive name here. It is a large, profitable beverage maker with almost no debt and a steady dividend, and it sells products people buy in any economy. No stock under $5 is truly safe, but a debt-free, cash-generating business is far steadier than a cash-burning startup.
