Penny stocks are traded at a very low price per share on the stock exchange and are quite different from the big companies’ stock. Unlike blue-chip stocks; they have low market capitalisation, prone to scams like pump and dump schemes. They have the tendency to move either direction irrespective of market conditions.
“There are many reasons why a stock will sell at a lower price. It could be because of very poor performance, for some, investors priced them so low because they hardly return either in cash or scrip to their investors in a long time,” he said, adding that some are actually growth stocks with low valuation metrics and they constantly come out with positive results and the hope of another positive numbers/dividend is increase from one quarter to another.
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