A penny stock is a share of a small company that trades for less than ~$5. Penny stocks aren't for everybody. They may be hazardous, unpredictable, and comparable to day trading in terms of risk vs. reward. Before investing, you have to study extensively and do your due diligence. If you're a beginner investor, you’re better off starting with safer investments like ETFs, mutual funds or even REITs before moving to penny stocks.
To start investing in penny stocks or ETFs all you need is a brokerage account or a robo advisor. When it comes to robo advisors, Wealthsimple is the one we can’t recommend enough: with its no-minimum initial investment, highly-rated app, low fees, and access to financial advisors on demand, it’s no wonder Wealthsimple is consistently named Canada’s best robo advisor.
What Are Penny Stocks?
A penny stock refers to the stocks of small, lesser-know companies that trade for less than ~$5 per share. Some penny stocks are traded on large exchanges like the Toronto Stock Exchange or the NYSE, but most are traded over the counter or on less regulated, privately-owned markets.
Penny stocks are usually traded less frequently than other stocks, meaning they have considerably lower liquidity and limited buyers in the marketplace. Investors may find it difficult to sell their stocks, and typically, penny stocks have high volatility, resulting in a high-risk, high-reward investment.
Why Invest In Penny Stocks
Penny stocks are among the most volatile type of security, there's the opportunity to make large profits in a short period, but there's also the potential to lose a lot of money very quickly, too.
Like other traders, those that trade penny stocks may be in it for short-term or long-term investors. In Canada, trading penny stocks isn't usually done in the Toronto Stock Exchange but rather on smaller exchanges like the TSX Venture Exchange, with fewer restrictions.Â
With that in mind, penny stocks aren’t for everybody. They’re extremely risky investments that should be approached cautiously.
For new investors, we recommend getting into safer investments like GICs first. If you're retired and receiving the bulk of your income from the Canada Pension Plan or Old Age Security, we advise staying away from penny stocks altogether, as their values can fluctuate wildly from day to day, and you don't need that sort of volatility in your portfolio.
If you'd prefer to have someone else guide you through your investments, you can also subscribe to a financial newsletter. My top-rated newsletter right now is Capitalist Exploits (learn more about them here), both because they're rated 4.9/5 on Trustpilot with over 400 reviews and because they have a track record for beating the market year after year.
The Best 16 Penny Stocks In Canada
#1 American Lithium Corp (LI)
| Market Price | $4.24 |
| 12 Month Spread | $2.23-$5.95 |
| Exchange | TSXV |
American Lithium Corp is a Vancouver-based company that owns and operates lithium deposits all over North America. It recently acquired the TLC claystone deposit in the US as part of the Falchani Lithium Project. This deposit is located just three hours away from Tesla’s Gigafactory, the world's largest lithium-ion battery producer and electric vehicle component factory, powered by renewable energy.
As part of the Falchani Project, American Lithium is extending operations to South America, seeking to become a major player in the uranium market. It has already secured contracts to work on one of the largest uranium deposits in Peru, the Macusani. It also has plans to extend its sustainable mining approach, embracing green energies in all its projects.
#2 CloudMD Software & Services (DOC)
| Market Price | $0.84 |
| 12 Month Spread | $0.62-$2.32 |
| Exchange | TSXV |
CloudMD Software & Services is a Canadian company built by medical experts that provide a comprehensive healthcare program covering primary care, telemedicine, and mental health support. They also offer educational resources and artificial intelligence programs.
CloudMD has a large network of pharmacies and clinics across North America, primarily in Canada. It offers in-person and virtual visits to over 600,000 patients who use the CloudMD platform. As of March 2022, over 22,000 family doctors and 55,000 specialist doctors are registered with CloudMD.
#3 HIVE Blockchain (HIVE)
| Market Price | $2.64 |
| 12 Month Spread | $2.11-$5.99 |
| Exchange | TSXV, Nasdaq |
Based in Vancouver, HIVE Blockchain is a crypto-based company and the first publicly traded crypto miner listed on the TSXV. Currently, HIVE mines Bitcoin, Ethereum, and Ethereum Classic, three of the more stable cryptocurrencies, to create long-term growth for their shareholders with a buy-and-hold strategy.
HIVE operates in crypto-friendly countries like Canada, Sweden, and Ireland, and, like our number one penny stock American Lithium, this company relies on all green and renewable energies to mine crypto. Hive has a $1.08 billion market cap.
#4 Hamilton Thorne (HTL)
| Market Price | $1.99 |
| 12 Month Spread | $1.60-$2.20 |
| Exchange | TSXV |
Hamilton Thorne is a publicly-traded company that develops and distributes high-precision imaging instruments and devices for stem cell, biology, and fertility analysis and research. Based in the US, it is available in the TSXV and delivers its products to countries worldwide.
Currently, Hamilton operates three clinical-grade lasers and half a dozen research lasers, and it has partnerships with some of the biggest pharmaceutical and biotech companies and has research labs in Cambridge, Charles River Labs, DuPont, Harvard, MIT, Pfizer, and Yale, to name a few.
#5 5NPlus (VNP)
| Market Price | $2.40 |
| 12 Month Spread | $1.96-$4.76 |
| Exchange | TSX |
5NPlus is a Canadian tech company that develops and delivers semiconductors and high-performance materials using cutting-edge technologies. 5NPlus materials are used in pharmaceutical, space, industrial, and even renewable technologies.
In 2021 they recorded $177.19 million USD in sales, with clients in Europe, North America, and Asia. With their strong focus on green and renewable energies, it’s reasonable to expect considerable growth. 5NPlus products make solar panels, LEDs, and advanced pharmaceutical equipment.
#6 Baytex Energy (BTE)
| Market Price | $5.55 |
| 12 Month Spread | $1.23-$6.63 |
| Exchange | TSX |
Baytex Energy Corp is a Canadian oil and gas corporation that operates across North America. Its biggest projects are in Canada, in the Western Canadian Sedimentary Basin, located between Manitoba, Alberta, and British Columbia; and in the US Eagle Ford, Texas.
Over 80% of Baytex’s production leans towards crude oil and natural gas. Baytex has the environment in mind, In 2018, it was recognized as one of the 40 responsible corporate leaders in Canada, and in 2021 it fulfilled its pledge to reduce its net greenhouse emissions by 30%.
#7 BTB REIT (BTB)
| Market Price | $4.26 |
| 12 Month Spread | $3.88-$4.40 |
| Exchange | TSX |
BTB is a large investment trust listed on the Toronto Stock Exchange, with properties in western and eastern Canada. BTB has 75 properties in its portfolio, with a total leasable area of 6 million square feet and a total asset value of more than $1 billion.
#8 Exro Technologies (EXRO)
| Market Price | $1.38 |
| 12 Month Spread | $1.16-$5.14 |
| Exchange | TSX, ORCQB |
Exro Technologies is a Canadian company that produces smart electrical components for electric motors that are self-sustained and improve the performance and longevity of batteries. Through its Dynamic Power Management System (DPMS) and in partnership with other companies, it provides the power banks and electric components necessary to improve their performance.
It has recently partnered with electric vehicles manufacturers like Motorino Electric, Zero Motorcycles, Aurora Powertrains, Potencia Industrial, and Clean Seed Capital. Exro stocks can be acquired in the US and Canada, in the TSX and ORCQB, respectively.
#9 Numinus Wellness (NUMI)
| Market Price | $0.58 |
| 12 Month Spread | $0.44-$1.25 |
| Exchange | TSX |
Numinus Wellness is a healthcare research company dedicated to creating, through their world-class therapeutic protocols and facts-based research, a psychedelic solution to mental health problems affecting patients around the world. This includes psychotherapies and psychedelic therapy clinical trials.
Numinus’ primary research center is located in British Columbia, Canada, and it is highly regulated by Health Canada and holds a Controlled Drugs and Substances (CDS) license to produce and export a comprehensive range of psychedelic products. Some of the active psychedelic compounds are Psilocybe, Ketamine, and Mescaline.
#10 Uranium Royalty (URC)
| Market Price | $5.12 |
| 12 Month Spread | $2.75-$7.31 |
| Exchange | TSXV, Nasdaq |
Available on the TSX Venture Exchange and the Nasdaq, Uranium Royalty is a uranium pure-player that owns and operates a diverse range of uranium assets, including physical uranium and shares in uranium companies. To avoid the risks associated with prospecting and mining, it doesn’t invest in mining or exploration companies.
Uranium Royalty’s strategy is to invest in futures contracts of the physical uranium and make interest from the sales. They also try to acquire direct joint ventures or other types of interests from third-party uranium holders to gain more exposure to the uranium market and to convert the potential interests into royalties.
#11 Good Natured Products (GDNP)
| Market Price | $0.58 |
| 12 Month Spread | $0.49-$1.40 |
| Exchange | GDNP |
Founded in 2006, Good Natured Products is a Canadian company that produces a variety of packaging made from plants. It has gained popularity for its approach to substituting plastic and petroleum-based packaging, and it is considered a pioneer in the field of next-gen bioplastics made from renewable sources.
When they began their research in 2006, they focused on high-quality poly soles using green, eco-friendly, chemistry, focusing on durability and strength. Later, in 2008, they made a breakthrough for thermoforming and increased the performance, and they’re partners with some of the largest Canadian research institutions.
#12 Drone Delivery Canada (FLT)
| Market Price | $0.67 |
| 12 Month Spread | $0.58-$1.55 |
| Exchange | TSXV |
Drone Delivery Canada was founded in 2014, and its goal was to develop and improve drone delivery logistics, both for personal and commercial use. Some of the commercial sectors that benefit from this are retail, pharmaceuticals, eCommerce, and even isolated indigenous communities are, among its clients.
Despite being headquartered in Vaughan, it has partners from all over Canada, including large companies like Air Canada Cargo, DSV Panalpina, Edmonton International Airport, Moose Cree First Nation, and Vision Profile.
#13 Champion Iron (CIA)
| Market Price | $7.81 |
| 12 Month Spread | $4.02-$7.97 |
| Exchange | TSX |
Similar to Uranium Royalty, Champion Iron is a pure player, this time an iron pure player. It focuses on prospecting, exploration, and iron mining in some of the largest and most profitable deposits.
Through Quebec Iron Ore, a subsidiary, it acquired the Bloom Lake Mine and built a railway system connecting it to modern ports dedicated to ore export. Thanks to its very high-quality iron (67% purity) and stringent environmental policies, it has secured deals with clients across the world, including Canada, China, Europe, India, Japan, the Middle East, and South Korea.
#14 FOBI AI (FOBI)
| Market Price | $0.84 |
| 12 Month Spread | $0.56-$3.93 |
| Exchange | TSXV |
Headquartered in Vancouver, FOBI AI is a data intelligence company that develops automated artificial intelligence (AI); aimed at the retail, telecom, sports, and entertainment industries. It offers solutions to connect their physical and digital ecosystems, and it provides seamless integration with existing infrastructures to optimize and predict a consumer’s physical and digital needs.
#15 Ventripoint Diagnostics (VENTRI)
| Market Price | $0.38 |
| 12 Month Spread | $0.22-$0.67 |
| Exchange | TSXV, OTC |
Ventripoint Diagnostics is a US-based medical company listed on the TSXV and the OTC. Its flagship product is the cardiac diagnostic tool, which allows the creation of a 3D model of your heart from a 2D cardiogram. This yields information on all four heart chambers in just a couple of minutes.
Ventripoint’s proprietary tech is sold worldwide, with clients on all continents. It was founded in the US but has since moved most operations to Canada.
Additionally, Ventripoint has partnered with veterinary hospitals and clinics to test and study the viability of extending the tech to all animals.
#16 OrganiGram Holdings (OGI)
| Market Price | $2.09 |
| 12 Month Spread | $1.65-$4.49 |
| Exchange | TSX, Nasdaq |
Organigram Holdings is Canada’s largest producer and provider of medical and recreational cannabis. Its primary indoor facility is located in Moncton, New Brunswick, and it accounts for 60% of its total production and has a total area of over 14 acres.
Organigram produces its edibles and derivatives, and in 2021 it secured a deal and acquired the Edibles and Infusions Corp. (EIC), a large retailer in Manitoba. Since then, it has maximized sales and maintained its high quality. OGI takes control of all environmental factors in its indoor facilities to increase yield and maintain the optimal micro-climates for each strain of the plant.
Conclusion
Penny stocks aren't for everybody. They may be hazardous, unpredictable, and comparable to day trading in terms of risk vs reward. Before investing, you have to study extensively and do your due diligence. If you're a beginner investor, you’re better off starting with safer investments like ETFs before moving to penny stocks.
To start investing in penny stocks or ETFs, all you need is a brokerage account – or better yet, a robo advisor. In terms of robo advisors, Wealthsimple is the one we can’t recommend enough: with its no-minimum starting investment, highly-rated app, low fees, and open access to financial advisors on-demand, it’s no wonder Wealthsimple remains Canada’s best robo-advisor.
FAQs
Where are penny stocks traded?
Penny stocks are usually traded in smaller exchanges, like the TSX Venture exchange. You won't find many penny stocks on major trading platforms in Canada.
Are penny stocks actively traded?
Penny stocks are often associated with higher volumes than traditional equities. The average investor might find penny stocks among the top ten most active stocks on the TSX on any given day. However, certain lesser-known penny stocks may have little trading activity or volume for many days in a row.
Is it safe to invest in penny stocks?Â
No. Penny stocks come with very high risk and high reward, which means you can make a lot but lose a lot. They're typically extremely volatile and can fluctuate by a wide margin in a single day.Â
Some companies may be overly reliant on a few customers or one item – if one of those consumers leaves or a rival introduces a superior product, they might be exposed to a significant drop in business and, consequently, in the price of the penny stock.
Some may be offering stock investment advice as a short-term investment in newsletters and on social media as a way to entice others to buy, and the promoters liquidate before the price drops.
