Penny stocks are stocks of small companies that trade for less than $5 per share. For that reason, a small movement in the price of a penny stock can produce a large percentage gain. The low price can be attractive to smaller investors, especially given the easy access to many trading platforms. But while penny stocks offer the potential for big gains, they tend to be more volatile than established stocks and are, therefore, a much riskier investment.

Some investors use penny stocks as part of a portfolio diversification strategy, taking a small portion of a larger portfolio and focusing on high-risk, high-reward opportunities. A small allocation to penny stocks can minimize their impact on a portfolio, but given the greater risks, there is also the potential for large losses.

Below is an analysis of the top penny stocks for December 2024, screened for a high return over the last 30 days and bullish technical patterns.

All charts and data are current as of Nov. 23, 2024.

BARK Inc. (BARK) is a pet company specializing in subscription-based products and services for dogs, including toys, treats, and health care solutions. During the week of June 10, the company’s stock broke out of a bullish inverse head and shoulders bottoming pattern. The breakout was confirmed with a weekly close above both the neckline and prior swing high of $1.52. Since then, BARK’s stock looks to be preparing for a possible takeoff from a solid launch pad. It has formed a small bullish pennant that successfully tested support twice around the 50-day moving average (orange) as it was constructed. If an upside breakout can clear the top of the pattern at $1.91, this company’s stock has the potential to see a sharp improvement in bullish momentum. Previous swing highs that are marked on the chart are the most obvious potential upside targets. 

• Price: $3.40
• 30-day return: 79.9%
• Average daily trading volume: 536,100
• Exchange: Nasdaq

The stock of Expensify, Inc. (EXFY) triggered a long-term bullish reversal signal the week of Nov. 11, as it broke out of an inverse head and shoulders pattern and long-term downtrend line at the same time. A slightly earlier bullish clue pointed to a potential change in trend when the 20-week moving average (purple) crossed above the 50-week moving average line (orange). The stock looks extended in the short term, but it is worth watching the pullbacks that may test support around the neckline at $2.63 and the downtrend line. That neckline price level is also a weekly low. Nonetheless, the first upside long-term target derived from the price structure is up at $5.67, followed by a prior price zone around $7.98.

• Price: $3.38
• 30-day return: 89.9%
• Average daily trading volume: 361,000
• Exchange: Nasdaq

Jowell Global, Ltd. (JWEL) is a China-based ecommerce platform offering health, wellness, and beauty products. Its stock triggered a decisive bull breakout of an inverse head and shoulders pattern the week of Nov. 18, showing a wide trading range and strong close near the highs of the week. Jowell’s stock reclaimed both the 20-week moving average and 50-week moving average a few weeks earlier. That provided a clue that price action might be about to change. If the stock can continue to strengthen, it looks to have the potential to eventually head towards prior swing highs at $5.52, $8.93, and $15.29. Given the short-term extension in price, investors will be watching pullbacks for entry setups. Keep in mind that the breakout is new, and therefore, the stock may surprise to the upside. 

• Price: $1.96
• 30-day return: 21.0%
• Average daily trading volume: 644,200
• Exchange: Nasdaq

During the week of Nov. 18, the stock of Quince Therapeutics, Inc. (QNCX), a biopharmaceutical company, attempted a breakout of a double bottom pattern on a rally above $1.93. Although the week of Nov. 18 ended technically above the breakout level at $1.96, a potentially bearish shooting star pattern was formed. The stock is extended in the short term, as it has seen six consecutive weeks of gains and a questionable pattern breakout. An upside breakout may have a greater chance of success following a pullback or consolidation. That could prepare the way for a new burst of momentum once it becomes clearer that a long-term trend reversal may be in process.

• Price: $2.19
• 30-day return: 81%
• Average daily trading volume: 361,400
• Exchange: NYSE

The stock of Zevia PBC (ZVIA), a beverage company, triggered a bull breakout during the week of Nov. 8—of both an inverse head and shoulders pattern and a 50-week moving average line at the same time. What followed was a price spike of over 95% in the following two weeks. Notice that resistance was seen with a high of $2.48, which is at the confluence of two anchored volume-weighted average price lines (AVWAP) and the 38.2% Fibonacci retracement. During the advance, a bull breakout of the long-term downtrend line was confirmed. Although the stock is extended and due for a pullback in the near term, once a correction is over, it has a chance to see strong demand once again. Further, given recent strength, it may keep rising toward the top trendline before a correction. The first key support levels look to be around the 20-week moving average, now at $1.67, along with the long-term downtrend line. Also, watch last week’s low at $1.88 and the prior week’s low at $1.58.

What to Know About Penny Stocks

Many penny stocks trade via over-the-counter (OTC) markets, which means they have minimal regulatory oversight and little analyst coverage, making it difficult to access accurate company information.

However, the penny stocks we’ve identified in this article are all listed on the New York Stock Exchange or Nasdaq, which means they are subject to the same listing requirements as any other company on these exchanges. These requirements are intended to ensure that only high-quality securities are available for trading on the exchange.

While penny stocks are a riskier investment than established stocks due to their volatility, the potential for high returns is attractive to some investors.

How We Chose the Best Penny Stocks

There were a few criteria used to find the stocks listed in this article. Of course, the price of the stock needed to be below $5 per share. The stocks needed to have a minimum average daily trading volume of 100,000 shares—used to help ensure liquidity. The stock also had to have at least 24 months of trading history.

Then, the charts were reviewed for bullish patterns, including breakouts above trendlines, key resistance, and moving averages. Candlestick patterns were also considered, as we looked for signs that pointed to a bullish trend reversal or indications that a trend was strengthening. Still, no one can predict what will happen in the future, and past performance is not a guarantee of future performance.

Penny Stock Advantages and Disadvantages

The low price of penny stocks offers investors high potential for growth, and they can give smaller businesses a platform to access funding. But while these stocks can bring investors significant gains, they also carry the risk of significant losses.

There are greater risks associated with investing in penny stocks than with more established stocks. One disadvantage is that most institutions, including mutual funds and many ETFs, are prohibited from purchasing stocks below $5 per share. Penny stocks usually don’t have much liquidity. It can also be difficult to find solid public information about penny stock companies that trade over the counter. Given the additional risks, penny stocks are not suitable for all investors, especially those with a low risk tolerance.

There are ways to mitigate the added risks, starting with raising the minimum price and average trading volume and selecting penny stocks that trade on the NYSE or Nasdaq. Overall portfolio risk can be contained by allocating only a small amount of total capital to the penny stock market.

The Bottom Line

There are some benefits but also significant risks associated with investing in penny stocks. Investors can mitigate those risks by allocating only a small portion of their total portfolio to penny stocks and using technical analysis to assess stock performance. Here, we screened for penny stocks that had a high return over the last 30 days and displayed bullish technical patterns.

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As of the date this article was written, the author does not own any of the securities listed above.