Penny Picks: The Top Penny Stocks of 2021 and Beyond Penny stocks can be volatile and, in some cases, too volatile for investors looking to achieve consistent long-term gains. However, with the right knowledge and strategy, there is potential within...

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Penny stocks can be volatile and, in some cases, too volatile for investors looking to achieve consistent long-term gains. However, with the right knowledge and strategy, there is potential within the market. One of the reasons penny stocks often get a bad reputation is because they're typically companies that aren't well known or their share price is less than $1. This can make them a riskier investment than shares in a company with a market capitalization of many billions.

Despite this, penny stocks can be profitable if you do a bit of research and use a conservative investment strategy. For example, most overviews containing tips to invest in penny stocks will advise you to look at a company's history and accounts. If the executives are seemingly reputable and the company has been making a profit in recent years, it could be a good investment. It's also a good idea to look for growth sectors that are ripe for start-ups. Indeed, this is where you could find penny-stock companies that, within a decade or so, could be leaders in their field.

Four Penny Stocks to Look Out For

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The other thing you can do is look at performance. Don't focus too much on the share price. Instead, look at price performance over a sustained period of time. In fact, we can delve a little further into this by looking at some of the top penny stocks in 2021. The following stocks shouldn't be seen as examples only. Their previous performances aren't an indicator of future success. However, not only are they among the top penny stocks of 2021, they're an example of how these investments can be profitable.

Progenity Inc. (NASDAQ: PROG)

Progenity's share price actually surged to $2.20 in October 2021 thanks, in part, to the $20 million in funding it received. This actually prompted a major sell-off which caused the share price to plummet. However, with its work on molecular testing breaking new ground in various areas, including preeclampsia, it's a company that has potential based on its utility alone.

AIkido Pharma Inc. (NASDAQ: AIKI)

Pharmaceuticals have always been popular, but interest spiked in the early part of 2020 due to COVID-19. This has helped Aikido enjoy a bullish period since mid-September with its share price increasing from $0.73 to $0.90 by mid-October. As well as renewed interest in pharma, AIkido has been actively investing in companies with exposure to other markets, including DatChat which is a blockchain-based social media platform.

Kosmos Energy Ltd. (NYSE: KOS)

The future of oil and gas might be up for debate, but this penny stock achieved a 183% year-on-year gain in October 2021. Fueling the recent rise of Kosmos is a strong cash flow in the second quarter of 2021. This cash is being used to pay down debt and implement expansion plans in 2022. This could help this penny stock remain buoyant for at least the foreseeable future.

Alto Ingredients, Inc. (NASDAQ: ALTO)

It's probably not be considered a penny stock anymore. And, if it is, it probably won't be for long. This company used to make its money producing ethanol. However, since pivoting, it now focuses a lot of its resources on specialty alcohols which are used in everything from cosmetics to pet food. This switch helped push the Alto Ingredients share price above $6.50 in July. It's since fallen, but it remains well above its 2020 low of $0.44.

Penny stocks are classed as higher-risk investments, but they aren't always a bad option. Indeed, with sufficient research and the right strategy, you could find a sleeping giant.