A penny stock is generally defined as a company that trades at less than $1.00 per share. But that bracket has expanded over time to include stocks that trade anywhere below $5.00 per share.
These stocks are also thinly-traded, which means that they average very low trading volumes. Another aspect of penny stocks is that they tend to have a market valuation of less than $50 million, which places them in the micro-cap and nano-cap categories.
These stocks also tend to be developments stage companies, which means they invest a lot in research and development with little to no revenue to show for.
Ideally, investors analyze them based on what they could offer in the future in terms of royalties from projects, or sales from a product under development.
However, not all stocks that trade under $1.00 exhibit these features. In fact, some of them have fallen to these levels after their stock prices plummeted over the last 12 months.
Baytex Energy
Baytex Energy Corp (BTEGF) which now trades at about $0.61 per share has a market cap of about $292 million. This crude oil producer traded at $1.51 per share at the beginning of the year. It has since suffered the wrath of the coronavirus pandemic amid falling oil prices.
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At the current price, Baytex falls in the category of penny stocks, but it is clearly not your ordinary penny stock. Below is a clear demonstration of why it could be one of the top penny stocks to watch going into the tail-end of the year.
Based on the company’s most recent quarterly results, Baytex is on course to turn profitable again within the next 12 months. The Calgary, Alberta-based oil and gas company reported results for fiscal Q3 at the start of the month with adjusted funds flow per
