Best Penny Stocks for September 2024, Using Technical Analysis

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 September 2024, screened for a high return over the last 30 days and bullish technical patterns. All charts and data are current as of August 17, 2024.

Ampco-Pittsburgh Corporation (AP)

Ampco-Pittsburgh Corporation (AP) fabricates specialized metal products and equipment for the industrial and commercial industries. Its stock surged by $1.11, or 146%, in six days in early March, accompanied by high relative volume. The rally followed a precipitous waterfall decline of approximately 75% in only 14 weeks. Subsequently, the stock reversed back up off the 50% retracement zone to complete a pullback in early August. The confluence of indicators assists in identifying potential targets. They point to the $2.59 price area, followed by a range from $2.70 to $2.79.

• Price: $3.34
• 30-day return: 10.6%
• Average daily trading volume: 400,000
• Exchange: Nasdaq

The stock of ChromaDex Corporation (CDXC), a bioscience company that develops products for healthy aging, surged by $3.40, or 272%, to reach a high of $4.65 in early April. Given a sharp four-day rally prior to that high, ChromaDex stock has the potential to see similar enthusiasm since the breakout of a bull flag pattern several weeks ago. Although the retracement forming the flag was deeper than preferred, the stock has been showing signs of renewed interest after ranging around a bottom for two years. Notice how quickly it rallied from the March lows relative to the speed of the prior decline. It shows renewed interest that could be the makings of a long-term bottom.

• Price: $3.65
• 30-day return: 52.1%
• Average daily trading volume: 3.7 million
• Exchange: Nasdaq

In early March, the stock of Digital Turbine, Inc. (APPS), a mobile video advertising platform, broke out of a bullish inverse head and shoulders bottom formation. It sets up a potential long-term reversal of the bearish trend in the stock. Strength was further confirmed recently with a weekly close above the long-term downtrend line. If Digital Turbine’s stock can close above its 50-week moving average, at $3.89, it has a chance to continue higher. 

• Price: $2.07
• 30-day return: 19.7%
• Average daily trading volume: 712,000
• Exchange: Nasdaq

Organigram Holdings, Inc. (OGI) is a consumer-focused pure-play cannabis company in the Canadian market. Its stock looks like it is attempting to come off the bottom as the 20-week moving average (purple) crossed above the 50-day moving average (orange) in March, which was followed by a higher swing low in August. Moreover, a second breakout above the long-term downtrend line was triggered for the second time recently. 

• Price: $2.81
• 30-day return: 41.2%
• Average daily trading volume: 502,500
• Exchange: NYSE

The stock of LoanDepot, Inc. (LDI) has formed a potential bottom-expanding triangle pattern with internal measured moves pointing to a likely test of resistance around $4.09. That would put the stock at a 28-month high and at a potential bull breakout pivot. LoanDepot is involved in all aspects of servicing residential mortgages. If the stock can get above $4.09 and stay above it, there is a chance to test a price zone around $4.79 to $5.02. The higher price level is a 50% retracement level. 

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.