The Next Million-Dollar Penny Stock

Penny stocks can make you rich. Need proof? Every one of these multibaggers was once a penny stock:


Recent Price

CAPS Stars (5 Max)

Five-Year Return

Denbury Resources (NYSE: DNR  )




Darling International (NYSE: DAR  )




KMG Chemicals (Nasdaq: KMGB  )




Savient Pharmaceuticals (Nasdaq: SVNT  )




The Knot (Nasdaq: KNOT  )




Sources: Motley Fool CAPS, Yahoo! Finance.

The promise of outrageous returns has periodically made even the world's best stock-pickers penny stock investors. Peter Lynch has enjoyed the stock market's super-cheap seats in the past, and still does on occasion. The Royce Low-Priced Stock fund has beaten the market for a decade by betting on stocks trading near or below $10 a share, including Imperial Sugar (Nasdaq: IPSU  ) .

Even the All-Stars in our 135,000-plus Motley Fool CAPS community take to penny stocks. More than a few have been richly rewarded.

Pennies from heaven
So why not invest in penny stocks? Well, the warning the SEC issued about them provides one excellent reason to steer clear. But what if we take the agency's definition literally, and limit our choices to stocks trading between $1.50 and $5 a share? And what if we further seek only four- and five-star stocks with a market cap between $250 million and $2 billion? Surely our CAPS screener would return some winners, right?

When I ran that screen this week, 56 stocks made the cut -- including our last topper, Parker Drilling.

My favorite penny stock this week is biomaterial maker Orthovita (Nasdaq: VITA  ) , a stock to watch according to some in our Motley Fool Rule Breakers community. Our CAPS members seem equally bullish:



CAPS stars (5 max)


Total ratings


Percent Bulls


Percent Bears


Bullish pitches

22 out of 23

Their thesis is simple: Orthovita's Vitoss is a proven substitute in bone grafts. Cortoss, if approved by the Food and Drug Administration for use here in the U.S., could juice earnings by giving doctors another option for aiding those suffering with brittle bones.

"I worked for a company that distributed Orthovita products and I saw first hand what Vitoss could do and the amount of bone regeneration that took place in the spine following surgeries," wrote CAPS investor bonedude6 in late December. "Vitoss is a great product and I'm counting on Cortoss to be just as good and used by even more surgeons."

Agreed, but that's my take. I'm more interested to know what you think. Would you buy Orthovita at today's prices? Let us know by signing up for CAPS today. It's 100% free to participate.

More millionaire-making Foolishness:

Each month, our Motley Fool Hidden Gems service spotlights promising micro-cap opportunities in a segment called Tiny Gems. Try this market-beating service risk-free for 30 days to find out what our penny stock sleuths are following now.

Fool contributor Tim Beyers didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. The Motley Fool is also on Twitter as @TheMotleyFool. The Knot is a Rule Breakers recommendation. Its disclosure policy was small and cuddly. Once.

Read/Post Comments (0) | Recommend This Article (13)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 913865, ~/Articles/ArticleHandler.aspx, 10/24/2016 8:15:29 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated Moments ago Sponsored by:
DOW 18,223.03 77.32 0.43%
S&P 500 2,151.33 10.17 0.47%
NASD 5,309.83 52.43 1.00%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
VITA.DL $0.00 Down +0.00 +0.00%
Orthovita CAPS Rating: ****
DAR $13.68 Up +0.18 +1.33%
Darling Ingredient… CAPS Rating: ****
DNR $2.78 Down -0.05 -1.77%
Denbury Resources CAPS Rating: ***
IPSU.DL $0.00 Down +0.00 +0.00%
Imperial Sugar Com… CAPS Rating: ***
KMG $29.52 Up +0.41 +1.41%
KMG Chemicals CAPS Rating: No stars
SVNTQ $0.00 Down +0.00 +0.00%
Savient Pharmaceut… CAPS Rating: **
XOXO $18.89 Up +0.36 +1.94%
XO Group CAPS Rating: **