Are Penny Stocks a Good Investment?

By Keith Noonan – Updated Sep 29, 2025 at 1:42 PM | Fact-checked by Frank Bass

Key Points

Penny stocks are high-risk with prices under $5, often leading to investor losses.
Invest in larger firms with clear growth paths, avoiding speculative low-value stocks.
Explore alternatives like fractional shares in established companies to minimize risk.

Everybody likes a bargain, and stocks with low share prices certainly seem like bargains. With some high-priced stocks costing hundreds or even thousands of dollars for a single share, buying penny stocks -- stocks with share prices of less than $5 -- can be a tempting way to try to grow your money quickly. Penny stocks are stocks with share prices below $5 and market capitalizations below $250 million. However, penny stocks generally have a well-deserved reputation for burning investors.

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It is possible to achieve strong returns by investing in young companies with small valuations or depressed stock prices. But it's typically better to invest only in companies that are larger and have less speculative valuations. Any risky stock buys should be limited to shares of companies that generate meaningful revenues -- or are pursuing clear, realistic paths to growth.

We'll delve into how to identify cheap stocks, as well as name some individual stock picks that have significant potential. But first, let's take a closer look at penny stocks and why they have such a poor reputation.

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Many penny stocks are traded so cheaply because the businesses behind them aren't worth much more than that.
Tom and David Gardner, Co-founders, The Motley Fool

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My foray into penny stocks turned into an investing horror story that I was reminded of every time I looked at my brokerage statement.
Reuben Brewer, contributor, The Motley Fool

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Ticker Information Table
Name and ticker	Market cap	Dividend yield	Industry
Expion360 (NASDAQ:XPON)	$4.0 million	0.00%	Electrical Equipment
Inspire Veterinary Partners (NASDAQ:IVP)	$5.2 million	0.00%	Healthcare Providers and Services
Cognition Therapeutics (NASDAQ:CGTX)	$136.8 million	0.00%	Pharmaceuticals

Data as of Nov 16, 2025.

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1. Expion360

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NASDAQ: XPON

Expion360

Today's Change

(-8.66%) $-0.11

Current Price

$1.16

Key Data Points

Market Cap

$0B

Day's Range

$1.13 - $1.60

52wk Range

$0.60 - $5.50

Volume

28M

Avg Vol

2.4M

Gross Margin

21.17%

Dividend Yield

N/A

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Expion360 (XPON -8.66%) is a battery-technologies specialist that designs and manufactures lithium-iron-phosphate batteries. The company produces batteries for recreational vehicles (RVs), marine applications, golf carts, and other industrial and residential purposes.

2. Inspire Veterinary Partners

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NASDAQ: IVP

Inspire Veterinary Partners

Today's Change

(16.85%) $0.11

Current Price

$0.78

Key Data Points

Market Cap

$0B

Day's Range

$0.68 - $0.80

52wk Range

$0.63 - $6.31

Volume

157K

Avg Vol

182K

Gross Margin

11.90%

Dividend Yield

N/A

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Inspire Veterinary Partners (IVP +16.85%) is a company that owns veterinary and animal care practices and had its initial public offering in 2023. Inspire purchases veterinary businesses and associated real-estate holdings and aims to improve the sales and efficiency of these businesses.

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3. Cognition Therapeutics

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NASDAQ: CGTX

Cognition Therapeutics

Today's Change

(0.65%) $0.01

Current Price

$1.55

Key Data Points

Market Cap

$0B

Day's Range

$1.40 - $1.59

52wk Range

$0.22 - $3.83

Volume

908K

Avg Vol

3.9M

Gross Margin

0.00%

Dividend Yield

N/A

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Cognition Therapeutics (CGTX +0.65%) is a clinical-stage biotech company that is trying to develop treatments for Alzheimer's disease and dementia with Lewy bodies (DLB) among other degenerative central-nervous-system disorders. As a clinical-stage biotech, Cognition Therapeutics does not yet have any treatments on the market -- but its stock could see big gains if favorable data emerges from its trials.

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