Please ensure Javascript is enabled for purposes of website accessibility

The Next Million-Dollar Penny Stock

By Tim Beyers - Updated Apr 6, 2017 at 1:25AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Cheap stocks could give you huge returns.

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


Recent Price

CAPS Stars (Out of 5)

5-Year Return

Interactive Intelligence (NASDAQ:ININ)




Gulfport Energy (NASDAQ:GPOR)




Questcor Pharmaceuticals




AsiaInfo Holdings (NASDAQ:ASIA)




Green Mountain Coffee Roasters (NASDAQ:GMCR)




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 ValueClick (NASDAQ:VCLK).

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?

This week when I ran that screen, 41 stocks made the cut -- including our last topper, ANADIGICS.

My favorite penny stock this week is Dennison Mines (AMEX:DNN), a uranium producer last seen in this column in September. Today's details:


Dennison Mines

CAPS stars (5 max)


Total ratings


Percent Bulls


Percent Bears


Bullish pitches

82 out of 83

Data current as of July 30, 2009.

Fools who like Dennison at these levels are likely encouraged by Cameco's (NYSE:CCJ) recent purchasing patterns, an indicator that uranium prices may be nearing the bottom.

"Uranium was recently at its lowest price level. With brent price increase, uranium and fossil fuels tend to follow the price increase," wrote CAPS investor jajege in June. "New nuclear power plants are planned and will require more uranium production, [e]specially after the stock of uranium from the nuclear weapons are running out."

Even so, this is a very risky stock. Dennison's balance sheet boasts just $2.5 million in cash versus $100 million in long-term debt, according to Capital IQ. If market tailwinds don't materialize, and soon, today's investors could see losses.

But that's my take. I'm more interested to know what you think. Would you buy Dennison Mines 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. Green Mountain Coffee Roasters and Interactive Intelligence are Motley Fool Rule Breakers recommendations. Try any of our Foolish newsletter services free for 30 days.

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. Its disclosure policy was small and cuddly. Once.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Keurig Green Mountain, Inc. Stock Quote
Keurig Green Mountain, Inc.
Cameco Corporation Stock Quote
Cameco Corporation
$25.89 (0.47%) $0.12
Gulfport Energy Corporation Stock Quote
Gulfport Energy Corporation
Denison Mines Corp. Stock Quote
Denison Mines Corp.
$1.24 (6.90%) $0.08
Interactive Intelligence Group, Inc. Stock Quote
Interactive Intelligence Group, Inc.

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/08/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.