So you want to become the next Wolf of Wall Street? Well, you’ve come to the right place! Before you can start trading penny stocks, you need to learn the basics before reaping the rewards. Penny stocks have a bad reputation and are regarded by some as the gutter of Wall Street! Talk to any financial adviser about them and they’ll laugh. New traders starting off get attracted to these stocks because of the massive potential gains! It’s possible to make over 50-100% in a single day due to their volatility. On the other hand, blue chip stocks such as Google and Apple move up or down by less than 1% every trading day. 95% of penny shares are scams but once you understand how they work, develop a strategy to take advantage of the manipulation.

What are Penny Stocks?

Penny stocks are classified by the SEC as any stock below $5 per share and have a market cap between $50-$300 million. You will find that most trade over-the-counter on the OTC Bulletin Board (OTCBB). 95% of these pink sheet stocks aren’t real businesses. These companies trade for pennies and only exist so shareholders can dump worthless shares on suckers. New investors hope to strike it rich by buying millions of shares in these tiny companies, trading for 1/10 of a cent. 99.9% of the time this stupid strategy fails. I strongly advise you to stay away from the OTC market due to the lack of regulation. OTC stocks struggle to survive, they don’t need to report financial earnings and generate little or no volume. It’s safer to only trade companies that meet requirements to get listed on the Nasdaq and NYSE.

Getting Started with Penny Stocks

You’ll be surprised how easy it is to get started with penny stocks. To reduce your chances of failure, start off by paper trading first. 90% of new traders are too eager and blow up their accounts within a few months. Learning to trade is like any skill, it takes time to learn. Rather than risking real money straight away, paper trading allows you to become more comfortable with the basics of the stock market. This is a vital component that will be the foundation to your success. You will gradually develop your own style and test out strategies in a safe environment. Are you a long-term investor or maybe you prefer day trading/swing trading? Paper trading should last at least three months, then the real fun can begin! FYI, Marketwatch.com is the best place to open a virtual account and compete in competitions.

Setting Up a Brokerage Account

In recent times the barriers to stock trading have fallen dramatically. Almost anyone can sign up for a broker and start buying stocks within days. The only problem, finding suitable penny stock brokers is a challenging task. There are countless factors involved in selecting a good broker that won’t overcharge on commissions and offer fast executions but speed is important when entering and exiting trades. The ideal broker for penny stock traders also charge a flat commission rate, no volume restrictions, low account minimums and quality customer service.

Some brokers have no minimums deposits to attract new customers while others charge no fees. Robinhood and TradeZero charge no fee, the only problem is both of them offer terrible executions. Both brokers make money by routing their order flow through various market makers which put customers at a disadvantage. Remember there is no such thing as a free lunch on Wall Street. In my opinion, Etrade and Charles Schwab are the best options as they have low account minimums, cheap commissions and solid executions.

Another thing new traders don’t know about is the Pattern Day Trader rule enforced by the SEC. The PDT rule sucks for those with small account sizes. For accounts under $25,000, you are only able to make 4 day trades within the same 5 business day time-frame. To avoid the PDT rule most traders end up using an offshore broker which is risky and there are also tax implications to consider when using an offshore account. There are ways to get around the regulation but it’s better to save up enough money to use the best brokers.

Pump and Dumps

Not surprisingly, a lot of beginners get introduced into penny stocks from pump and dump schemes. Stock promoters purposely target novice traders who are more likely to buy shares in a crappy penny stock. This can be seen in movies like the Wolf of Wall Street and Boiler Room. Jordan Belfort made millions through pump and dump scams. His firm, Stratton Oakmont would accumulate millions of shares in a tiny company with the intention of selling them at an inflated price. Back during the 1990’s they aggressively promoted penny shares through cold calling, using unethical sales techniques to attract buyers, advertising stocks trading for pennies as the next Microsoft. Later Stratton Oakmont would sell for a massive profit and customers suffered huge losses. In the end, Jordan Belfort was responsible for defrauding customers out of $200 million in total.

Nowadays, penny stock promoters use the internet to promote companies. With the advancement of social media, its much easier to reach to a large audience. Promoters create websites to rank high on Google for specific search phrases and pay for ads on different search engines. Any time someone searches “hot stock tips”, they will come across their website and sign up to their email list. Another tactic is advertising on Facebook to specifically target people likely to fall prey to scams. Luckily the SEC has upped their game and is punishing promoters for illegal stock manipulation. The SEC are now monitoring the web for pump and dumps so the tactics mentioned are no longer as effective. Examples of some notorious promoters include Jonathan Lebed and John Babikian. These con artists defrauded millions from poor unsuspecting people. Always perform your own due diligence and never listen to “hot stock” tips.

Technical Analysis

Penny stock day traders need to learn technical analysis, so they can correctly time their entries and exits. Technical analysis is the study of historical chart patterns to predict the future direction of a stock’s price. It’s important to note technical analysis isn’t reliable for micro caps that are thinly traded. The greater the volume, the more trustworthy chart patterns become. Day traders such as Tim Grittani trade purely using technical analysis and ignore the fundamentals because they don’t matter in the short-run. Trade the ticker, not the company, is his motto!

Here are five basic terms you should know:

• Support Levels
• Resistance Levels
• Moving Averages
• RSI (Relative Strength Index )
• MACD (Moving Average Convergence Divergence)

Below is a helpful video from Peter Leeds. He explains the basics of candlestick charts, chart patterns and the best technical indicators to follow.

Penny Stock Strategies That Work

Short Selling

Shorting is one of the most popular strategies for volatile stocks in the $2-$10 range. Timothy Sykes popularized short selling over-hyped penny stocks and has made millions in the process. It involves placing a bet that a certain stock will decline in price. What confuses people is your selling a position in a stock you don’t own and buy it back later for a lower price. You’re borrowing shares from a broker who has shares available to short. If the stock drops, the profit is the difference between the price at time you borrowed and the price at which it was subsequently purchased. The problem is most brokerages don’t have the necessary tools to short sell stocks under $5 and therefore won’t allow investors to do so.

The optimal time to short sell is when a company explodes based on a catalyst and then wait like a sniper for momentum to slow down. This strategy is dangerous unless you have strong risk management. Technically your losses are unlimited. If you short 1000 shares at $4 and the price rises to $20, you lose $20,000! That’s more than 100% and end up owing money to your brokerage. Knowing when to short sell is difficult, stocks can act irrational longer than you can remain solvent. A lot of investors shorted the housing bubble too early and lost millions. Others waited for the right time and reaped the rewards.

Momentum Day Trading

Momentum traders make a living by finding penny stocks that are moving 20-30% in a day. They profit by taking either a long or short position hoping the momentum will continue in its current direction. Stocks that only move sideways are useless for these type of traders! To find volatile stocks use a stock screener such as Trade Ideas to gather a list. Using the correct criteria, you can whittle the list down from 5,000 to 10 stocks to watch. Building a watch-list is effective as you can focus your attention on just 10 charts instead of 100’s.

Criteria for momentum plays:

• Low float: the number of shares available to the public has to be under 100 million. Ultra low floats have around 15 million shares available. The lower the float, the less volume it takes for a stock to dramatically increase or decrease.
• Daily charts above the moving averages with no short-term resistance.
• High relative volume at least twice the daily average. The relative volume indicator is displayed as a ratio, example 4.5 means it is trading 4.5 times its normal volume.
• A positive or negative catalyst that will affect share price.

As with every strategy, the goal of momentum trading is finding high probability setups where you can control risk. This strategy is more popular in low priced stocks because of the rise of algorithmic trading. Algorithmic traders avoid small caps because the difference between the spread is too high. Their loss is your gain!

Long Term Investing

Investing in penny stocks for the long term requires using fundamental analysis to assess the attractiveness of a company. This is the same approach Warren Buffett uses but applied to the penny stock market. Investing early into small caps can be very lucrative but requires a lot of patience. You may end up buying and holding your position for a few years. While most long-term investments may not perform as expected others will become billion dollar businesses. Take Monster Energy as an example, it was once below one dollar in the mid-1990s. Back then the company was known as Hansen Natural. Right now their share price is $60 with a market cap of $31.4 billion! While investing in the next 1000% gainer is unrealistic there’s no reason why you can’t make 50-100% by investing in an undervalued company.

To achieve these impressive gains, you have to start generating ideas and researching companies. Over 95% of stocks under $5 are absolute garbage so you’ll need to dig through the remaining 5% to find the hidden gems.

Criteria to find the best small caps:

• Experienced management team with an impressive track record.
• Strong balance sheet – very little debt or long-term liabilities.
• Strong cash flow – it’s important the business can self-fund growth through revenue without needing to dilute shares.
• Operate in a hot sector – cyber security and artificial intelligence are prime examples.
• High barriers to entry in the industry – own a patented technology or have a sustainable competitive advantage.
• Consistent earnings that are growing each quarter. Watch out for companies using magic accounting to make financial results appear stronger.

Beware of Fraudsters

The penny stock industry is full of charlatans selling trading education to beginners. These self-proclaimed guru’s make thousands every month selling overpriced courses. They never reveal their track record and have no business teaching others how to trade. Some will show profits for certain trades but will never show their brokerage statements. Even 20 year old kids on social media are claiming to be experts. William Karaman and Austin Page are all good examples. These young kids understand there is easy money to make by selling education instead of trading. They can teach the basics of penny stocks and sound as though they are knowledgeable. On social media, they post images of their stacks of cash or their rented Lamborghini. Painting this false image of success. “Use my simple strategies and buy your own exotic sports car.” It annoys me how people can’t see through their bullshit.

With so many scam artists online, it’s difficult for beginners to learn without getting ripped off. Finding an experienced mentor with a solid track record and successful students is crucial. While not everyone likes Timothy Sykes, he has multiple success stories. Some of his most successful subscribers include Tim Grittani, Steven Dux, Michael Goode, Roland Wolf and Connor Bruggemann. An alternative option is using YouTube and Investopedia to educate yourself. There are hundreds of videos and free websites that teach the foundations of stock trading but beware of marketers creating videos purely to advertise their services. In addition to YouTube videos, Penny Stocks for Dummies by Peter Leeds is another great learning resource.

Conclusion

While penny stocks are risky there still is potential to make huge profits providing you follow a suitable strategy. The path to profitability can be a long road, learning to trade is a frustrating task that can take years to master. Get yourself a mentor and set yourself up for success. This requires investing heavily into education that will pay off in the long run.

Many well-respected penny stock traders have managed to become “superstars” of the penny stock world. However, none of them have reached the kind of status that Timothy Sykes has, and he has solidified himself as a pillar of the penny stock community.

For those who are unaware, Sykes reached legendary status among penny stock circles when he earned well over $1 million day trading during his time at Tulane University. In fact, he was able to earn this amount of money by merely investing his Bar Mitzvah money. He also went on to run a hedge fund.

Sykes is currently a financial educator, and many individuals seek to follow his blueprint regarding penny stocks. He has also published books and created DVDs to help those who seek to replicate his success. Sykes has also launched websites and programs to help traders reach their full potential. However, many traders are curious as to which DVDs to purchase in order to succeed. Here are the top 5 Timothy Sykes DVDs that you should consider.

PennyStocking

The first DVD that traders should purchase is PennyStocking, and it’s a great introduction to Timothy Sykes and his strategies that have worked in the market. If you are a beginner, this is absolutely the place to start. If you are a seasoned trader, it still might provide insight into the penny stock world that can prove valuable.

This is the first Timothy Sykes DVD that you should explore, and you will be able to recognize patterns that will net you significant profits in the future. Of course, it’s up to you to use the strategies wisely. This particular DVD is 6 hours long, so it’s quite an investment.

TimRaw

Once you have a basic foundation of penny stocks, Tim Raw is a DVD that offers more strategies and basic tips that could help you succeed. Here, Sykes speaks a lot about specific chart patterns more than the penny stock market itself.

Also, he offers a lot of stories and perspective on his success that can prove useful. This might not be the most valuable Timothy Sykes DVD, but it’s worth a watch. This DVD is longer than usual, clocking in at 12 hours.

Learn Level 2

Penny stock trading isn’t just about recognizing chart patterns and digging into fundamentals. The penny stock world is also heavily determined by the Level II market makers, which often manipulate price action for their own benefit. If you want to succeed in penny stocks, you will have to know more about Level 2.

Timothy Sykes provides some incredible insight here into Level 2, and it is certainly one of his most important DVDs ever. If you are serious about improving when and why you enter and exit a stock – this is the Timothy Sykes DVD to purchase.

Spikeability

There are many Timothy Sykes DVDs that have garnered a significant amount of attention, but Spikeability is arguably his most underrated DVD to date. This particular DVD focuses on chart patterns and situations where traders can benefit from huge spikes in a stock.

Here, you can learn strategies on how to take advantage of stocks that run from 100% – 500%. Who wouldn’t want to learn about how to triple their money or more? Spikeability is definitely one of the Timothy Sykes DVDs to watch as soon as possible. The DVD is 6 hours long.

TIMFundamentals Part Deux

After you understand the basics, and the best ways to trade – there’s a lot more to learn about penny stocks. Here, Timothy Sykes takes you into the world of researching penny stocks, and identifying red flags that might end up draining your account if you aren’t careful. Sykes also elaborates on how to create watchlists, and other fundamentals that can turn you from a novice trader into an expert one.

This DVD does require some initial knowledge, but it still remains one of Timothy Sykes’ best DVDs in terms of actual valuable information.

Conclusion

Some people believe that Timothy Sykes is a polarizing figure, and argue that his financial education DVDs are overrated. However, there’s an important thing to note. Sykes actually has students that have replicated his success, which is quite the rarity when it comes to penny stock investing. Specifically, Tim Grittani used the strategies of Timothy Sykes to turn $1500 into over $1 million in just several years!

Timothy Sykes cannot turn you into an overnight millionaire, but he clearly does have information to offer that can help you capitalize on the right trades at the right times. We hope this list of DVDs guides you in the right direction.

Over the years scumbag stock promoters have given penny stocks a bad reputation. Everyone knows someone who has been burned badly in the past. Innocent people have lost thousands after investing a large chunk of their savings into a “hot stock tip”. Although promoters are unethical, they provide educated traders with an opportunity to profit from these pump and dump scams. With that being said the vast majority are awful with a terrible track record. Fast forward to 2020, only a handful of them have the ability to attract enough volume to make it worthwhile to buy or short sell a promotion. 

The landscape has changed significantly with big-time promoters getting shut-down by the SEC; these included Awesome Penny Stocks, Best Damn Penny Stocks and Victory Mark Corp. Four or five years ago it wasn’t difficult to make money buying pre-promos by discovering details of upcoming promotions through stock screeners and researching via Google. APS and PennyPic had dozens of “sister websites” that released alerts early to subscribers before blasting it out to their massive email lists. John Babikian was the mastermind behind APS, it is reported he made close to $100 million from his scheme. His lavish lifestyle attracted a tonne of media attention, owning dozens of properties throughout the world and driving a Bugatti Veyron. John Babikian ended up owing $15 million in unpaid taxes, he fled Canada and is now believed to hiding out in either Russia or the UAE.

Top Penny Stock Promoters to follow in 2020

As of right now, pretty much all promoters suck! ElitePennyStock.com & Stocktips.com were previously the top two promoters but were shut down by the SEC. Below is a list of the best of a bad bunch. 

• Pennystocks.com
• Pennypicks.net  
• Pennystockdream.com
• thepennystocknewsletter.com
• Stockcommander.com
• Pennystockprophet.com
• Pennystock101.org
• Ultimatestockalerts.com

Use yopmail as a disposable email address to sign up for their alerts so you can track them. It’s useful to be aware they separate their email lists and don’t email their subscribers all at once. If they have a list of 10,000 emails, they might divide it up into 4 lists of 2,500.

Useful Websites for Research

Stockpromoters.com – This is a useful resource to track what promoters currently are the most effective and how many newsletters are touting a certain ticker symbol. 

EquityFeed.com – Trading software that can be used to scan 1000’s of symbols to find OTC stocks with abnormal volume. (Look at the bottom of the page to see the filters I use).

Goodetrades.com – This is a great site run by Michael Goode and provides an abundance of research on the latest pump and dumps.

Promotionstocksecrets.com – Premium service to learn out about how promotion works, free articles on the site are educational. 

I also use SEMrush.com to track how much websites are spending on advertising campaigns on Google. SEMrush is a paid SEO tool which estimates how much a site is spending on PPC (Pay Per Click) campaigns on Google and Yahoo. They bid on search terms/keywords relevant to their website, like “stocks to buy”, this could keyword could cost $1-$4 a click, the higher you bid, the higher you appear in the ads section. E.g. PennyPicks.net for July has received an estimated 10,562 visitors at the cost of $45,036 and overall are bidding on 1,161 keywords. ($45,036 / 10,562 = $4.26) This means PennyPicks.net are paying over $4 per visitor, that is a significant amount to spend and results in high-quality website traffic which means more people are signing up for their alerts. Pennystockhub.com for July got 2,560 visitors at of cost of $13,702. ($13,702 / 2,560 = $5.35) In theory, PennyPicks.net should be the more effective promoter as they’re spending $30,000 on their overall campaign and receive an estimated 5 times more visitors. 

Here’s a screenshot of an example.

Spotting Stocks Before They Get Promoted

The best method to find penny stocks before they’re pumped is using stock screening tools such as Equity Feed and StocksToTrade.com. Once you apply the correct filters, stock screeners can spot unusual trading activity on OTC and pink sheets, i.e. insiders slowly buying up blocks of shares months before the promotion begins.

Promotional Tactics

With the rise of social media platforms like Facebook, Instagram and Twitter, there’s more opportunity to reach a mass audience with minimal cost. Instagram, in particular, is becoming hugely popular to tout stocks. I’ve noticed Instagram models with millions of followers, getting paid to advertise marijuana companies. With all the hype around the legislation of marijuana, dozens of people lost money on that alert. On Twitter it’s relatively easy for promoters to find penny stock traders, e.g. they can just visit Timothy Sykes followers list, mass follows them and set up an automatic DM touting a shitty company. Promoters can also leverage paid ads on Facebook to set up highly targeted advertisements that follow you around everywhere. Sometimes to look more natural they create fake profiles claiming to be financial advisers or have worked for Goldman Sachs.

Another tactic utilized by promoters is developing a strong brand and portraying themselves as an authority figure. National Inflation Association was a clever scheme run by Jonathan Lebed and Gerard Adams. To the average person, they appeared as a non-profit organization trying to educate the masses on how to prepare for hyperinflation and profit from the next stock market collapse. Their short documentaries on YouTube were well-produced and amassed millions of views, allowing them to build massive email lists to promote worthless companies. Hundred’s of vulnerable people lost money investing in their stock picks during tough economic times, their email alerts sounded compelling but in reality, were bullshit and dropped 90% a few months after.

Gerard Adams left NIA and co-founded Elite Daily which was later acquired by the Daily Mail for $50 million. More than likely Jonathan Lebed is still operating the website, but his picks receive very little attention. Lebed is the poster boy for pump and dumps, at 16 years old he was indicted by the SEC for pumping penny stocks on message boards and had to pay back $285,000. He created about 80 different usernames on message boards and had conversations with himself to make it look like the stocks he was talking about were great investments. Back in the early 2000’s this was an effective strategy but doesn’t work as well now.

With so many investment scams being advertised, the SEC will have to be more vigilant monitoring the internet for micro cap fraud to protect the public.

The Brooklyn native who’s crazy lifestyle was portrayed by Leonardo DiCaprio in ‘The Wolf of Wall Street’, currently has a net worth of minus $100 million. Once worth millions, the former stockbroker experienced a massive fall from grace.

Made infamous through trading penny stocks throughout the ’90s and most notably the 2013 film ‘The Wolf of Wall Street’, Jordan Belfort co-founded Stratton Oakmont, along with his partner in crime, Danny Porush. Stratton Oakmont was a brokerage firm that promoted worthless penny stocks to uneducated investors. Belfort and his companions used aggressive sales tactics to increase share prices and later dump the same stock for substantial profits as customers lost nearly everything.

For those less financially savvy, penny stocks are shares that typically trade under $5 per share with a market cap of $50-$300 million. 90% of penny stocks are completely worthless and only exist so shareholders can sell their shares at inflated prices. Most of these stocks trade on the OTC Bulletin Board and don’t have to release any financial statements to the public. Penny stocks are a hunting ground for scammers looking to make easy money, those new to stock trading get suckered in with the lure of making explosive returns.

Jordan Belfort’s Net Worth Explained

You may be wondering how someone can end up with a negative net worth of $97 million! This is due to the fact he was convicted by the SEC for stock manipulation. As well as receiving a 4-year jail sentence (22 months served), Belfort was also ordered to pay back the sum of $110.4 million to the victims he defrauded. With approximately $13 million having been paid back to date, Belfort still has a long way to go in terms of his reparations.

Over the last few Belfort has made little effort to repay investors. He continues to the live high-life, renting a beautiful property by the sea in California and another five bedroom mansion on the shores of Lake Tahoe. The 57 year old only pays back $4,000 to $5,000 per month, at this rate it will take 1,600 years to clear the debt.

What is Jordan Belfort up to Today?

Since his release in 2006, Belfort has gone on to publish three books: ‘The Wolf of Wall Street’ (2007), ‘Catching the Wolf of Wall Street’ (2009), and a self-help book ‘The Way of the Wolf’ (2017). Receiving an advance of $500,000 for his first book just a few days after his release, it seemed like he couldn’t make money.

This initial book went on to see the popular film adaptation starring Leonardo DiCaprio and featured the same title. Despite this film making $392 million at the box office, Belfort sold the rights for a mere $1 million. Out of this $1 million, only $21,000 went towards his restitution payments leaving his victims a little bewildered. I wouldn’t be surprised if the con artist has millions stashed away in off-shore bank accounts. A lot of wealthy businessmen have their fortunes located in offshore jurisdictions so the authorities can’t take their money.

Belfort has continuously stated his full intent to pay back his former investors and has been earning a substantial income through motivational speaking. Touring the world teaching entrepreneurs his ‘Straight Line Persuasion’ system, that reveals how to improve your sales by implementing various persuasions tactics. His ‘Straight Line Persuasion’ course, retails online for a mind-blowing $1,997. Belfort boasts he’ll earn more money in recent years than he ever did at the height of his stockbroking career.

With Belfort earning anywhere between $30,000-$80,000 per talk it’s easy to see how he could amass another fortune so quickly. He’s also stated that he fully intends on using 100% of his U.S. tour to fund his restitution package, already with $50 million sitting in an escrow account.

How Did Belfort Get Started?

Belfort was an entrepreneur at an early age, he began selling ice-cream in-between high school and college at a local beach with his childhood friend Elliot Loewenstern and made a cool $20,000.

After graduating from American University with a degree in biology he ended up in the surprising industry of door-to-door meat and seafood sales. Although Belfort experienced initial success, he inevitably filed for bankruptcy when he turned 25. This was his turning point as a family friend helped him gain a position as a trainee stockbroker at L.F. Rothschild and the man we all know was born.

While penny stocks are often criticized by experts as highly speculative, all the risk associated with penny shares does not come without potential for massive rewards. Some penny stocks may never take off and others may suffer from the “pump and dump” syndrome, but others hit it big and became billion dollar companies.

Contrary to popular belief, Apple and Microsoft were never penny stocks. Microsoft went public back in 1986 for $21 per share. If you look at their long-term share price, it seems as if they started as a penny stock because their historical value has been adjusted to include stock splits. For example, a 5-for-1 split would make a $50 stock appear on a long-term chart, that it started trading at $10 per share.

Below are 10 well-known companies that all traded under $2 at one point in time, only to see their stock prices soar in value, making savvy investors a boatload of cash. Included in this list, you will find small companies that transformed into industry leaders and successful businesses that collapsed or reignited into corporate powerhouses once again.

Monster Beverage (MNST:NASDAQ)

Everyone has heard of Monster Energy drinks, and today, Monster Beverage is a popular momentum stock on Wall Street. However, the company that formerly went by Hansen Natural was originally founded in 1935, evolving its business significantly over the course of 80 years. Today, Monster Beverage produces a variety of energy drinks, fruit drinks, and natural soft drinks, but its most popular products are Hansen’s Natural Soda and Monster Energy energy drink.

At the moment, shares of Monster Beverage trade around $60, and the company has achieved a market cap of $31.4 billion. Unbelievably, however, it wasn’t long ago that the company traded under $1. In fact, shares of Monster Beverage, which was still known as Hansen Natural at the time, closed at 69 cents on December 29, 1995. Thanks to the energy drink explosion in the last decade, Monster Beverage has gone from a lowly penny stock to a top Wall Street performer.

True Religion Apparel (NASDAQ:TRLG)

True Religion is the only ever penny stock pump that actually turned into a real company as their designer jeans became very popular with young people. On the 30th of July 2004, True Religion shares traded at $0.67 and were eventually bought out for $32 per share by a private equity firm, TowerBrook.

The suckers who bought the True Religion during the promotion were heavily rewarded as it rose an astonishing 4,676% from its low. TowerBrook’s acquisition turned out into a nightmare as they filed for bankruptcy in July 2017. The rise of online e-commerce sites such as Amazon and their failure to adapt to new fashion trends were the main reasons for their collapse.

Pier 1 Imports (PIR:NYSE)

The financial crisis drove this once-successful company to the absolute brink of destruction. Pier 1 is a home décor company that sell a wide range of home accessories, housewares and seasonal products throughout its stores. Although Pier 1’s stock suffered from volatility during the late 1990s, the company proved to be a success as shares eclipsed $25 at the end of 2003.

In the years following, Pier 1 Imports stockholders saw their share prices fall sharply as the company experienced fiscal difficulties. However, the real peak of despair occurred during the housing market implosion and the ensuing financial crisis. Since Pier 1 is a seller of furniture and household items, its business was completely devastated almost beyond repair by the mortgage meltdown.

Pier 1 hit an all-time low of 11 cents on March 13, 2009. In a feat of financial magic, the company was able to avoid bankruptcy, and an improving economy and soaring stock market popped the stock back up to $20. Unfortunately, the companies share price has been on a gradual decline since 2013 and currently trades at $0.28.

BJ’s Restaurants (NASDAQ:BJRI)

Most investors may look for technological or medical breakthroughs when searching for investment opportunities, but BJ’s Restaurants was able to create a market cap of over $1 billion through sound management, perseverance and time. In total, there are 117 restaurants operating under the BJ’s Grill, BJ’s Restaurant & Brewery, BJ’s Pizza & Grill, and BJ’s Restaurant & Brewhouse brand names.

The company has witnessed consistent growth over the years as the stock price has steadily climbed higher and higher. However, in 1997, BJ’s Restaurant stock garnered little attention and traded under $2. Today, BJ’s Restaurant is trading around $17, making investors who bought the stock at its lowest point an astronomical return of 750%.

Medifast (MED:NYSE)

Medifast is another shining example of a penny stock that eventually became a thriving company over time, succeeding in a highly competitive industry where countless others have failed. Medifast develops disease and weight management products. Its shares have been volatile over the years, but they have experienced a long-term upward trend.

The weight loss supplement industry has not always had the best reputation, which caused many investors to remain skeptical about Medifast in the early 2000s. In fact, Medifast was only trading at 14 cents at the end of 2000. Fast forward nearly 17 years later and Medifast are a widely known company with a market cap of $813 million and a stock price around $69. Forbes magazine even ranked Medifast as the leading small business in America in 2010, which is an impressive feat for a former penny stock.

Sirona Dental Systems (NASDAQ:SIRO)

This dental equipment manufacturer has seen consistent growth over the last decade and currently enjoys a $6 billion market cap. The company’s stock is sitting around its all-time high of $110 and has produced amazing returns for investors. Since 2003, Sirona Dental Systems stock has risen by a staggering 1480%.

If the returns were to be calculated from a few years earlier when it was still a penny stock, they would be even more impressive. At the end of 2000, the company’s stock closed at a meagre 27 cents, making Sirona a shining example of the profit potential that can come with long term small cap investing.

Quality Systems (QSII)

Quality Systems was a healthcare software provider based out of California. Quality Systems was 20 years ahead of its time when they IPO’d in 1982, back then hospitals didn’t store records digitally. The company stayed under $3 for nearly two decades before exploding in 2002. Quality Systems peaked at $48 in 2013 and since declined to $10.53. On 7th September 2018, they rebranded to Nextgen Healthcare.

Pharmacyclics, Inc. (NASDAQ:PCYC)

Pharmacyclics is a biotech company that creates therapies to treat cancer and immune-mediated diseases. Pharmacyclics was under $5 from 2006 to 2009, it skyrocketed to $250 in 2015 and was acquired by AbbVie for $21 billion.

Mylan (NASDAQ:MYL)

Mylan is a pharmaceutical company that IPO’d in 1973 and reached a low of $0.75. Initially, they traded over the counter but upgraded to the Nasdaq. Mylan are now the second largest generic drug supplier in the world, Mylan was under $5 for 5 years and now trades at $15.76 with a market cap of $8.4 billion.

Ford Motor Company (NYSE:F)

Ford Motor Company is a surprising inclusion in the list, but it did plummet to a low of $1.43 during the last financial crisis, things got so bad that even General Motors had to file for bankruptcy. The iconic car manufacturer rebounded strongly until it was hit by the recent coronavirus pandemic, currently trades at under $5 per share. Those brave investors who bought during the crash and sold at the end of 2009 would still have made a whopping 240% return.