Here at The Motley Fool, one of the most frequently asked questions we receive from new investors is, "Should I buy penny stocks?"
While our premium subscription services do offer a variety of recommendations trading at different prices, we are not currently recommending penny stocks due to what we feel is an unnecessarily high risk for permanent loss of capital. We define “penny stocks” as those trading below $5 per share. Being that these companies typically go public between $15-25 per share, many of these companies have fallen into that territory.
At The Motley Fool, when we recommend a stock in any subscription or strategy, we are doing so with the intention of holding that stock for 3-5 years - minimum. As long-term investors, we believe in investing in great companies that we expect will increase in value over time. We would rather own one share of a company we love than 100 shares of one we know nothing about or, worse, one that will be bankrupt by this time next year.
For additional information on why The Motley Fool stays away from penny stocks, check out this article.