- Small-cap companies' transition to next stages provides opportunities for investors to take part in the value creation.
- Penny stocks investing offers high growth companies or even special situations like incumbent companies falling out of the mainstream market.
Penny stocks provide decent opportunities to assess the long-term potential of a company. Most of the times, penny stocks are high-growth small companies. Meanwhile, a continued erosion of market value may also put a company in the category of penny stock.
For instance, Myer Holdings (ASX:MYR) closed at $0.32 on 17 February. MYR stock has lost its value significantly over the years and has a market capitalisation of about $275 million. It reported sales of over $2 billion in FY20.