Unfortunately there's no one magic stock or ETF that's 'best' for everyone. Instead, you should look at your own individual needs and investment strategy to decide what stock is right for you. Further, nobody can say for certain which direction a share will go as past performance is no guarantee of future results. So keep in mind these are stock ideas only and should not be taken as personal financial advice.
It has been a turbulent time for markets, with many of the pressures from 2022 remaining in 2023. Today's share market is still dominated by rising interest rates, stubbornly high inflation and the possibility of a recession. In this current market there has been nowhere to hide with commodities, bonds and shares all falling in recent times.
But as Warren Buffett famously said, "Be fearful when others are greedy and greedy when others are fearful." With markets focusing on the profitable big end of town, this could be an opportunity to snap up some penny stocks at a bargain price.
As such, Finder has come up with a few penny stocks that are worth adding to your watchlist in 2023.
To help you identify the latest penny stocks, we used Finder's proprietary algorithm to find ASX-listed companies that have strong fundamentals based on price performance, profit, revenue and dividends.
We also used filters to exclude companies that did not meet the following requirements:
Important: Our list of highlighted stocks aren't necessarily the best penny stocks for you or your personal situation. Investing in penny stocks is typically highly speculative and can be very risky. We do not guarantee the performance or returns of any investment. You should do your own research and consult an industry professional when in doubt.
Our top pick for
US stocks
Our top pick for
Low costs
Our top pick for
Dividend investing
The algorithm was last updated on 1 December 2023.
Penny stocks are smaller, less established businesses which are often impacted by volatility. In a period like we have today where markets are punishing unprofitable companies with investors fearing a recession, it might seem like it is a bad time to be buying penny stocks.
And for anyone who hasn't got a stomach for volatility this might be true. Although there are a few caveats to this.
Just because a market is volatile, it doesn't necessarily make it a bad time to invest, especially for those who are buying for the long term. After all, the share price and business performance don't always align over the short term.
So over the long term owning shares that are cheaper, in businesses that are growing can be beneficial to your long-term wealth.
If you're looking at investing during a downturn, just look at the global financial crisis (GFC). While many businesses didn't survive, others thrived, taking advantage of a changing landscape. In the US, companies including Netflix, LEGO and Mailchimp took the opportunity to expand and have since become global leaders.
In Australia, the commodity boom off the back of the GFC helped power many of our penny stocks, especially in the mining and resources sector.
Also it's worth pointing out that not all shares follow the market. In fact many businesses can have differing performance to how the market is going. Again though, this will rely on buying the right business.
Finally some businesses perform stronger in a recessionary period. Service providers, repair services, small luxury items, consumer staples and commodities can be recession resistant.
Penny stocks are highly volatile and are often seen as riskier investments. But that doesn't mean all penny stocks fall in a bear market.
Historically, penny stocks have larger swings in both bull and bear markets. This means that when times are good, investors increase their holdings. However, when the market turns and the sentiment is low, these investments fall further than blue chip shares do.
But just like large caps, how the business performs and its share price vary based on its own circumstances and the sector it is in.
If you look at the current market technology, consumer cyclical and metal and mining companies are struggling as the ASX 200 continues its sell-off. On the other hand, consumer staples, health care and industrials are outperforming the market.
The same is true with penny stocks.
I’ll trade in things I believe have a lot of hype… I’ll have a very firm stop loss and a price I take a profit at. And once I take the profit, I take it and move on. I’m done. I’m not re-entering… Or if it hits my stop loss, I sell and take the loss. I’ve taken lots of losses and I’ve taken lots of profits.
Fred Schebesta
Founder, Author
Penny stocks are highly speculative investments. The odds of you losing all your money are greater than gaining multi-bagger returns.
As such, these investments usually are tailored towards the following:
None of us can see into the future. What happens next is anyone's guess. However, we do know some big themes that currently drive the market:
Stubbornly high inflation
Despite the best efforts of central banks around the world, inflation remains high. In Australia this is led by high house prices, supply delays, energy shortages, higher-than-normal savings rates during the pandemic and decades of low unemployment. While signs are that inflation has peaked, it is still well and truly above the Reserve Bank of Australia's target range.
Interest rate rises
Going hand-in-hand with stubbornly high inflation is interest rate rises. In order to fight off inflation, central banks need to lift rates. As it currently stands Australia's interest rates are now at their highest levels in 12 years, although from a historical point of view they still remain low.
China re-opening
One of the key drivers of the world's growth for the last few decades has been China. The country has now re-opened following strict COVID lockdowns which lasted until the end of 2022. China is effectively a year or so behind the western world in that it opened later, meaning it might have the same surging demand that countries like Australia had in late 2021 and early 2022 after it re-opened.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances and obtain your own advice before making any trades.
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