ASX Penny Stocks

5 Reasons to Invest in ASX Penny stocks and how to access high returns

ASX Penny stocks form an important part of any Australian investors diversified investment portfolio, with the potential for high returns - provided you can reduce the risk.

Get bang for your buck: its more likely for a share to go from 5c to $1 than from $5 to $100.


Penny shares give you exposure to exciting new industries. Can sometimes let you buy millions of shares at very low prices. Fortescue (FMG) was once a penny share, now it's more than $20. TPG was once a penny share, and is now more than $6. City Chic was once a penny share and it's now $6. There is serious money to be made.

Increase the Money you make from the Stock Market

Penny Stocks are loved for their fast growth and high performance. All you need are one or two stocks to double or triple in size to really outperform the market and bank big returns.

What are Penny Stocks on the ASX?

Penny stocks are simply the smaller companies by market cap on the ASX. They can be riskier because of their size and a penny stock is that is usually at beginning of their company story but they are not all volatile. The most promising Small Caps that we recommend are solid companies operating with big ideas. It's because they are small and growing that there are increased returns. Read our Ultimate guide to investing in ASX Small Caps now.

Be Aware of the Investment Risks

As an Australian ASX Investor or trader you need to be aware of the market risks and here we talk about how to de-risk and limit losses through proper fundamental analysis so you can invest successfully and sleep at night despite the higher risk. Learn more about our services and the dramatic advantages of investing in penny stocks here.

What is the difference between Penny Stocks and Small Cap Stocks?

Penny stocks can also be called micro-cap stocks or small cap stocks. There are lots of ASX micro-cap or small cap stocks that are ‘penny stocks’ because they literally cost a few cents and are certainly well under a $5 a share. The definition of penny stocks is only about how much each share costs, but it is not considering the size or value of the entire company, and this is where risk really comes into it.

Best Penny Stocks of 2021

Look at this graph and see the ASX Penny stocks that we have recommended in 2021. You can see that you can turn $1,000 into... with carefully selected ASX Penny Stocks.


Access the best Penny stocks to buy. You won't find these recommendations anywhere else.

The financial rewards and outperformance are why Australian investors are active in this space despite the higher risk. We deliver up-to-date technical advice and research on these key under researched stocks. Read onto find out the top 5 reasons you need to invest in penny stocks.

Top 5 reasons why you should invest in ASX Penny Stocks?

1. Australia's Penny Stocks can make you money: Get capital growth and a strong financial return

When a company is small it is much easier for it to grow fast and to double, triple, quadruple or indeed become a 10 bagger because it is still small and starting from a low base.

This means that your investment can easily grow from an ASX penny stock, much more than from a blue chip stock. It's all about limiting losses and that is what independent research and advice does for you. It de-risks your investments.

Growth is rare and hard to achieve in developed economies, which is why penny stocks, or ASX Small Cap stocks as they are known in Australia, can offer ASX share investors real share price rises.

We have many examples of company's that have transformed from penny stocks to serious performers. Some are glamorous big names operating on a global scale but most you won't have heard of.

Afterpay (APT) we tipped at $2.51 inn 2017 is now over $130, City Chic Collective (CCX) we tipped at 48c is now $6.28, Northern Star Resources ( NST) we tipped at 83c is now $9.37. Zip Co (Z1P) we tipped at 66c is now $6.84.

ASX Small Cap Lithium producer Pilbara Minerals (PLS) we tipped in October 2020 for 32c and is now $2.17!

Evolution Mining (EVN) we tipped at 72c in July 2021 and it is now $3.86!

We have lots of great Penny Stocks to buy so follow our clear and easy to action advice now.

2. Penny Stocks are cheap: lower prices and more affordable

An obvious benefit is that when a stock is cheap, you don’t have to put much money in. Or you can buy a significant holding at cheap prices, with much less capital required upfront. You are risking less and you don't need a lot of money to start trading in the share market.


3. Penny stocks give you diversification

You can really diversify your portfolio across a number of different industries, or a cutting edge technology cheaply through penny stocks. They can also give you global exposure cheaply.

This really means you are spreading your risk so that you don’t hold all your investments in just one company but across different company's and industries from mining to a small cap bank, to shares with an international sales exposure.

Our expert analyst team recommend that your ASX share portfolio should have a minimum of 7-10 small caps or penny stocks. When you subscribe to our services and stock report, we make it easy for you. You can follow our advice and our clear buy, sell and hold recommendations.

4. Penny Stocks give your portfolio the boost that it needs

If you park your money in the bank, or just invest in a blue chip company for their dividend yield your capital will remain stagnant and will not grow.

You need to consider investing a percentage of your active portfolio into a number of penny stocks so your portfolio has the opportunity to really grow.


5. Penny Stocks allow you to invest in niche industries

Another great (and really interesting) thing that investing in penny stocks does, is that it allows investors to get to learn about and understand a small company. They often are in a niche industry that have cutting edge technology, or for example are a med-tech stock developing new and exciting drugs or lithium, which is where we have had great success in 2020 and 2021.

How to find 100 of the best Penny Stocks under $5 on the ASX stock market?.

All 100 of Under the Radar Report’s current recommendation of penny stocks were under $5 when we first recommended them. But they are not all penny stocks now! That is the point of penny stocks. They can provide some significant benefits. They offer real returns to really boost your portfolio's return.



It's easy to find 100 of the best Penny Stocks on the ASX, subscribe to Under the Radar Report's services and advice. If you love finding value on the ASX then you will love Under the Radar Report.


Small Caps can't be forecast easily like Blue Chip stocks. This is because institutional investors have to keep away from Small Cap stock stock to investment mandates and low liquidity.

Our performance

Another way to look at our performance is 7 out of 10 penny stocks that we cover make our subscribers a strong profit.

It's why our members get access to our platform for free for 14 days and stay with us for years. We are known to be stock picking experts in penny stocks because our expert analysts give clear advice based on proper fundamental analysis on the company's and the markets. 

Look at our Best performing stocks to see the stocks that started out as penny stocks but are now star performers. Many have transformed into being household names. It's what disruptive penny stocks can do!

Join Under the Radar Report today

Start trading penny stocks now with Under the Radar Report.

Australian ASX investors love our small cap stocks. Our independent research de-risks your stock picking. We filter through over 2,000 stocks, pick the companies with a cheap share price that are positioned to expand and take market share.

We select companies in the right industries and delve deep into the financials, management and fundamentals before recommending the stock. Simply put, we do the hard work for you.

Follow our stock advice now for free so you can invest successfully in this riskier space of ASX Penny Stocks.

What are Penny Stocks called in Australia?

Americans use the term penny stock but in Australia we use small cap stocks or micro caps. They are simply a stock on the ASX that typically trades with a share price of a couple of cents to less than $5.

They typically are considered to be volatile with a buyers beware tag. But with quality independent research, there is serious money to be made no matter your risk profile.

Why are Small Cap stocks a good investment?

50% of all the small cap stocks we tip and recommend started out at under $5.00 but they are not that price now! There are literally hundreds of examples and many of them are our best performing stocks. Think: Afterpay (APT), we tipped when it's share price was $2.51 now it's over $100, Northern Star, we tipped when it's share price was $0.83 now it's $9.71, City Chic, we tipped when it's share price was $0.48 and now is $5.39.


Lithium Stocks in 2021

Lithium is a hot industry right now and our mining stocks in this sector are driving value and growth to our report subscribers right now. Orocobre (ASX ORE) has given significant growth in 2020/2021 to our platform subscribers. Access now our latest lithium stocks or


to get free access to all our research.


ASX share investors are all after serious share price growth and a few small penny stocks that you buy cheaply can really transform the returns in your share portfolio by doubling, tripling and more.

Penny Stocks are cheap!

They are cheap to buy and you can buy a good number of different penny stocks on the stock exchange like the ASX without a big capital investment.

With a small $2,000 investment you could buy 20,000 shares at 10c per share. Then if the stock price rises to 15c you make a quick $1,000. For the same investment you could buy 20 CBA shares.

But if your penny stock goes up to 50c per share you really have made a hot penny! turning $2,000 into $10,000. Now who doesn't want to do that. The trick is not to lose your original $2,000.

Penny stocks are known to be high risk. You need to reduce your risk

Penny stocks are known to be high risk but you can reduce your risk and make a profitable investment.


You need quality stock picking by penny stock experts. It's really as simple as that. You don't want to just head to the casino.

Quality independent research

It's only through fundamental analysis to rule out the dead beat stocks that you can build a watchlist of penny stocks that are positioned for share price growth.

To find out more about Under the Radar Report's independent analyst team and to get free access our 10 best stocks to buy, click here.

Most of the company's we pick are under $5.00 per share when we first recommend them and many were cheaper than $2.00 per share when we first recommended them. 70% of these stocks have outperformed the market delivering exceptional returns for our members.


Best Penny Stocks ASX to Buy

In our free 14 day trial you get free access to our best penny stocks to buy in Australia. Some people trade our small cap and penny stocks, others are investors and follow our clear buy, sell and hold recommendations.  We make it really easy and give you well chosen penny stocks with growth and stellar returns. It's why our subscribers stay with us for years.

We don't choose just the popular stocks. In fact, we look for the opposite!

Our team are looking for penny stocks with a cheap stock price, that have a solid underlying business, are well run by an experienced management team. 

ASX Stock exchange

We only research penny stocks that are listed on the ASX securities exchange. We don't cover penny stocks or small caps on any other stock exchange.


Investors need quality Stock Research when investing in a Penny Stock

It’s very important to be careful and to invest wisely and to get quality stock research.  This is particularly important in Penny Stocks and at the smaller end of the stock market.

The small companies can be high risk because these penny stocks are often unknown and normally always under researched. They don't have teams of analysts pouring over their financials like you do with the Big ASX Blue Chip stocks.

Do you buy a Penny Stock because it's cheap?

A good benchmark is to look at the value of the company as a whole. The bigger the market cap the bigger the company.

Don’t buy a penny stock just because you are buying it for a penny. It’s not a gamble you are making. You can remove risk through proper research.

Whether you consider yourself a trader or an investor, you need to make sure it's not a gamble and to do that you need research before you place a buy trade on a penny stock. 

Penny Stocks are renowned for their high risk profile. You often read about a penny stock that offers huge, unbelievable returns or at the other extreme that people crash out and lose their money. So is this true?

It is if you don’t do your research and if you really are only buying penny stocks and really are only a few cents and price alone has been why chose to hit buy.

Penny Stocks offer huge share price growth

Penny stocks are interesting and often very exciting investments. Penny Stocks have leverage, which means they can achieve much faster growth. These ASX Stocks have the ability to grow sales but penny stocks also have the ability to grow earnings even more. We’re talking about operating leverage.
Penny stocks are small companies and offer huge growth potential. If a company generates sales of $100m and it grows sales at 10% to $110m, that is a big deal and it might grow its profit after tax by that amount. But if a much smaller company has only $10m in sales and increases its sale to $12m, that is an increase of 20%, from which its net profit after tax might grow 40%.  For Penny Stocks, because their costs are lower, when they grow sales, the bottom line grows even more which means the profitability grows exponentially and the share price of the penny stock grows exponentially too!

Investing In Penny Stocks

Are all Penny Stocks a risky investment?

Penny Stocks have a bad reputation as being highly risky stocks to buy. You always hear about people who bought in and lost all their money, but you also always hear about the people who made a lot of money from buying penny stocks!
Most ASX stock investors don’t want to put their money, whether it’s a few cents or a few hundred dollars or in fact any money into the dust bin. Money is hard to earn and they respect it!

Market Capitalisation and why the size of a company is important to ASX Stock investors

Before you invest in a penny stock simply because it doesn’t cost much, you really need to actually look at the company to see if it is profitable, or at least is on the path to being profitable. (of course there are always exceptions, like Amazon for example that doesn’t actually make much money, yet is worth a lot!).  But profitability is important and remember the hideous statistic from the Australian Bureau of Statistics that more than 60% of businesses fail within their first three years.

What does Market Capitalisation mean?

Market Capitalisation or market cap simply means the value of all the shares on issue which tallies up to how much the company is actually worth in total, not including the debt it might own. When you buy an ASX share you are buying part of the company. The market cap also gives ASX stock investors a guide to liquidity which means how easy it is to buy and sell out of the stock. Because even if you own the share and decide you want to sell it, there has to be someone there wanting to buy it, and with very small ‘penny stocks’ liquidity can be a real problem.

computer screen with trading penny stocks

ASX Penny Stocks with a Market Cap of $50 million

At Under the Radar Report we focus on the ‘sweet spot’ of ASX stocks with a market cap from around $50 million to about $500 million. In this space there are still lots of ASX penny stocks with a stock price of well under $1 (over 50% of the ASX small cap stocks we recommend fall into this category) and the other 50% are under $5. Only occasionally do we recommend an ASX stock with a price tag of over $5 per share.

How to find ‘penny stocks’ to buy that are also profitable businesses

Any ASX stock has risks but at Under the Radar Report our purpose is to find cheap, undervalued stocks that our independent analysts believe are a strong and profitable investment. We look at every company’s fundamentals, which means their financial and operational strengths. We only recommend ASX penny stocks that are profitable companies that show true potential. Penny Stocks in a balanced ASX share portfolio have the ability to transform your returns.

60% Returns on our ASX Penny Stocks

We are very proud of our strong ASX penny stock picking record, where we have delivered an average return of over 60% on our buy recommendations over nearly 10 years. A major reason for this is our determination to investigate each of our ASX small cap companies thoroughly and to analyse what the share price is reflecting and how that relates to fundamental value.

How to find the Best Penny Stocks to buy on the ASX

Our team of expert stock analysts hunt for ASX penny stocks that have substantial long-term potential for ASX stock investors. We have a strong team of independent analysts who are all expert company analysts and are experienced and highly knowledgeable about penny stocks and small caps and what to look for.

Diversification and Buying Penny Stocks

We recommend that our ASX stock investors diversify their portfolio and invest over 7-10 ASX stocks which goes along with ‘don’t put all your eggs in one basket’. It’s common sense really but experts write pages and pages about it. But diversification is really important.

Find out what you need to get started with penny stocks


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