Penny stocks are fraught with risk. So much so that the Securities and Exchange Commission (SEC) requires brokers to provide investors with a formal risk statement before they're permitted to trade in this category of investments.
That warning notes, among other things, that it's possible to lose the entirety of your initial investment in penny stocks.
Despite these risks, interest in penny stocks remains strong. Indeed, many folks believe these small companies have the potential to deliver life-changing profits.
But what makes penny stocks so risky? And if you have a small sum of money, say $100, which you can afford to lose, which companies might be among the best penny stocks to buy now? Let's take a closer look.
Penny stocks: new names, little revenue and lots of risk
The investment thesis behind penny stocks is straightforward. When a company trades for only a dollar or two per share — or sometimes just a few pennies — it doesn't take much of a price move to deliver returns that are two times, five times or even 10 times your initial investment.
That potential gains are appealing, but the potential losses can be gut-wrenching, especially if you put more of your hard-earned cash on the line than you are able to lose.
This is because penny stocks are often new, unproven companies with no profits and sometimes little to no revenue. Beyond the tendency for investors to buy into narratives rather than numbers, penny stocks also come with structural challenges: they are thinly traded and typically aren't listed on major exchanges such as the New York Stock Exchange or Nasdaq.
This means that daily trading volume is often so low that even if you have a paper profit, you might struggle to find a buyer when you go to sell your position. And if you want to exit quickly during a downturn, simply placing a sell order can push shares even lower.
If you're reading this, you likely already understand the risks and have seen the official SEC warnings. So rather than belaboring the downsides, Kiplinger wants to remind you to do your own investment research before placing any trade. And if you do have $100 that you can afford to lose, these picks can be a jumping-off point for playing with penny stocks.
Gold Resource
- Sector: Materials
- Market value: $130..0 million
Gold Resource (GORO) is a gold miner with more going for it than the typical penny stock. It's listed on the NYSE platform for small stocks and does not trade over the counter.
GORO was last seen trading at less than $1 per share, but the materials stock is up an impressive 250% for the year to date through mid-December. And unlike many penny stocks with zero revenue and only early stage software or pharmaceutical ideas, this mining company has real production figures and ongoing mine development.
That said, GORO carries the same risks as other commodity-based assets. Gold prices have performed well in 2025, but a reversal in the metal's price could undercut the stock's momentum.
Additionally, GORO posted a quarterly loss according to its November financial filing, even as several larger gold miners post strong profits.
Still, if you're determined to dabble in penny stocks, GORO stands above many in the field. Its tie to gold in the current economic environment lends it more credibility than companies banking solely on untested future products.
Additionally, the two analysts covering the stock tracked by S&P Global Market Intelligence rate it at Strong Buy.
Strive Asset Management
- Sector: Financials
- Market value: $869.4 million
Strive Asset Management (ASST) is a wholly-owned subsidiary of Strive and it manages the assets of its parent company. Like many larger asset managers, this penny stock is fundamentally a bet on the firm's active investment strategy — and Strive has made it clear that it is all-in on bitcoin.
This paid off in early 2025 when bitcoin prices were hot and ASST shares soared from about $0.60 at the end of 2024 to a 52-week high above $13 by May. But the subsequent crash in bitcoin has punished the financial stock, with shares back below $1 as of this writing.
The reason is straightforward. The company's most recent financial filing shows it held 5,886 bitcoin as of September 30 that were bought for an average price of $116,053. Bitcoin prices were last seen closer to $90,000.
If you believe in bitcoin — and prefer investing through a company like Strive rather than managing a digital wallet yourself — ASST may be a penny stock to watch in 2026.
Noodles & Co.
- Sector: Consumer discretionary
- Market value: $38.3 million
Noodles & Co. (NDLS) is a fast-casual restaurant chain founded in 1995 that serves a variety of noodle-based dishes, from macaroni and cheese to Italian to pad thai. The company directly owns about 360 restaurants, franchises nearly 100 more, and generates nearly $500 million in annual revenue.
The reason NDLS trades as a penny stock is its high debt and declining profitability. Investors have recently been encouraged by comparatively lower labor costs and rent pressures, and shares are up more than 40% for the year to date due in part to these positive trends.
However, activist investor group Galloway, which recently took a stake in Noodles & Co., is urging the chain to sell most of its company-owned locations and overhaul its operating model rather than wait for organic improvements.
Being caught in the middle of a dispute between activist investors and management is always risky. At a minimum, it creates distractions, and sometimes the final strategic decisions end up hurting shareholders.
Still, NDLS is a real company with real revenue, and if you like the brand's potential — or believe a restructuring could unlock value — this penny stock could be worth a closer look.
