Penny Stocks

Thanks in advance for taking this question.

In your blog I found a section under Penny Stocks:

"No Penny Stocks: Penny stocks do not come within the purview of Graham's framework either; as their only discerning feature is their low price, and that presents no indication as to their underlying value."

However, when I screen for "NET-NET" stocks, the majority of the top picks (highest iv%) are in fact penny stocks.

Why are these not filtered out and if you were to manually, what is the USD cut-off? Anything under $1?

Thank you.

Stocks Discussed: 

Dear BobT,

Thank you for your forum post!

The blog post on Cigar Butts, where that has been mentioned, has been updated to give a more complete explanation. That statement was meant to indicate that a Penny Stock would not be a valid Graham or Value stock simply by virtue of having a low price alone.

So naturally, there is no cut-off price on GrahamValue either. Incidentally, the SEC now defines Penny Stocks as anything selling under $5.

Thank you again for your forum post!

Penny shares are traded (over-the-counter)

You can find out by entering only the arrow and then selecting (About stock)

Then Market Identifier Code (MIC):OOTC
OOTC= Penny

Also, it's not bad. Amazon was a penny stock

I think penny stocks only need experience but I'm not sure about it

Dear Omar_H,

Thank you for your comment!

You can find Over-the-counter (OTC) stocks on GrahamValue's screeners by simply entering OOTC in the Search Keywords field.

The all-time lowest closing price for Amazon.com Inc (AMZN) was indeed $0.07 on May 22, 1997, but this is only after adjusting for stock splits.

Amazon has never actually traded under $5, which is the SEC definition for Penny Stocks.

Thank you again for your comment!