The technology sector consists of businesses that develop, build, and market consumer electronics, electronic components, and software. Companies in the tech sector may also provide information technology (IT) services such as cloud computing. While the best-known companies are giants like Apple Inc. (AAPL) and Microsoft Inc. (MSFT), there also are tech businesses that are classified as penny stocks. Penny stocks typically trade at $5 per share or less. Some examples are Support.com Inc. (SPRT), an online customer service platform; and immunotherapy developer Advaxis Inc. (ADXS). Investing in penny stocks can be especially risky, particularly in times when the stock market is already highly volatile. Investors should therefore be careful when considering whether to invest in these or similar securities.
There is no widely-used benchmark for technology penny stocks, and their performance has varied significantly over the past 12 months. However, the Invesco S&P SmallCap Info Tech ETF (PSCT) provides a general indicator for tech penny stocks. PSCT has significantly underperformed the broader market in the past year, providing a 1-year trailing total return of -2.7% compared with 15.9% for the Russell 1000.1
Here are the top 3 technology penny stocks with the best value, the fastest earnings growth, and the most momentum, respectively. All figures are as of September 16, 2020.
Best Value Technology Penny Stocks
These are the technology penny stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generate
- Future FinTech Group Inc.: Chinese company Future FinTech Group operates a blockchain e-commerce platform with other activities in developing financial technology.
- Pivot Technology Solutions Inc.: Pivot Technology Solutions is a Canadian company that acquires and integrates companies with IT capabilities. Through multi-vendor sourcing and implementation solutions, Pivot utilizes its acquired companies to support the IT needs of its customers. On September 9, the company announced that it had entered into an agreement whereby Computacenter plc and its subsidiary would acquire all outstanding shares of Pivot for an equity value of roughly CA$105.8 million (USD $80.4 million).2
- Quarterhill Inc.: Quarterhill is a Canadian internet service company focused on connectivity of machines and sensors. The company caters to customers in industrial applications such as mining, oil and gas, and manufacturing. In August, Quarterhill reported a 68.2% decline to net revenue year-over-year (YOY) for Q2. The company posted net income of CA$9.5 million (USD $7.2 million) for the period, after reporting a loss in the same period a year earlier. The net income was due in part to Quarterhill’s sale of asset maintenance software company VIZIYA.3
Fastest Growing Technology Penny Stocks
These are the technology penny stocks with the highest YOY earnings per share (EPS) growth for the most recent quarter. Rising earnings show that a company’s business is growing and is generating more money that it can reinvest or return to shareholders.
- Photon Control Inc.: Canadian company Photon Control offers fiber optic measurement services. The company designs and builds optical sensors and other tools to measure position and temperature and serves customers in the semiconductor and wafer fabrication industries. On September 16, Photon Control announced that it had entered into a distribution agreement with Woowon Technology Co. This partnership provides the company with access to the South Korean market, which is the world’s second-largest semiconductor market and accounts for roughly 20% of the global chip market overall.4
- Cheetah Mobile Inc.: Cheetah Mobile is a Chinese internet and mobile software developer. The firm specializes in developing and operating internet browsers and security applications, mobile games, memory saving solutions, and related services.
- Wirecard AG: Wirecard is a German online payment and processing services company. It builds software systems for online payments, electronic funds transfer, fraud protection, and similar services. On August 25, the company reported that the district court of Munich had opened insolvency proceedings regarding Wirecard assets. Wirecard’s stock price and finances collapsed financially this summer amid reports of fraud and that billions of dollars had gone missing.5 6
Technology Penny Stocks with the Most Momentum
These are the technology penny stocks that had the highest total return over the last 12 months.
|Technology Penny Stocks with the Most Momentum|
|Price ($)||Market Cap ($M)||12-Month Trailing Total Return (%)|
|BrainChip Holdings Ltd. (AZKLF)||0.40||629.7||788.9|
|Kontrol Energy Corp. (KNR.CX)||CA$3.85||CA$115.1||541.7|
|Quisitive Technology Solutions Inc. (QUIS.V)||CA$0.62||CA$119.5||376.9|
|Invesco S&P SmallCap Info Tech ETF (PSCT)||N/A||N/A||-2.7|
- BrainChip Holdings Ltd.: BrainChip is an Australian holding company that provides neural computing technology solutions through artificial neural networks, software, and digital hardware solutions . The company serves customers in the U.S. and Australia.
- Kontrol Energy Corp.: Kontrol Energy offers energy auditions and assessment services, catering to residential, commercial, and institutional clients. The company is based in Canada. On September 11, Kontrol Energy announced the release of BioCloud, a wall-mounted product which detects the presence of COVID-19 in the air and triggers an alert.7
- Quisitive Technology Solutions Inc.: Canadian company Quisitive Technology Solutions is a digital technology consulting business. The company provides advisory services related to cloud migration, application and web platform development, blockchain technology, and in other related areas.