Behind every great business is a story of challenge and triumph by a determined entrepreneur or group of business people. That is the case for some of the successful penny stock companies of the past. Many of them are still around, going strong, and well out of the penny stock leagues.
Penny stocks, which are companies traded at $1 or less, get a side eye from most investors who do not take them seriously and it is easy to see why. Who can foresee making lots of cash and even becoming wealthy from a mere $1-or-less-per-share company? Also, it is difficult to pick the winners from the losers or the out and out scammers. As a result, investors often lose money on penny stocks if they do not have a strategy and some insights on the ones that will break out.
There are three types of companies that generally trade as penny stocks: Young and unproven companies, companies that may be well known and once successful but that have fallen out of favor, and companies that are growing but very undercapitalized and strapped for cash.
Setting a penny stock investment strategy or even determining your interest in them may be as simple as learning about a few successful companies that have emerged from a penny stock past:
- Pier 1 Imports
- True Religion
- Monster Energy Drinks
Pier 1 Imports
Pier 1 Imports is one of those companies that has been around for a long time. It manufactures and retails middle market and high end home wares and goods. They are often located in very densely populated areas among residential areas with middle to high incomes. So, the company’s stock price trades at around $20 or more dollars per share. This has not always been the case. In 2008 when the real estate market bottomed out and the market hit significant lows all home building stopped and people were not too interested in decorating their homes either. This sent Pier 1 Import’s business into the pits and their stock price went along with it. During that low time Pier 1 was a penny stock trading at only 11 cents per share. Pier 1 has since made a turnaround and rebounded since the market took back off and its business and price have gone back to their typical levels.
True Religion is a hip clothing company that is now considered a classic with a cult following, especially when it comes to its jeans. This is an interesting story, however, because this company was once thought to be a total scam. Somehow through pop culture and entertainment its jeans became a hot commodity and what was once a penny stock trading at around 47 cents per share has become a $500 million dollar a year company with a healthy bottom line and stock price to match.
The battle of the bulge is alive and well in America and as result Medifast is too. However, this company’s profits and stock price were not always as healthy as its food. At one time Medifast was struggling to keep the business alive with a stock price that dragged along at 14 cents per share in 2000. Now, the company rakes in $405 million per year and trades at $25 per share.
Monster Energy Drinks
It has strong competitors in Red Bull and 5 Hour Energy but Monster Energy Drinks is not doing too shabbily in the market with a per share average of $47 and a staggering market capitalization of $8.5 billion dollars. Compare that to 1995 when its shares closed at less than 70 cents under the then-brand name of Hansens Naturals. This penny stock was the little engine that could and has sure come a long way since.
Nancy Green is a freelance blogger and writer, who likes to invest in her free time. She is a mother of two and avid investor.