When our MDJ editorial team were drafting new ideas to write about in 2022, the idea of Canada’s best penny stocks drew plenty of emailed groans.

Afterall, we’re a group that highly prioritizes long term buy-and-hold investing solutions such as all-in-one ETFs, Canadian robo advisors, and Canada’s best dividend stocks.

That said, our inbox consistently fills up with people (who may or may not have just watched Wolf of Wall Street – or something similar) who want to know exactly what a penny stock is and/or if there is money to be made there.

So we thought we’d try something different and see just if we – as money nerds – could have any type of random success at picking the best penny stocks in Canada before 2022 began. We’ll likely update this article a couple of times throughout the year – and either tout ourselves as the hot new stock-picking geniuses of the Great White North – or (more likely) provide evidence about how picking penny stocks is not a great idea.

Once again we want to reiterate that we would never actually invest our own money this way!  (Or would we… read on to find out.)

Our 2022 List of Top Canadian Penny Stocks

top5 canadian penny stocks chart

What is a Penny Stock?

There isn’t a dictionary definition of a penny stock but typically, a stock is considered a penny stock if:

1) Its price is below $5

2) Has a market capitalization below $300 Million

3) Traded on venture exchanges or over-the-counter on bulletin boards rather than on major stock exchanges.

Penny stocks are very risky investments. They are usually issued by small companies that are in volatile and highly speculative industries. It’s can even be difficult to classify investing in penny stocks as investing. It is probably more akin to gambling or playing the lottery.

But, the allure of striking it rich with a penny stock that “goes 20x” in price is strong. So many folks want to know where and how to find the next great penny stocks in Canada.

Trading Penny Stocks in Canada

The simplest way to access penny stocks in Canada is through the TSX Venture Exchange. The top discount brokers and trading apps like Qtrade, Questrade, and Wealthsimple Trade all offer access to the TSX Venture Exchange. This makes buying and selling penny stocks online very easy.

Broker

MDJ Score

ETF Comissions

Trading Fees

Description

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Qtrade logo

Qtrade

?4.9 / 5

FREE buying and selling of 100+ ETFs

$8.75 ($6.95 elite accounts)

Canada’s Best Overall Broker - Buy & Sell ETFs for Free, Best Online Platform, Low Cost, Superb Service

Up to $2,000 Cash Back

Questrade logo

Questrade

?4.3 / 5

Free BUY of ETFs (full trading prices apply to ETF sales)

$4.95-$9.95

Runner Up Best Broker - Best Options Trading, Advanced Data Streams, Customer Service Lacking

$50 in Free Trades

National Bank Direct Brokerage Logo

BMO Investorline

? 4.1 / 5

FREE buying and selling of 80+ ETFs

$9.95 ($7.95 elite accounts)

Best Big Bank Brokerage - 80+ Free ETF Trades, Big Bank Convenience, Medium Cost

Up to $2,000 cash back (use promo code MDJCASH)

National Bank Direct Brokerage Logo

RBC Direct

? 3.8 / 5

$9.95 per ETF trade

$9.95 ($6.95 elite accounts)

Canada’s Biggest Bank, Good Mobile Platform, High Fees

None

TD Direct Investing Logo

TD Direct Investing

? 3.8 / 5

$9.95 per ETF trade

$9.99 ($7 for Active Traders)

Serviceable Platform, Good Convenience, High Fees

None

Scotia iTrade Logo

Scotia iTrade

? 3.7 / 5

$9.95 per ETF trade

$9.95

Medium Cost, High ETF Fees, Good Convenience, Integrated Savings Account

None

Wealthsimple Logo

Wealthsimple Trade

? 3.4 / 5

Free to buy and sell

$0 Trades

$0 Trades, Poor and Buggy Platform / App, Terrible Account Options, Depends on high-fee crypto trading to make money

$50 Free Signup Bonus

Hot / Strong Penny Stocks in Canada on the TSX Venture Exchange

In no particular order, here are our Top 5 Penny Stocks in Canada (determined by some wild and wacky internet sleuthing, and a whole lot of guesswork).

FCC – First Cobalt Group

First Cobalt Group is a battery materials company that aims to explore, develop, and refine ethically sourced cobalt within North America. According to their website, they operate the only permitted cobalt refinery in North America capable of producing battery materials.

The electric vehicle revolution will demand more and more cobalt for larger and larger batteries. At the same time, there is increasing cultural awareness of the human cost of resource extraction. First Cobalt Group’s focus on ethically sourced cobalt positions it well to serve the growing body of ethically minded consumers.

FCC is currently trading at $0.33/share. Its 52 week high/low swung between $0.14 and $0.46. There could be plenty of opportunities for big gains.

Update, First Cobalt Group recently changed its name to Electra Batteries with a ticker symbol of ELBM.

FOXG – Royal Fox Group

Royal Fox Group is a company engaged in exploration and evaluation of potential mineral properties in Canada. The company is currently focused on the Philibert Property in Quebec.

The Philibert Property is part of a group of properties in an emerging gold camp. Larger companies have made strategic investments in the area and Royal Fox Group expects consolidation in the future. A nearby project was also recently discovered, increasing the likelihood of processing capability investments that will transform the area into a gold mining and processing hub.

The Royal Fox Group is a new venture that began trading only in May 2021. Although a brand new exploration project, the group is not starting from zero. The Philibert Property comes with a good amount of historical work.

Over 60,000 metres of drilling was completed and $10 million have already been spent previously on studying this property. Elevated gold prices motivated Royal Fox Group to look at this historical data through a new lens.

The stock is currently trading at $0.05, near its all time low of $0.04, making it a potential bargain. This stock is solidly in penny stock territory, it’s new, it’s low priced, and it has small market capitalization. It is highly speculative but has potential to explode if the area does indeed become an established gold camp and see a large inflow of investment from bigger resource companies.

HIVE – Hive Blockchain Technologies Corp.

Hive Blockchain Technologies is the first publicly traded crypto miner. It was first listed on the Toronto Venture Exchange in 2017. For a backgrounder on bitcoin and cryptocurrency investing in general, check out Hannah’s Canada Bitcoin Guide.

The company operates data centres in Canada, Iceland, and Sweden. The data centres use 100% renewable energy to mine bitcoin and ethereum. HIVE’s commitment to a green energy and ESG (Environmental, Social, Governance) strategy from the beginning positions the company well to cater to the growing market of environmentally conscious investors.

Cryptocurrencies are here to stay and are becoming some investors’ go to instruments to store value. One can of course hold cryptocurrencies directly or invest in a mining company like HIVE. 

HIVE’s stock currently trades at $3.67 and has ranged between $1.41 and $7.25 over the past year. The large price swings reflect the volatility in cryptocurrency prices, but do present opportunities for arbitrage.

Note: HIVE has quite a large market capitalization and is traded on the large NASDAQ exchange in addition to TSX Venture. Arguably, it may no longer be accurate to classify it as a penny stock but due to its speculative nature, it is still included in this penny stocks list.

ADY – Adyton Resource Corporation

Adyton Resources is an exploration company focused on developing gold and copper resources. It currently holds a portfolio of prospective projects in Papua New Guinea’s prolific Pacific Rim of Fire. Papua New Guinea is strategically located between China and Australia, it has a track record of resource and energy projects with strong government and international backing.

Adyton recently completed initial drilling of five holes on Feni Island. One of those exploration holes hit significant copper. This, according to the company, validates their geological model and instills confidence that Feni Island has the potential to host zones of high grade copper.

Adyton Resource shares were released in February 2021 and are currently trading at its all time low of $0.05. Investors seem to be waiting for more progress on their drilling program. But in order to cash in on this penny stock, one has to get in before the good news is announced.

If Adyton Resource continues to find significant resources in its exploration, the share price will grow in response. It may be worth taking a gamble at the current low price.

MRS – Mission Ready Solutions Inc.

Mission Ready Solutions provides services and products for the military, police, fire, security, and protective services agencies. Its main service is decontamination, cleaning, and repair of personal protective equipment. It also manufactures its own line of protective gear.

Mission Ready Solutions’ stock is currently trading at $0.28, nearly double the price one year ago. The company recently announced that it won a contract from the U.S. Defense Logistics Agency. The share price seems to have been buoyed by this announcement. 

Mission Ready Solutions is operated out of Canada but has customers in both Canada and the United States. This company is in quite a different sector from the other companies in this list and brings some diversification to your penny stocks portfolio.

How to Choose Penny Stocks?

So far, we covered where and how to buy penny stocks in Canada, and listed the best penny stocks to buy now. 

But the real question is, how did we narrow down the list to these stocks?

Spoiler: Our methodology isn’t too different from throwing darts at the wall.

On the day I wrote this article, I went to the TSX’s website and pulled their list of daily 20 penny stocks with the highest volume. Then, I picked stocks from that list based on the following sophisticated algorithm:

  1. I added up the last two digits of my birth year (1983) and picked the stock corresponding to the answer. The 11th stock on the list turned out to be FCC.
  2. I picked the stock corresponding to my birth month (October). The 10th stock turned out to be FOXG.
  3. I picked the stock corresponding to my birthday (5th), which turned out to be HIVE.
  4. I picked the first stock in the list that contained the first letter of my name. That turned out to be ADY.
  5. Finally, I had shrimp for lunch so the first stock in the list to contain the letter ‘s’ rounded out the final pick. That turned out to be MRS.

In other words, my selection process was completely arbitrary and might as well have been random.

I didn’t mean to trick you, dear reader. I was hoping to drive home this simple fact: I have no idea which penny stocks are on the edge of a price explosion, which penny stocks are hidden diamonds in the rough, or which penny stocks are worth your attention and your money

But, it is quite easy to look at marketing material and spin an optimistic rationalization to justify purchasing any penny stock.

It’s easy to throw together an arbitrary list of ticker symbols and call them the next hot penny stocks to make you rich.

The reality is:, no one really knows what the best penny stocks today are.

Anyone, any article, any website that claims to know which penny stocks are “about to go to the moon” are speculating. 

And that’s okay, it’s fine to play the speculative game. It’s just like going to the casino. Gambling with eyes wide open and only taking on risk within one’s own tolerance can be a lot of fun.

Penny Stock Risks

There are a number of risks associated with penny stock investing. Penny stocks are not subject to rigorous financial reporting requirements of larger, major exchanges. Therefore, it is very difficult to assess the soundness of the company underlying a penny stock.

Typically, the only information to go on is the company’s own news releases and marketing material. It’s safe to say the company is only going to post good news.

Some penny stocks represent deteriorated businesses that failed to maintain their listing privileges on major exchanges. That hints at big potential problems in the business itself.

And as already mentioned, penny stocks are usually issued by companies in highly speculative and volatile industries and markets. Some current examples of volatile industries are resource exploration, cannabis operations, and cryptocurrency. 

These kinds of volatile markets are rife with uncertainty and are difficult to analyze. Therefore, it is hard to assess the potential fortune of companies (and their stocks) in these volatile markets.

There are a lot of risks associated with penny stocks, the only upside is their low price tag. Read our article on low risk investing in Canada to see the alternatives.

Penny Stocks – an Experiment

While researching this topic, I found many websites and articles that happily tout lists of best penny stocks to buy. Those articles are titled similarly to this article’s, along with similar click-baity titles. But I didn’t find examples of those article authors putting their money where their mouths are. No one bought the penny stocks they were recommending. And no one bothered to follow up on their recommendations months/years down the road.

Well, I’m doing an experiment. On December 17, 2021, I bought shares in the five stocks I listed in this article.

With my own money.

Here is a screenshot of my personal account holdings summary:

top5 canadian penny stocks chart

I bought about $100 of each stock in this list. 

Okay, that’s a relatively small amount but that’s my risk tolerance. I’m only willing to lose this much for the sake of an experiment. And I fully expect to lose my capital because, if you recall, these stock picks are completely arbitrary.

I’m hoping this experiment will take me through the big ups and downs, show me some financial shenanigans, and give me the real feeling of playing in this penny stocks casino. Over time, I hope this Canadian penny stocks experiment can build up some real-life data points to give you, dear reader, a peek into the penny stock game.

Let’s check back in a few months or so and see how they are doing. Stay tuned.

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Yang

Yang is a mechanical engineer by day and an avid learner by night. He has a wide range of interests and hopes to turn his interest in personal finance into helpful articles for other Canadians along their path to financial freedom.
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