penny stock

US term for low-priced (typically from $10 to $5 and sometimes as low as $1, but not a penny) issues floated commonly by oil, gas, gold or other prospecting firms with little or no real assets, firms with short, erratic, or no track record of earnings, or once-good firms that have fallen on hard times and are ripe for sale. Their attraction lies in the potential for high percentage returns if the venture succeeds or the firm is takenover, but the speculative nature of underlying enterprise causes wild swings in their market prices. In the US, penny stocks are sold only in over the counter market. In the UK, however, (where they are called penny shares) they are traded on stock exchanges.