Investing in penny stocks can be appealing due to the low cost of entry and the potential for higher returns. The low share price means that investors can purchase a large number of shares with a relatively small amount of capital. Moreover, as these stocks trade at low prices, even a relatively modest price increase can result in substantial percentage gains for investors.
However, investors need to take caution, as penny stocks can be backed by companies with unproven business models and uncertain prospects. That means these stocks are risky, highly volatile, and could result in investment losses.
