Penny stocks, loosely defined as stocks that trade for under $5 per share, have drawn renewed interest from traders and investors ever since the election of Donald Trump as president of the United States. The idea is that the incoming administration will enact tax policies and lower regulatory barriers that will work to the advantage of these companies whose stocks underperformed the S&P 500 in 2024.
That’s not to say that all small-cap stocks performed poorly in 2024. The Russell 2000 index, considered a proxy for small-cap stocks, was up approximately 16%. That’s a good year, but it was about 68% lower than the S&P 500, which closed the year with a gain of approximately 27%.
