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How To Trade Top Penny Stocks in Philippine Stock Market

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You probably have heard of numerous claims that people trading in the Penny stocks categories earned more money than those trading stocks with fundamentals or Blue chips stocks. It may be true as the penny stocks category provides high rewards as the prices can surge “normally” by 10% or more in just one day. But remember that with high reward expectations comes also with higher risks. It is true that volatility is high in penny stocks because they have mainly lower market capitalization or they have low public float of shares, but this volatility may happen in both direction.

In this article we will discuss the most traded penny stocks today in the Philippine Market

What are Penny stocks

If you are not new to the PSE market you can see from below snapshot that it’s a penny stocks day for this particular time. FFI, PHA,EVER, ZHI,PRIM, TECHW,BHI,LAND which are in this category upsurge in one day from 5% to 49%. What a move!.

For this discussion, we can classify penny stocks as those stocks that have low market capitalization in the range below 5Billion market capitalization. Investagrams provide this info on its website every time you search for a particular stock. You can see on the shaded “yellow” region of the snap shot. For this example PHA or Premier Horizon Alliance with a current price of 0.45pesos/share and a market cap of 2.33Billion.

How to Identify Penny Stocks

One of the ways I used to identify this if the market capitalization is the price of a stock normally is below 1 pesos. Some have slightly higher than 1 peso price per share but it is a good thumb rule to check out the market cap first before considering as a penny stock. For the below snap shot, Prime media holdings has 2.22 pesos/share price but if you look closely to its market cap it is just 1.56Billion.

Why people like to trade penny stocks

Earning quick money is one of the top reasons why traders buy and sell penny stocks. With the low price per share and possibility of accumulating stocks at their low prices is very attractive since you can buy more shares. When the prices move in accordance to your prediction, it can really give big profits in the short term. One of the most notable rallies experienced last time was during the Telco days where people speculate who will be the third telco during that time. NOW price during the 2018 timeframe sky rocketed by as much as 582% is just under a month of trading. Some really were able to ride the trend and became millionaires during this time.

The graph below shows this potential. Imagine investing 1,000 pesos this time would have made you more than 0.5 Million pesos in earnings.

Why trading penny stocks have high risk

Since trading has always two sides, if you are right with your prediction you can earn big in penny stocks, but if for some reason the market did not move with our expectation, the opposite can happen, you can loss a lot of money and could end up as a very big lesson for taking the risk especially if you could not manage your emotions.

The chart below shows what happen to NOW telecoms, after the speculations subsided, if you are able to buy on its peak at 20 pesos per share and not able to cut your losses early, you are possible to have taken a very big loss of more than 90%. Your account could suffer what most traders nightmare is, being wiped out. Imagine your hard earned money losing its value every day until there is almost nothing left.

Penny stocks have low trading volumes when speculations subside

As you know now, penny stocks have lower market capitalization thus it has a low trading volume. At times when speculations are finish, the stock tend to be illiquid and if you did accumulate a number of shares on a certain penny stocks, selling off this shares may be difficult. I have several experiences where the volume suddenly dried up so I cant sell most of my shares. Either you sell them at much much lower prices or you get “trapped” on these stocks. Hence the term “basura stocks” or “zubaru stocks” are coined with penny stocks as anytime you can stumble a gold mine or a bomb stock.

See sample video below of a trade I did on Penny Stocks

Penny stocks run the risk of Delisting or Prone to market manipulations.

There are several penny stocks in the PSE market that suddenly one day the trading was suspended by PSE regulators due to abnormality on tradings, not earnings (always negative earnings) and accounting issues. Most notable is Abra Mining where until now the stock is still not tradable after being suspended last March 2021.

Penny Stocks in the Philippine Market Below 1 Peso

Company	Code	Price
Haus Talk Inc.	HTI	1.04
CTS Global Equity Group	CTS	1.06
Alsons Consolidated Resources	ACR	0.91
Harbor Star Shipping Services	TUGS	1.28
PH Resorts Group Holdings	PHR	1.06
Nihao Mineral Resources International	NI	0.94
Solid Group, Inc.	SGI	0.86
Anglo Philippine Holdings	APO	0.73
Vulcan Industrial & Mining	VUL	1.04
A Brown Company	BRN	0.84
Italpinas Development Corp.	IDC	0.71
City & Land Developers	LAND	0.86
Ionics, Inc.	ION	0.6
Oriental Peninsula Res Group	ORE	0.73
Balai ni Fruitas	BALAI	0.8
Lorenzo Shipping Corp.	LSC	0.455
Cityland Development Corp.	CDC	0.68
Medilines Distributors Inc.	MEDIC	0.73
Vitarich Corp.	VITA	0.61
Cemex Holdings Philippines, Inc.	CHP	0.75
Alliance Select Foods International	FOOD	0.55
Figaro Coffee Group, Inc.	FCG	0.67
Roxas and Company, Inc.	RCI	0.6
SOCResources	SOC	0.5
Premium Leisure Corp.	PLC	0.46
Waterfront Philippines	WPI	0.5
Premiere Horizon Alliance Corp.	PHA	0.38
ATN Holdings	ATN	0.385
Century Properties Group	CPG	0.375
Basic Energy Corp.	BSC	0.365
Allday Marts	ALLDY	0.32
Ever-Gotesco Res. & Holdings	EVER	0.285
Xurpas	X	0.285
Transpacific Broadband Group	TBGI	0.28
Medco Holdings	MED	0.275
APC Group	APC	0.21
Empire East Land Holdings	ELI	0.193
Geograce Resources Philippines	GEO	0.185
MRC Allied	MRC	0.18
Lepanto Consolidated Mining	LC	0.132
Millennium Global Holdings	MG	0.113
Crown Equities	CEI	0.081
Boulevard Holdings	BHI	0.064
Apollo Global Capital	APL	0.038
Oriental Petroleum & Mineral	OPM	0.011
The Philodril Corp.	OV	0.0089

How to Trader and Mitigate the risk of Penny Stocks

Here’s the list of items you need to consider before going to penny stocks. These reminders are based on my experiences trading on the market. It may or may not be effective today as circumstances surrounding a penny stock change on a day to day basis.

1. Check the liquidity of the current stock you are trading, ask your self first if there is enough traders on the stock. Penny stocks can easily dry up in volume if there is no catalyst.

2. Allocate a certain tolerable amount to trade the stock. Remember we are not trading fundamental stocks at the moment so there is a chance that when the speculations stop, the volume will certainly dry out. Trade amount you can afford to lose, do not put all your capital in 1 stock

3. Set your take profits at stop loss areas. Once you enter a trade, you should have a plan when to enter and when to exit. No planning on this type of stocks will cost you a lot of money if you are not careful. Some brokers like 2tradeAsia have auto stop loss and take profits options where when the price is hit, the system of the broker will automatically execute the transactions.

For expectation purposes, the volatility can be +/-10% in just one day of trading so take this into consideration

4. Execute your trades according to your plan, there should not be a hesitation when applying what you have intended to do, always remember what happened to NOW telecons, it did happened and it will happen again.

You may want to check these articles as well.

BLUE CHIP STOCKS, WHAT YOU NEED TO KNOW

CASH DIVIDEND IN THE STOCK MARKET

HOW DO YOU EARN FROM THE STOCK MARKET BY PRICE APPRECIATION

WHY DO WE NEED TO INVEST?

DISCLAIMER: Links included in this description might be affiliate links. If you purchase a product or service with the links that I provide I may receive a small commission. There is no additional charge to you!

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Blue Chip Stocks, What you need to know

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Blue chip stocks are so called best companies in the Philippine market today. They have been selected by the Philippine Stock Exchange to represent the best companies in the country. They are the stocks that represent the Philippine Stock Exchange Index or PSEI.

If you want to know what we think are the current list of Blue chips stocks in the Philippines worth looking at and investing today’s market conditions you can check our Blue chips Stock Picks today.

Blue chip stocks are being reviewed every year from July of the previous year to the month of June of current year. The final list of the 30 stocks are announced normally during August period

These stocks are normally giving good dividends as these companies have a good recurring income. These are big companies and easy to identify in the public as these are brands most notable to many. For example Jollibee foods corporation, Banco De Oro, San Miguel Corporation and the like.

To be able to be considered as a blue chip or the cream of the crop of the stocks, it must meet at least 3 minimum requirements duly reviewed by the Philippine Stock exchange.

1. Liquidity

The company should be among the most traded companies. This criteria selects the Top25% in median traded value in 9 out of 12 months

You can see below the traded value (amount in pesos) for the day of Blue chip stocks Emperador (ticker symbol EMP)

An advantage of this is that you can get in and out of the stock anytime because a lot of investors and traders are buying and selling the stock any time of the trading hours

2. Highest in market Capitalization

The company should be the biggest in market capitalizations

This is to ensure that the company is strong enough to whether the economic situations that might occur, like the pandemic that we are having now.

You can see here that Emperador has a Market capitalization of 220Billion pesos. It’s a very big company.

Market capitalization can also be computed by the current price of the stock multiplied by the total Market shares available for that stock.

3. Market Float level is >12%

The company should have the shares invested in public be greater than 12%.

For the company to be remain in the stock market it should have at least 10% free float level of the equivalent shares that the public can invest in the total amount of capitalization of the market

You can see here that Emperador has a free float level of 15.73%. Once this value becomes lower than 10% the Philippine stock exchange will not allow public to invest on the company so make sure the one you are buying have greater than 10% public float.

Blue chip stocks are very important index category of the stock market. If majority of these stocks are going down in direction, it means that the economic condition of the country may not be good and those can give a signal that it is not the correct time to invest in the market. The opposite therefore is true that if these stocks are going up in direction, it’s the best time to buy and ride the trend.