MarketPR
Stocks trading below $5 per share carry an official designation from the Securities and Exchange Commission — penny stocks — and that label matters more than the bargain-bin price.
The return potential is straightforward: 100 shares of a $3 name that rises $3 delivers 100% profit, or $300 on $300 deployed.
The failure mode is equally concrete: companies in this price range can go to zero, leaving investors with nothing. What the SEC Classification Actually Means for Traders The SEC draws a hard line at $5.
Below it, a stock is a penny stock by regulatory definition, regardless of the company's underlying business.
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