What Are the Best Penny Stocks to Watch in the Technology Sector?

best penny stocks to watchShould You Invest in Tech Penny Stocks?

No one pays attention to the guy trading tech penny stocks—that is, until he multiplies $10,000 of his savings into more than $300,000. That’s not an exaggeration or dramatization; it actually happened to a 16-year-old investor named Connor Bruggemann.

While in his junior year of high school, Bruggemann started buying and selling technology penny stocks. He’s been hooked ever since. Using the right mix of research, patience, and tolerance for risk, he made more than 30% profit in less than 18 months. (Source: “Don’t try this: meet the high schooler who made $300K trading penny stocks under his desk,” The Verge, December 3, 2014.)

Every investor fantasizes about those kinds of returns, but Connor Bruggemann actually made it happen by investing in top penny stocks in the tech sector. Penny stocks are the bargain bin of the stock market, a place completely ignored by Wall Street titans.

The entire category of penny stocks suffers from an image problem. Most people think they are either scams or hollow investments that will collapse under the slightest pressure. Here’s the thing: they’re not entirely wrong.

Dear reader, I can tell you with absolute certainty that some tech penny stocks are absolute garbage. There’s no question that they belong to the trash pile of history, but that doesn’t mean all tech penny stock are worthless. A patient investor can make huge returns by simply taking the trouble to sort out the wheat from the chaff.

It’s a diamond-in-the-rough kind of investing.

That being said, technology penny stocks are some of the best opportunities that retail investors have to score triple-digit gains. Pension funds have a mandate to stay away from tech penny stocks, which leaves room for average investors to scour the market for stocks below $5.00. These stocks have the power to mint overnight millionaires.

But sorting through all that data can be time-consuming. That’s why I’ve compiled a list of the top penny stocks in the tech sector. The list isn’t exhaustive, but each of these stocks passes the smell test. They’re also cheap enough for regular investors to afford.

1. Top Penny Stocks in Tech Sector 2016: Plug Power Inc.

We all know that renewable energy is entering its renaissance, but who really wants to shell out hundreds of dollars for just one share of Tesla Motors Inc (NASDAQ:TSLA)? The truth is that big blocks of TSLA shares might be affordable to institutional investors, but retail investors would likely be better off with tech penny stocks like Plug Power Inc. (NASDAQ:PLUG).

Plug Power is currently trading at $1.69 per share. The company, which sells advanced batteries for forklifts, bills itself as the “architects of modern fuel cell technology”. It also boasts long-term relationships with Wal-Mart, Sysco, Proctor & Gamble, and Mercedes Benz. These partnerships have helped Plug Power deploy 6,500 “GenDrive” power cells.

The company is sitting on technology that genuinely has the power to disrupt how factories operate. Its GenDrive fuel cells are better on every level. For instance, refilling the GenDrive hydrogen only takes two minutes, compared to 15 minutes for replacing a battery. Those 13 minutes don’t mean much over a single shift, but they add up to 156 hours of lost productivity per year. (Source: “GenDrive: A smarter solution for material handling power,” Plug Power, last accessed August 15, 2016.)

That’s just one example. Another is that existing batteries need massive charging rooms, which eat into the commercial space of a business. Plug Power allows those charging rooms to be replaced by compact refuelling stations. Like I said, Plug Power has a genuinely disruptive technology on their hands, which is what makes PLUG stock an incredible tech penny stock.

2. Top Penny Stocks in Tech Sector 2016: Bazaarvoice Inc.

Switching gears completely, let’s take a closer look at a technology penny stock that caters to online shoppers: Bazaarvoice Inc (NASDAQ:BV). This company trades at $4.23 while having a market capitalization of $347.23 million.

Originally, Bazaarvoice.com was simply a review website, but it has since evolved into something more complex. The company recognized that people hate advertising, so it built a platform to help brands grow through word of mouth. It’s a very simple principle: people like to talk about what they buy, so give them space to review their purchases.

Crowd-sourced review boards strengthen brands, leading to higher sales and fewer returns. Instead of spending huge amounts of money on marketing, these brands simply use grassroots support to extend their reach. Bazaarvoice.com helps them execute this plan by building platforms, apps, and networks. It develops the infrastructure. (Source: “Bazaarvoice Conversations,” Bazaarvoice.com, last accessed August 15, 2016.)

With its growing revenues and shrinking losses, this little tech penny stock is well on its way to profitability. Once it reaches a critical mass of revenue, there’s no telling how high BV stock could soar.

3. Top Penny Stocks in Tech Sector 2016: Gilat Satellite Networks

Gilat Satellite Networks Ltd. (NASDAQ:GILT) completes my list of the best tech penny stocks to watch, but it isn’t remotely similar to the first two stocks. This company helps transmit broadband Internet via satellites and terrestrial receivers that it manufactures. It has shipped over a million products to more than 90 countries, meaning the company already has a global reach in its emerging field. Satellite-distributed Internet is growing rapidly.

GILT stock is trading at $4.59, up 32% from the start of the year. Some critics have been puzzled by the stock’s increase, especially in light of the company’s lower-than-expected profits last year. But I think I know why GILT stock surged.

Companies like Facebook Inc (NASDAQ:FB), Iridium Communications Inc (NASDAQ:IRDM), and Alphabet Inc (NASDAQ:GOOGL, NASDAQ:GOOG) have been developing a network of satellites that would envelope Earth in broadband Internet. Facebook wants to achieve it with high-flying drones; Iridium with a constellation of satellites; and Alphabet with a system of Wi-Fi-emitting balloons.

The visibility of these companies has rekindled enthusiasm for satellite-driven Internet, which could spark a new round of contracts for Gilat. The added revenue would help bolster this technology penny stock in the years to come, driving it way past the $10.00, $15.00, or even $20.00 mark.

In other words, the hype around satellites as a distribution point for Internet is an opportunity for Gilat, but that doesn’t mean the company can sit back and relax. It has to be incredibly proactive in pursuing new technology, even if it means merging with another communications firm like Iridium. The entire telecom world is on the brink of untold change, and Gilat should act now to keep its shareholders on the winning side of history. (Source: “Gilat Satellite Networks Ltd.,” Securities and Exchange Commission, March 22, 2016.)

Conclusion

Not everyone can be Connor Bruggeman, the whiz kid who made more than 30% gains trading technology penny stocks. But there is a lot of money to be made by digging through these cheaply trading securities. You never know what you may find.

For instance, the three tech penny stocks I listed above are all promising equities. They hold immense potential in their respective industries, and better still, they trade at an affordable price. Whether it’s these stocks in particular, or others not listed in this article, I think retail investors should consider tech penny stocks.

There definitely are some diamonds in the ruff, and you don’t want to miss out on the gains they have to offer. But these aren’t the only tech penny stocks with big upside potential. Check out our special FREE report, ‘The 5 Top Penny Tech Stocks of 2016’. Click here now to get the full story.