Penny stocks are not typically the stocks that someone would want to buy and hold as a major part of their portfolio. Many investors do enjoy “playing” with a small amount of money, hoping to get lucky. If someone had bought the three hottest penny stocks of 2014 and still owned the stocks at the end of 2015, how would their investment have done?
1. The Hottest Stock of 2014: Med-Cannabis Pharma Inc. – $1.14 to $0.07
Med-Cannabis (MCPI) was originally a Chinese import company, selling hairpieces and wigs in the U.S. The company radically changed direction to focus on retail sales of medical marijuana, beginning in Oregon. In 2014, the company posted an incredible gain of 33,233%. In August of 2014, MCPI hit $1.14 on tremendous volume of 227,800 shares. The stock was $0.31 at the end of 2014, on a more normal volume of 12,000 shares.
During 2015, the price of this penny stock steadily declined, reaching $0.07 on Dec. 18, 2015. The only high volume day in 2015 was on Dec. 7, when it appears that the owners of 62,200 shares decided to take their losses.
2. First Physicians Capital Group Inc. – $1,040 to $251
First Physicians Capital Group (FPCG) did very well in 2014, with a gain of 13, 991%. The company provides IT support staff to community and rural hospitals. It opened 2014 at $8.00 and was $1,040 in Jan. 2015. In Dec. 2015, it is quoted at $251. This is a very illiquid stock, trading on average less than 1,800 shares per day. These prices reflect a 1: 2000 stock split on Oct. 27, 2014 which caused the per share price on that day to change from $0.53 per share to $1,040 per share.
3. Creative Edge Nutrition Inc. – $0.09 to less than $0.01
Creative Edge Nutrition Inc. (FITX) had a gain in 2014 of 1,194%. The company sells health supplements and related products. In early 2014, the stock was selling for less than a penny, hitting a high of $0.09 in April 2014. It closed 2014 at $0.01. In 2015, the stock has never gone over $0.02 and in December 2015, it is selling for fractions of a penny.
All three of these stocks had the same pattern. The stock hit a high in 2014 with a lot of trading activity and then declined. All three had very disappointing share prices in 2015.