Best Penny Stocks for January 2025, Using Technical Analysis

These are some of the penny stocks with the most interesting charts using technical analysis over the past month

Penny stocks are stocks of small companies that trade for less than $5 per share. For that reason, a small movement in the price of a penny stock can produce a large percentage gain. The low price can be attractive to smaller investors, especially given the easy access to many trading platforms. But while penny stocks offer the potential for big gains, they tend to be more volatile than established stocks and are, therefore, a much riskier investment.

Some investors use penny stocks as part of a portfolio diversification strategy, taking a small portion of a larger portfolio and focusing on high-risk, high-reward opportunities. A small allocation to penny stocks can minimize their impact on a portfolio, but given the greater risks, there is also the potential for large losses.

Below is an analysis of the top penny stocks for January 2025, screened for a high return over the last 30 days and bullish technical patterns.

All charts and data are current as of Dec. 19, 2024.

Blade Air Mobility, Inc. (BLDE)

• Price: $3.92
• 30-day return: 22.1%
• Average daily trading volume: 957,000
• Exchange: Nasdaq

Blade Air Mobility, Inc. (BLDE) operates charter and by-the-seat flights as an alternative to congested ground routes, using jets, helicopters, seaplanes, and turboprops. The company’s stock triggered a decisive breakout of a bullish inverse head and shoulders pattern in November. Notice that the upside breakout also took out the long-term downtrend line. It is in an interesting position now as it has pulled back to test support around the neckline of the pattern. A bullish reversal following the first pullback after a key breakout is one of the more promising methods of entry, as a new leg up should still be in its beginning stages. Given the sharp one-week rally that triggered the breakout, similar aggressive buying is possible once the current retracement is complete.

Baozun, Inc. (BZUN)

• Price: $3.05
• 30-day return: 17.8%
• Average daily trading volume: 676,200
• Exchange: Nasdaq

The stock of Baozun Inc. (BZUN) has been showing signs of a long-term bullish reversal since it triggered a decisive breakout above key moving averages in September. Baozun operates ecommerce solutions for brand partners in China. Its stock triggered an initial breakout above the 50-day moving average (orange) the week of Sept. 16 and then took off the following week, triggering a breakout above the prior swing high resistance at $3.20. Also, the 20-week moving average (purple) crossed above the 50-day line and confirmed strength. Notice that the 20-week line had been below the 50-week since July 2021.

Cardiff Oncology (CRDF)

• Price: $4.49
• 30-day return: 77.5%
• Average daily trading volume: 2,216,300
• Exchange: Nasdaq

The stock of Cardiff Oncology, Inc. (CRDF), a clinical-stage biotechnology company, is showing signs of coming off a bottom. It has been in a long-term downtrend that reached a record low of $0.70 in March 2020. A sharp rally followed before the stock peaked at $25.50 in November 2020. That was a 3,537% low-to-high rally over 37 weeks.

The subsequent bearish correction hit a low of $0.94 in November 2023, which was followed by a new ascent. Given bullish price action that eventually followed in February 2024, there is the potential for continued strengthening. That rally completed a $5.48 or a 583% advance and is the first leg up from the bottom. A second leg up starting from the recent $2.01 swing low would target $7.49 on a price basis and $11.69 on a percentage basis, if it were to match the performance of the first leg up.

PLBY Group, Inc. (PLBY)

• Price: $1.67
• 30-day return: 47.8%
• Average daily trading volume: 3,736,400
• Exchange: Nasdaq

PLBY Group, Inc. (PLBY) provides products and services in the pleasure and leisure category primarily through the Playboy brand. Its stock triggered an initial breakout of a double bottom reversal pattern the week of Dec. 9 and then continued higher. It reclaimed the 50-week moving average in late October and successfully tested the 50-week line as support during the week of Nov. 11. Bullish confirmation may soon be signaled with the 20-week moving average about to cross above the 50-week moving average for the first time since December 2021. Further, the breakout is still in process and needs further signs of strength. Nonetheless, it indicates a potential long-term trend change that is still in its early stages. Investors will be watching the characteristics of pullbacks for signs of strength and attractive setups. 

Porch Group, Inc. (PRCH)

• Price: $4.57
• 30-day return: 30.2%
• Average daily trading volume: 2,820,700
• Exchange: Nasdaq

The stock of Porch Group, Inc. (PRCH), a homeowner insurance and vertical software platform, has formed a bullish multi-year inverse head and shoulders pattern. Signs of strength within the pattern include a right shoulder that is higher than the left shoulder and a rising neckline. A rising neckline is more bullish than a horizontal or declining neckline. The stock attempted to break out above the neckline during December but was not totally successful as the line was exceeded briefly. The stock quickly fell back below the line. Nonetheless, the prior swing high, beginning the right shoulder, was exceeded, which showed strength and established a third hit for the neckline.

What to Know About Penny Stocks

Many penny stocks trade via over-the-counter (OTC) markets, which means they have minimal regulatory oversight and little analyst coverage, making it difficult to access accurate company information.

However, the penny stocks we’ve identified in this article are all listed on the New York Stock Exchange or Nasdaq, which means they are subject to the same listing requirements as any other company on these exchanges. These requirements are intended to ensure that only high-quality securities are available for trading on the exchange.

While penny stocks are a riskier investment than established stocks due to their volatility, the potential for high returns is attractive to some investors.

How We Chose the Best Penny Stocks

There were a few criteria used to find the stocks listed in this article. Of course, the price of the stock needed to be below $5 per share. The stocks needed to have a minimum average daily trading volume of 100,000 shares—used to help ensure liquidity. The stock also had to have at least 24 months of trading history.

Then, the charts were reviewed for bullish patterns, including breakouts above trendlines, key resistance, and moving averages. Candlestick patterns were also considered, as we looked for signs that pointed to a bullish trend reversal or indications that a trend was strengthening. Still, no one can predict what will happen in the future, and past performance is not a guarantee of future performance.

Penny Stock Advantages and Disadvantages

The low price of penny stocks offers investors high potential for growth, and they can give smaller businesses a platform to access funding. But while these stocks can bring investors significant gains, they also carry the risk of significant losses.

There are greater risks associated with investing in penny stocks than with more established stocks. One disadvantage is that most institutions, including mutual funds and many ETFs, are prohibited from purchasing stocks below $5 per share. Penny stocks usually don’t have much liquidity. It can also be difficult to find solid public information about penny stock companies that trade over the counter. Given the additional risks, penny stocks are not suitable for all investors, especially those with a low risk tolerance.

There are ways to mitigate the added risks, starting with raising the minimum price and average trading volume and selecting penny stocks that trade on the NYSE or Nasdaq. Overall portfolio risk can be contained by allocating only a small amount of total capital to the penny stock market.

The Bottom Line

There are some benefits but also significant risks associated with investing in penny stocks. Investors can mitigate those risks by allocating only a small portion of their total portfolio to penny stocks and using technical analysis to assess stock performance. Here, we screened for penny stocks that had a high return over the last 30 days and displayed bullish technical patterns.

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As of the date this article was written, the author does not own any of the securities listed above.