Are stocks such as SingTel and SPH considered penny stocks due to their <$5 price?

Hi Anon,

Stock price is not the only factor to determine whether a stock is a penny stock or not.

Singtel may be trading at under $3/share, but it is one of the ten largest companies on the STI. Whether a company is a penny stock is also dependent on many factors such as market capitalization. I would probably use a benchmark of under $10 million in market cap, and under 20 cents a share as a guideline to gauge if a stock is considered penny.

In the past, penny stocks were considered any stocks that traded for less than one dollar per share. The U.S. Securities and Exchange Commission (SEC) has modified the definition to include all shares trading below five dollars. The SEC is an independent federal government agency responsible for protecting investors as they maintain fair and orderly functioning of the securities markets.

Penny stocks are usually associated with small companies and trade infrequently meaning they have a lack of liquidity or ready buyers in the marketplace. Due to their lack of liquidity, wide bid-ask spreads or price quotes, and small company sizes, penny stocks are generally considered highly speculative. In other words, investors could lose a sizable amount or all of their investment.