Is it wise to invest in at least a few low-priced stocks? That way, if they go up, you can make a good return quickly?
Many investors start out thinking that they can double or triple their money in low-priced stocks, then shift their newfound wealth into the higher-priced, less exciting investments we focus on here at TSI Network. Some say they “can’t afford” to buy stocks that trade well above $100, such as Apple or even Canadian Pacific Kansas City, at $111. They prefer to buy stocks trading between, say, $1 and $10. They can buy more shares that way, and the shares can produce big percentage profits with a small dollar gain.
Almost all investors who think this way wind up losing money. It’s easy to see why.
Occasionally a $1 stock goes to $5, if not $50 or more (perhaps splitting its shares several times along the way). But the odds are against it. That’s because low-priced stocks aren’t just those companies that are just starting up. Low-priced stocks include those stocks that are outright shams. Ostensibly, they exist to carry out mining exploration or develop computer software. But their main activity is selling stock to the public.
Instead of focusing on price-per-share, successful investors look at the value and growth appeal of a company. They calculate the total value of all its shares, plus they look at its outstanding debt, its sales, earnings and dividends. That’s less exciting than investing in $1 stocks that can jump 10% to 50% or more in a day, of course. But if excitement is your goal, the profit you make as a successful investor can pay for a lot of bungee jumps.
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Why we recommend you not to invest in low-priced stocks just for the sake of price
We’ve seen this scenario play out countless times over more than four decades of publishing investment advice: A novice investor is drawn to the low entry point and high potential upside of a $1 stock, hoping to strike it rich. But what begins as a seemingly harmless gamble can quickly derail a person’s financial future.
It’s not that all low-priced stocks are inherently bad. Some may represent early-stage companies with real potential. But the overwhelming majority of these so-called “penny stocks” (often classified as stocks trading below $5) lack transparency, liquidity, and a track record of financial performance. Many trade on junior exchanges with less stringent reporting requirements, making it difficult for investors to accurately assess risk.
Rather than trying to “get in early” on the next big thing, we encourage investors to consider why a stock is low-priced in the first place. In many cases, the market has already weighed the company’s prospects — and found them lacking. A low share price often reflects deep financial trouble, poor management, or a lack of meaningful revenue — all red flags that should prompt caution, not excitement.
Do shares of low-priced stocks mean more value?
It’s a common misconception that owning more shares of a low-priced company translates to greater opportunity. But this overlooks the fundamental concept of market capitalization — the total value of a company’s outstanding shares.
For example, owning 1,000 shares of a $1 stock gives you a $1,000 investment. But if that company’s market cap is just $5 million and it has no earnings or proven business model, you’re buying hope, not value.
Contrast that with buying just 5 shares of a $200 stock in a company with a $100 billion market cap, consistent profits, and a track record of paying dividends. The second scenario may not feel as exciting, but it’s far more likely to deliver real long-term returns.
At TSI Network, we prefer high-quality companies — regardless of share price — that demonstrate financial strength, operational discipline, and potential for sustainable growth. Whether a stock trades at $10 or $1,000 is less important than what the underlying business is worth.
Do you know how to spot a quality stock?
Rather than chasing daily fluctuations or betting on speculative plays, we recommend that investors focus on key indicators of long-term value:
- Earnings growth: Is the company generating consistent profits over time?
- Debt levels: Does the company manage debt responsibly, or is it overleveraged?
- Dividend history: Are dividends paid consistently, and is there room for increases?
- Cash flow: Is the company bringing in more money than it spends?
- Industry leadership: Is it a dominant player in its sector?
These are the types of companies we identify and recommend in TSI Network’s investment newsletters, including The Successful Investor and Wall Street Stock Forecaster. These publications are designed to help Canadians avoid costly mistakes and build reliable wealth, step by step.
Real investing is not about excitement
Let’s be honest: investing in solid, well-run companies with reasonable valuations isn’t flashy. You’re unlikely to see a stock jump 300% overnight. But this steady, disciplined approach is what builds wealth — and protects it — over the long term.
If you’re craving excitement, we suggest a different outlet: learn a new skill, take up an adventurous hobby, or take a trip. The satisfaction that comes from watching your portfolio grow steadily over time is a different kind of thrill — one that rewards patience and prudence rather than luck.
The bottom line for Canadian investors
The idea of “getting rich quick” is appealing — but it rarely works in practice. Low-priced stocks may seem like a shortcut, but they come with high risk and little reliability. TSI Network encourages investors to look beyond price-per-share and focus instead on real business fundamentals.
The market has always rewarded investors who prioritize value, quality, and time. That’s not just our opinion — it’s what the evidence shows again and again.
Your long-term financial success doesn’t come from picking the next big penny stock. It comes from owning a portfolio of reliable, growing businesses — the kind of companies that TSI Network has been researching and recommending to Canadian investors for over 40 years.
Have you ever invested in a low-priced stock? How did it turn out? Do you think share price matters when choosing a stock? Why or why not?
