Some of us have probably heard of someone that invested in a penny stock and tripled their money or about someone who made a ton of money by investing in an undiscovered company that went on to grow into a big company.
There is also some people that have invested in a penny stock and lost all their money. There is no doubt penny stocks can be very risky.
So while penny stocks can be risky, that risk comes with the potential for massive reward for the investor.
Not all penny stock are created equally. While most penny stocks are micro cap companies trading over-the-counter, some penny stocks are formerly successful companies that have fallen on hard times and look like they could be headed for bankruptcy. And sometimes these stocks rebound to produce massive gains.
With that being said, here are 5 big name brands that once traded at penny stock levels (under $5).
1. Monster Beverage (NASDAQ: MNST)
Formerly known as Hansen Natural, this company has been around since 1935, although its business has evolved significantly since then.
Monster Beverage is the maker of one of the most popular energy drinks on the market. It also makes natural soft drinks and fruit drinks.
Its most popular products are Monster Energy Drink and Hansen’s Natural Soda. Currently, Monster shares trade at around $66 per share and the company has a market cap of around $11 billion.
Investors could have picked up Monster shares (then known as Hansen Natural) for as low as .25 cents back in 2003. As the energy drink market exploded in the last decade, so did Monster Beverage, and this former penny stock has seen huge gains for investors that have continued to hold for the past decade.
2. Pier 1 (NYSE: PIR)
Pier 1 is an importer of decorative home furnishings and gifts, which it sells at its stores nationwide. Pier 1 Imports has one of the best turn around stories.
During the “Great Recession” its stock drastically declined as it appeared the company was at risk of going out of business.
Pier One was hit hard during the housing market collapse as people lost their homes to foreclosures and evictions, and people didn’t have any reason to spruce up their homes anymore with Pier One’s products.
The company was one of many to see its stock decline drastically during the financial crisis, and in March 2009, Pier One’s stock hit an all-time low of $0.11 per share.
However, Pier 1 fought through the hard times and never declared bankruptcy. An improving economy and a rising stock market have subsequently sent the stock back near its old highs. Currently, shares trade at around $23.
3. Apple Inc. (NASDAQ: AAPL)
We all know and love Apple’s products – from iPhones, iPods, iPads and Macs.
While, Apple never really did trade as a penny stock, however, throughout 2002 and 2003, shares of Apple could have been picked up for well under $8 per share (split-adjusted). This was a few years after the iPod was released and before the iPhone and iPads were released.
If an investor would have picked up shares around this time, they would have seen enormous gains. For example, $5000 invested in Apple around 2003 would now be worth over $360,000 as Apple’s stock now trades at over $550 per share. That’s well over a 5000% gain for investors that have held on!
Apple has now become the most valuable company in the world, far more valuable than Microsoft, Google and surpassing the largest oil company, Exxon Mobil in recent years.
4. Ford Motor Co. (NYSE: F)
2008 brought some great buying opportunities as the housing market collapsed and the the stock market crashed. While the “great recession” nearly wiped out the American auto industry, with General Motors and Chrysler going into bankruptcies.
Ford, by contrast, avoided a bailout and worked through its own problems, thanks to timely debt refinancing and popular new models, Ford Motor was barley able to survive.
Ford’s stock price crashed in 2008 along with the rest of the market and fell to penny stock levels, dipping to under $2 per share.
Smart investors that avoided buying General Motors and bought shares of Ford instead, have been greatly rewarded over the years.
Ford made a terrific turnaround and unlike other American auto manufacturers, they were able to avoid bankruptcy and their stock price recovered with its stock currently trading above the $15 per share mark.
5. Medifast Inc. (NYSE:MED)
Medifast (MED) is a very good example of a penny stock that was once an unknown brand that went on to grow into a very successful company.
The company develops weight management and disease management products and other consumable health and diet products.
MED could have been bought at .25 cents per share throughout 2001 and 2002. While, the stock has been volatile over the years, the stock is currently trading around $25. For investors that bought this stock when it was trading as a penny stock they have seen gains of over 9900%.