Give the high-risk and low liquidity of penny stocks, can investors actually uncover some winners in the sector? Overall, know that the odds of finding a good, solid penny stock that rewards you with profitable gains are against you. After Retirement Basics. By Brian O’Connell. Penny stocks can trade on other securities exchanges, most notably in foreign stock markets. Penny stocks usually are tied to younger companies, with low cash reserves and little or no track record. Penny stocks can also be defined as the securities owned by private firms, blocked off from public trading. Penny stocks are highly speculative and are often hard to price accurately. The U. Securities and Exchange Commission has strict rules on penny stock trading, including written documentation from broker-dealers on the higher relative risk of investing in penny stocks.