Penny stocks are high-risk investments and shouldn’t take up a significant piece of the long-term portfolio. Most penny stocks are start-up companies with minimal (if any) revenue and speculative business models. Therefore, investing in such stocks should depend upon the risk appetite of an individual.
Multi-baggers are equities that have the potential to develop rapidly over time. A fundamentally sound small-cap stock with decent management and a long-term outlook can be considered.
Companies go public to raise money and, in doing so, offer up opportunities for investors to make money.