Issuer Consulting Blog

OTC stocks are those traded over-the-counter.  Some investors shy away from OTC stocks as buying and selling them requires paying a commission.  Furthermore, OTC stocks are filled at specific bid prices, meaning investors must bid above the current trading price for their order to be filled.  Overlook these barriers to entry and you will find there are plenty of OTC gems worthy of your investing dollars.  Let’s take a look at some of the top innovators in the OTC market, since the start of the millennium.

Apple (AAPL – NASDAQ)

Rewind to the early 2000s and Apple was trading at less than a dollar per share. Today, Apple is trading at $148, even after several forward splits.  Venture into public anywhere in the world and you will find people using Apple phones, earbuds, laptops and other tech devices.  Apple’s tech innovation is centered on creating consumer tech devices with a superior user experience design and longevity.  Apple is by far the most successful OTC market penny stock in the history of the stock market.

Turtle Beach Corp (HEAR – NASDAQ)

Turtle’s gaming headsets and gaming accessories have quickly become the industry’s standard for quality.  Turtle traded under $5 for years before jumping to the $20s.  Check out the reviews of Turtle’s gaming accessories and you will be impressed.  The company’s brass seized the opportunity to capitalize on a relatively barren industry niche, providing affordable headsets for the gaming community that has quickly transitioned from couch gaming to online gaming in which headsets are central to play.

Mylan.NV (VTRS – NASDAQ)

Mylan, a pharmaceuticals business, merged with a division of Pfizer last year.  However, it wasn’t always peaches and cream for this former OTC stock that initially debuted for public trading in 1973.  Take a look at Mylan’s historical charts and you will find the stock once dipped down below $6 per share.  Mylan’s worth soared to nearly $9 billion, moving to $70 per share prior to its merger.

Plug Power Inc (PLUG – NASDAQ)

Plug didn’t garner much attention until the pandemic.  Rewind to the spring of 2020 and Plug was a penny stock.  In fact, Plug was trading around a dollar per share for most of its existence as a publicly-traded company until 2020.  Today, Plug’s worth is in excess of $2 billion thanks to the ongoing society-wide transition away from gas-powered automobiles to green vehicles powered by Plug’s hydrogen fuel systems.

AMD (AMD – NASDAQ)

Advanced Micro Devices was once trading below $2 per share.  The company is now one of the largest chipmakers in the world.  AMD is trading at $119, largely because its graphics cards are used in computing and video game consoles, an industry that has exploded in popularity in recent years.  The company has enjoyed a 50% increase in revenue growth in the past two years alone.

Novavax (NVAX – NASDAQ)

Once an OTC penny stock, Novavax is trading at $134.  This pharmaceutical company has capitalized on the coronavirus pandemic, jumping from under $20 in the spring of ’20 all the way to $290 in February of ’21.

Axsome Therapeutics Inc. (AXSM – NASDAQ)

Asxome, once an OTC stock is now traded on the NASDAQ.  The company develops novel therapies for central nervous system conditions.  Check out this biotech’s historical chart and you will find it traded under $10 until the spring of ’19.  Axsome reached $101.98 in December of ’19 and now trades at $40.

Workhorse Group Inc. (WKHS – NASDAQ)

Workhorse has been in the spotlight in recent years as its “last leg” electric delivery vehicles received considerable attention from the mainstream media amidst the shift away from fossil fuels to greener modes of transportation.   Though Workhorse vehicles top out at 75 mph and the company’s drones haven’t fulfilled expectations, it has succeeded as an OTC stock.  WKHS was a penny stock for more than a decade before the transition to electric vehicles gained traction.  WKHS ascended to $40.61 earlier this year.  Though WKHS currently trades at $6.29, it is still considered an OTC market success story.

American Axle & Manufacturing (AXL – NYSE)

American Axle, a vehicle driveline and drivetrain components/systems manufacturer, traded below 50 cents per share in 2009.  The stock jumped all the way up to $25 in March of ’15 and now trades at slightly more than $10.  The company’s success is attributable to its focus on cost reduction along with agreements with its supply base for “should cost” component pricing that proves mutually beneficial for both parties.

Pier 1 Imports (PIR – NYSE, now delisted)

Though Pier 1 is no longer a publicly-traded company, it had quite the amazing run as an OTC stock. This furniture and housewares business traded at 11 cents in the spring of ’09 and soared to more than $20 per share as the economy emerged from the Great Recession.

General Growth Properties (Delisted)

General Growth was sold to Brookfield Property Real Estate Investment Trust for $15 billion in 2018.  General made its fortune through establishing an expansive portfolio of real estate primarily centered on malls.  The company leased this space to tenants.  Though General filed for bankruptcy in ’09, its portfolio of real estate still held considerable value, helping this OTC stock jump from a mere 59 cents per share to more than $20.

Medifast (MED – NYSE)

Medifast traded around $5 or less from 2000 to 2008.  The nutrition and weight loss specialist is now trading over $200.  The stock hit an impressive $246 in 2018.  The company’s success stems from self-reliance.  Medifast makes, distributes and sells its nutritional offerings on its own.  Medifast sales channels include the internet, franchised clinics, telemarketing and multi-level marketing.

Doesn’t the title of this article remind you of the famous idiom, “digging your own grave”? I personally think this is fitting because it takes a lot of effort, time and patience to get a company listed on the stock exchange, and only seconds later to have it all come crashing down. Sometimes situations like these are unavoidable considering the nature of the industry, stock market, economic forces, and other factors that go into running a successful public company.

With that said, we’ve compiled a list of the seven most important factors in determining if a public company will be successful:

1. Ethical Standards:

Yes, this makes the top of the list! These are essential ground rules that companies must follow to maintain trust from customers, financial analysts, suppliers, investors, regulatory agencies, and exchanges. When a company goes public, it means there are more stakeholders, and you have to try to keep them all happy. United Airlines stock dropped $1.4 billion after its security officers forcefully dragged a passenger off an overbooked flight. A soft apology from the CEO was not enough to woo the customers who were looking forward to hearing more about better customer service.

2. Accounting Standards:

Public companies have to keep growing to retain investors, but it appears that they sometimes forget that growth doesn’t mean fabricating figures. It is similar to your child failing a math test and changing the teacher’s grade from an F to a B. Yes, he is a genius, but only until the teacher doesn’t call to tell you about it. The Discovery of the hidden liabilities of Enron is a comparable situation here. The company kept showing itself to be making profits even though it was hemorrhaging cash. Another recent example of fabricated sales is Luckin coffee that has left a bad aftertaste and is now struggling with a share plunge of 81%. Well, you can’t expect a tip if you don’t serve your customers well. Also, it looks like accounting scandals are a favorite of the public companies with other examples, including telecommunication companies, MCI, Inc., previously known as Worldcom and HealthSouth Corporation, a healthcare company.

3. Data Breach:

You will not allow someone inside the house, knowing the person is a thief. Data today has become very expensive, and any company that deals with public data must ensure the highest safety standards. Credit reporting agency Equifax and social networking site Facebook could not escape neighborhood watch, and the news of data compromise came to limelight with both companies badly losing on the stock market.

4. Environment:

Going big comes with additional responsibilities, and no company can ignore them. So, whether the BP spilled 3 million barrels of oil into the Gulf of Mexico or Volkswagen cars emit high levels of poisonous nitrogen oxides, they had to bear the brunt by paying huge fines and consequent stock market losses.

5. Product Recall:

In the year 2019, two giant product manufacturing companies Johnson & Johnson and Apple, had to go through the embarrassment of re-buying their products. FDA discovered traces of asbestos (cancer-causing mineral) in Johnson & Johnson baby powder as a result of which the company is now under 15,000 lawsuits. Apple, the tech giant, had to sell battery replacements at much lower prices after facing allegations for the slowdown of their older models. I am still wondering if my mother did right using the baby powder on me?

6. Top Management:

Never underestimate the power of social media and an excellent reputation. Perhaps Elon Musk is yet to learn that as he continues to top the charts with his controversial tweets. He faced a defamation case in 2018 on his “pedo guy” tweet and a lawsuit on taking Tesla private, which had Tesla’s shares slowed down.

7. Frauds:

The health industry seemingly aces this category with examples including health insurance giant, Cigna, that artificially inflated medical costs, Turing Pharmaceuticals artificially increasing the value of the life-saving drug Daraprim by 5,000% and another pharmaceutical company, Mylan, boosting prices by 400% for its EpiPen auto-injector.