Penny Stocks to Watch for June 2015: ONTY, Up 119%

penny stocks to watchThere are a handful of penny stocks to watch today that are poised to take off in coming months...

A small investment in a promising penny stock can turn into a significant profit over a short period of time. That's part of their attraction.

For example, penny stock Achillion Pharmaceuticals Inc. (Nasdaq: ACHN) started 2014 at $3.30. By Dec. 18, 2014, shares were trading at $14.54 - a blistering 337% increase.

Contrary to their moniker, most penny stocks rarely cost a penny. The U.S. Securities and Exchange Commission (SEC) considers a penny stock to be a security trading under $5 per share. The SEC also warns investors of penny stocks' risks. These include lax reporting standards, low liquidity, sizable bid/ask spreads, and promoted scams.

Still, there are plenty of legitimate penny stocks that develop into successful, lucrative companies and investments. Glu Mobile Inc. (Nasdaq: GLUU), featured in a Feb. 10 Money Morning piece, has moved out of the penny stock category. The stock started 2015 at $3.90. Monday, GLUU shares were changing hands at $6.45. That's a 65.64% gain over a five-month period.

There are plenty of suggested methods and strategies for how to trade penny stocks. The best tips, however, are to do your homework before diving into any penny stock, be prudent with any investment, and understand the risks. Money Morning explains how to pick good penny stocks and avoid scams here.

Now, here are five penny stocks to watch in June 2015 - one is already up a blistering 118% year to date, with room to run.

5 Penny Stocks to Watch in June 2015

Oncothyreon Inc. (Nasdaq: ONTY) is a clinical-stage biopharmaceutical company working on products to treat cancer. Clinical-stage candidate drugs are being tested for use in breast, thyroid, colon, stomach, pancreas, ovarian, prostate, and certain lung cancers. Shares surged more than 50% in early trading Monday to a 52-week high of $4.69. Sending ONTY shares soaring was news its experimental breast cancer drug ONT-380 was effective in treating women with HER-2 positive metastatic breast cancer who didn't respond to other treatments in a phase 1 clinical trial. The company is pairing ONT-380 with Xeloda and Herceptin as a third-line treatment for metastatic breast cancer patients who also have the HER-2 protein. The protein promotes the growth of cancer cells. Shares are up 118.42% so far this year.

China Nepstar Chain Drugstore Ltd. (NYSE ADR: NPD) owns and operates a chain of drugstores in China. The stores sell approximately 3,733 prescription drugs and 3,470 over-the-counter drugs. Also available are western medicines and traditional Chinese medicines for the treatment of common diseases, 476 nutritional supplements, and herbal products consisting of drinkable herbal remedies and packages of assorted herbs for making soup. Its stores also sell a wide range of personal care products. Revenue grew 8.9% last year. Earnings this year are projected to grow 50%. NPD sports a dividend yield of 12.08%. Shares are up 63.92% year to date to around $2.60.

Biocept Inc. (Nasdaq: BIOC) is a cancer diagnostics company that develops and commercializes tumor DNA tests using a standard blood sample. The tests provide information to oncologists that allows them to select appropriate treatment for patients based on detailed data on the characteristic of tumors. The San Diego, Calif.-based company announced Monday it had received  a U.S. patent for its blood collection and transport preservative. The patented collection preservative significantly reduces cell clumping that may interfere with their capture when using microchannels and other devices for up to 96 hours. In preserving specimen integrity, Biocept can perform testing for patients worldwide. Other preservatives for blood are limited to 24 hours, thus compromising the ability to offer many types of testing globally. Shares are up 32.66% year to date.

[epom key="ddec3ef33420ef7c9964a4695c349764" redirect="" sourceid="" imported="false"]

OncoGenex Pharmaceuticals Inc. (Nasdaq: OGXI) is a biopharmaceutical company that develops and commercializes therapies for treatment resistance in cancer patients. Product candidates include treatments for prostate, non-small-cell lung, bladder, and pancreatic cancer. Shares soared more than 25% to $2.72 Monday on news bladder cancer patients in phase 2 trials benefited from its drug apatorsen 600 mg. "After decades with little progress in the treatment of metastatic bladder cancer, we are finally beginning to see exciting innovation in treatment approaches that may improve outcomes, even in patients with poor prognosis," said Joaquim Bellmunt, M.D., Ph.D., Director, Bladder Cancer Center at the Dana-Farber Cancer Institute, Associate Professor of Medicine at Harvard Medical School, and one of the primary investigators of the trial. Shares are up 15.82% year to date.

Prana Biotechnology Ltd. (Nasdaq ADR: PRAN) develops therapies for the treatment of neurodegenerative diseases. Based in Australia, the company focuses on Alzheimer's and Huntington's diseases. Its lead drug candidate includes PBT2 for the treatment of both ailments. Other products in development in preclinical trials are therapies for the treatment of Parkinson's disease and other movement disorders. Monday, PRNA announced the European Commission has approved orphan designations for PBT2 for the treatment of Huntington's disease. The commission stated Huntington's disease patients may significantly benefit from the drug. Orphan designation provides for 10 years of market exclusivity in the European Union (EU) from the granting of marketing authorization (approval for sale). Other benefits relate to assistance in developing clinical protocols, reduced fees, and access to EU-funded research grants. Shares rose as much as 11.11% on the news.

Don't lose your hard-earned money by getting caught on the wrong side of a trade. Stay informed on what's going on in the markets by following us on Twitter @moneymorning.

More reading for investors: