The 3 Best Penny Stocks to Buy for 2018

Investors looking for 300%-plus returns often turn to penny stocks, which is why we're showing you the best penny stocks to buy for 2018.

Penny stocks are stocks that trade for less than $5.00 per share. At those prices, small swings in stock price translate to large changes in percent.

Take Marathon Patent Group Inc. (Nasdaq: MARA) for example. The stock celebrated Thanksgiving this year by skyrocketing more than 340% during the short trading week.

Investors who purchased shares of MARA in June, when it was trading at $0.64, have seen spectacular gains in the months since. It now trades at $5.64, more than 780% above this summer's prices.

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Still, investors must keep in mind that penny stocks are risky. The same price swings that can move a low-priced stock up a large percentage can also happen in the opposite direction, leading to large-percentage losses.

That's why Money Morning Chief Investment Strategist Keith Fitz-Gerald advises that no more than 2% of your portfolio be made up of penny stocks or other high-risk investments.

That said, if you're interested in the best penny stocks to buy for 2018, we have some recommendations for you. We expect that at least one of our top three picks could result in more than 500% returns.

Read on to find our third-best penny stock to buy in 2018...

The Best Penny Stocks to Buy for 2018, No. 3: Cogentix Medical Inc.

Minnesota-based Cogentix Medical Inc. (Nasdaq: CGNT) makes products in the fiber optic and video endoscopy sector for medical use. Endoscopy is a way for doctors to look inside of the body by inserting a small camera.

CGNT's flagship product is called PrimeSight. It's an endoscopy system that offers doctors and hospitals an all-in-one platform that helps reduce capital and maintenance costs. As healthcare costs skyrocket, the medical sector is increasingly interested in cost containment.

In July 2017, Cogentix announced it had agreed to an exclusive licensing agreement with Promepla, a medical devices maker, to roll out a series of products for endourology.

In the company's Q3 2017 earnings call, CGNT's CEO Darin Hammers said the launch of this set of products should allow for 20% revenue growth in CGNT's urology segment in 2018. Urology is responsible for nearly 30% of the company's net total revenue.

Three investment firms have ratings on CGNT shares. The average target price is $4.58, with JP Morgan Chase forecasting a $5 target.

Currently, the shares are trading at $2.89, up 38% year to date. The price targets imply upside of 58% and 73%, respectively.

But our second-best penny stock to buy in 2018 trades for less than $1...

The Best Penny Stocks to Buy for 2018, No. 2: Capstone Turbine Corp.

Capstone Turbine Corp. (Nasdaq: CPST) is based in southern California and offers products and services for a range of microturbine applications. Their products can be found in combined cooling and heating systems and generators for charging batteries used in hybrid electric vehicles.

On Nov. 2, CPST's management held their Q2 2018 earnings call. They forecasted that the company would break even at fiscal year-end 2018, which occurs in March. Up to this point, the company hasn't been profitable.

If this occurs, it would be a major step forward for the company. The next major move would be sustained profitability.

Right now, CPST stock trades at $0.73, roughly flat on the year. The five investment firms that cover the stock have placed an average share price target of $1.70 on it, which would be a 132% climb from current levels.

If you thought CPST was an attractive opportunity, wait until you see this next one, which trades for less than $0.25...