Top Penny Stocks to Watch in August 2025: High-Risk, High-Reward Plays

• What Are Penny Stocks?
• 1. Bitfarms Ltd. (BITF) – The Bitcoin Miner Heating Up
• 2. Douglas Elliman Inc. (DOUG) – Real Estate’s Hidden Pattern
• 3. Data Storage Corp (DTST) – Breaking the Downtrend
• 4. NIO Inc. (NIO) – EV Underdog Revving Up
• 5. Neuronetics (STIM) – Mental Health Tech Play
• Penny Stock Risks: Handle With Care
• FAQ: Penny Stock Essentials

Penny stocks—those trading under $5 per share—are the wild west of the investing world. They’re volatile, speculative, and often thinly traded, but for traders with a high-risk appetite, they offer the allure of explosive gains. This article dives into five penny stocks showing bullish technical patterns as of July 2025, screened for minimum price ($1.50+) and volume (200k+ daily avg). We’ll analyze Bitfarms (BITF), Douglas Elliman (DOUG), Data Storage Corp (DTST), NIO (NIO), and Neuronetics (STIM), all listed on major exchanges (NYSE/Nasdaq) for added transparency. Just remember: past performance isn’t predictive, and penny stocks can burn as fast as they shine.

What Are Penny Stocks?

Penny stocks are low-priced equities, typically trading below $5 per share, with market capitalizations often under $300 million. These stocks are known for their extreme volatility, driven by low liquidity and limited institutional coverage. While some penny stocks trade on major exchanges like Nasdaq or NYSE, many operate in over-the-counter (OTC) markets, where regulatory oversight is minimal. The stocks highlighted in this analysis meet stricter listing requirements, offering a slightly safer entry point into this high-risk investment category.

Key Characteristics of Penny Stocks:

Why Consider Penny Stocks?

Despite their risks, penny stocks attract investors for several reasons:

• Growth Potential: Successful small companies can deliver exponential returns.
• Affordability: Low share prices allow investors to build substantial positions with modest capital.
• Market Inefficiencies: Undervalued opportunities may exist due to limited analyst attention.

However, investors should approach penny stocks with caution, allocating only a small portion of their portfolio to these high-risk assets. Proper due diligence, including technical analysis and volume screening, can help identify more promising opportunities while mitigating some risks.

1. Bitfarms Ltd. (BITF) – The Bitcoin Miner Heating Up

Bitfarms Ltd. (BITF) has emerged as one of the most promising penny stocks in the cryptocurrency mining sector, currently trading at $1.28 with an impressive 71.5% one-month return. The stock's average daily trading volume of 27.2 million shares on Nasdaq indicates strong market interest.

Technical analysis reveals several bullish signals:

The company's sustainable approach to bitcoin mining, primarily using hydroelectric power, adds fundamental appeal to its technical strength. What caught my attention was the clear double-bottom pattern formation, confirmed by the breakout above $1.19 with substantial volume - a classic sign of genuine buying interest rather than speculative pumping.

From a technical perspective, three factors stand out:

While the stock shows promise, penny stocks always carry higher risk. The next resistance levels to watch are the 50-week moving average at $1.48 and the psychologically important $2.00 level where the 200-week MA currently sits.

2. Douglas Elliman Inc. (DOUG) – Real Estate’s Hidden Pattern

$2.86 |+20.7% |535k shares

Douglas Elliman Inc. (DOUG), a real estate services company trading on the NYSE, is showing intriguing technical patterns that warrant attention:

The stock appears to be forming a significant head-and-shoulders bottom pattern - a classic technical reversal formation that often precedes upward moves. Here's what makes this setup particularly interesting:

From a sector perspective, real estate stocks tend to be cyclical, and with interest rates potentially stabilizing, brokerage firms like Douglas Elliman might benefit from improved market conditions. The company's extensive network of agents and offices provides a solid operational foundation.

Technical analysts will be watching for:

• Volume confirmation on any breakout attempt
• Support holding at the 20-week moving average (~$2.60)
• Potential resistance at the $3.20 level (last seen in March 2023)

While penny stocks carry inherent risks, DOUG's technical setup combined with its NYSE listing (providing better regulatory oversight than OTC stocks) makes it an interesting case study in identifying potential turnaround opportunities in the real estate sector.

3. Data Storage Corp (DTST) – Breaking the Downtrend

Data Storage Corporation (DTST) has emerged as one of the most interesting penny stocks to watch in August 2025, showing strong technical signals of a potential trend reversal. Currently trading at $4.72, the stock has delivered an impressive 41.7% return over the past month while demonstrating improved technical structure.

Key Technical Developments:

The stock broke out of a falling wedge pattern in mid-July, a bullish technical formation that often signals the end of a downtrend. This was accompanied by two other significant technical developments:

What makes DTST particularly interesting is the confirmation of these moves by weekly closing prices, suggesting stronger conviction behind the breakout than we often see in penny stocks.

Price Targets and Key Levels:

The initial wedge pattern target of $5.27 has already been reached, but the chart suggests potential for further upside. The $8.00 swing high from May 2024 stands as the next significant target if momentum continues.

Perhaps most notably, the 200-week moving average has provided consistent support since December 2024. The stock recently rallied off this key level before the breakout, suggesting bears are losing control and a potential trend reversal may be underway.

For traders considering a position, key support levels to watch include:

• 20-week MA: $3.89
• 50-week MA: $4.46
• 200-week MA: Long-term support zone

While penny stocks always carry elevated risk, DTST shows several technical characteristics that help mitigate some of those risks, including decent liquidity (nearly 1 million shares traded daily) and listing on a major exchange (Nasdaq). The combination of pattern breakout, moving average reclaims, and volume support makes this one of the more compelling penny stock setups currently available.

4. NIO Inc. (NIO) – EV Underdog Revving Up

NIO Inc. (NIO), the Chinese electric vehicle (EV) manufacturer known for its innovative battery-swapping technology, has shown promising technical signals in recent weeks. As of July 28, 2025, the stock trades at $4.83 with an impressive average daily trading volume of 67.3 million shares on the NYSE.

• Broke out of a bullish wedge pattern in mid-July
• Successfully reclaimed the 50-week moving average ($4.46)
• Faced resistance at $5.21 before pulling back
• Next potential targets at $7.71 (wedge formation start) and $11.45 (200-week MA)

NIO differentiates itself in the crowded EV space through its unique battery-swapping stations and autonomous driving technology. However, investors should note the additional geopolitical risks associated with Chinese stocks, which can create volatility beyond normal market movements.

From a technical perspective, the recent breakout suggests improving momentum, though the stock may need to consolidate before attempting to challenge higher resistance levels. The 50-week MA at $4.46 now serves as important support, with stronger support at the 20-week MA ($3.89).

While the technical setup appears constructive, penny stocks like NIO carry higher risk than established companies. The EV sector remains highly competitive, and NIO must continue executing its growth strategy to justify its valuation.

5. Neuronetics (STIM) – Mental Health Tech Play

Neuronetics, Inc. (STIM) presents an intriguing opportunity in the mental health technology sector, currently trading at $4.52 with a notable 28.0% one-month return. The company specializes in transcranial magnetic stimulation (TMS) therapy for treatment-resistant depression, combining medical innovation with growing market demand.

Technical Analysis Highlights

The stock's recent breakout from a bullish wedge pattern during the week of July 21 coincided with reclaiming its 20-week moving average. What makes this particularly noteworthy is how the 200-week moving average provided consistent support throughout the consolidation period, suggesting strong underlying demand.

Why This Matters

Three key factors make STIM stand out:

Looking ahead, after a potential pullback to test support levels, STIM appears positioned to challenge its recent high of $5.92. The combination of technical strength and fundamental tailwinds in the mental health space makes this more than just another speculative play - it represents a convergence of healthcare innovation and investment potential.

Data source: TradingView technical analysis platform

Penny Stock Risks: Handle With Care

These aren’t buy-and-hold picks. Penny stocks face:

• Liquidity traps: Thin volume = slippage. Exit strategies matter.
• News sensitivity: A single tweet can crater prices.
• Scams: Pump-and-dump schemes thrive here. Stick to listed names.

FAQ: Penny Stock Essentials

How do I screen for penny stocks?

Focus on stocks >$1.50, avg volume >200k, and positive 1-month momentum. Chart patterns (like wedges or H&S) should confirm fundamentals.

Are penny stocks suitable for beginners?

Not ideal. Start with blue chips to learn market mechanics. Penny stocks amplify mistakes.

What’s the biggest mistake penny stock traders make?

FOMO. Chasing spikes without a plan. Always set stop-losses.