I don't blame folks who brands this stock as scam because almost everybody that trade penny stock end up with a bad experience and they never go back. However, I believe there must be a technique to successful trade penny stock. How do you know a penny stock that is not overpriced? How do you trade penny stock?
I use stock hacker/scanner on TOS for premarket. Set my price say .20-$3 with at least 5k-100k volume that has dropped at least 4-5% from previous close. I've found it to be a great way to find beat up undervalued stocks ready to bounce. Of course all of them won't so I pick a few with top volume and DD fundamentals. Been worth pretty well. Pennies are a whole different beast that takes some tweaking to get a good system but they can be quite profitable.
Typically many penny stocks are companies with little or no revenue and in a "developmental stage". Although there are a lot of scams, there are some companies with a genuine intention to build a real business. It is extremely important that you do extensive research on such companies/investments as most will fail. As with any investment in a security, research should include an in depth analysis of company management/experience, stage of development, product/service commercial viability, market/growth potential, competition, strategic partnerships/alliances, and financials (balance sheet and income statements). Also, pay close attention to meaningfulness or quality of news related to company and whether or not such news is from credible sources. Many, if not most penny stocks on paper are "overvalued" (due to a number of reasons I won't go into) and will have to justify valuations based on actual meaningful progress and ultimately secure revenue and growth. So before making a decision come to a determination of whether or not a given company is truly capable of making progress towards commercial viability and achieving growth. Don't trust promoting or hype. Do your own research.