Penny stocks have made people alot of money. But be careful. basically a penny stock is the stock of a company that for whatever reason, has gone down to the sub $1 level. It may be a very new company or an established one that is having some trouble.
3 things can happen with a stock in that range. 1) it can be de-listed from the exchange, meaning no one can buy or sell shares, which means your shares are worthless. 2) the company can fold up, which means your stocks are worthless. 3) It can go higher in which case you will make alot of money.
To make money in penny stocks, you need to understand the stock market, understand the industry in which the particular company is in and be lucky.