Good penny stocks do exist. Shady stock promoters
and boiler room operations give penny stocks a bad
reputation. Companies like Dell and Microsoft had
their beginnings as a penny stock. Imagine the returns
you would have had if you held on to them from the
beginning! Finding the best penny stocks is no different
than picking the best stocks of large corporations.
Successfully well run businesses share many traits
and usually are reflected in their share prices. To
find the best penny stocks, here’s what to look
for.
1. Shares Trades In A Regulated Exchange: Shares
that trade in a regulated environment means that the
company supplies the necessary financial information
to its shareholders and meets other compliance issues.
Reputable exchanges are the AMEX American Exchange
and the NASDQ SmallCap Market. There are also some
good penny stocks that trade in the Over The Counter
Bulletin Board.
2. Company Up To Date With Financial Reporting:
It’s a good sign if the company is up to date
on all its financial statements. It’s an indication
that they run a tight ship and have nothing to hide.
To do the proper evaluations of penny stocks, the
most current financial information is needed.
3. Strong Revenue and Profit Growth: The
main reason to buy penny stocks is to get high returns.
Capable management, a good business model and strong
operating results are signs of a well-managed company.
As long as the company shows they are continuously
making more money than the precious year, the share
price will likely appreciate.
4. Good Liquidity: This means the
penny stock has good trading volume. There are active
buyers and sellers. Getting your buy or sell order
filled will not be an issue. This also suggests that
the penny stock have a good following by the investment
community.
5. Upward Trend In the Penny Stock’s
Share Price: When a company does well or
struggles, the situation could go on for years, creating
a trend. The fortunes of the company tend to be reflected
in its share price.
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