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Finding The Best Penny Stocks

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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