how would i know if its a good one to pick?? any references??
2007-02-10 13:33:33 · 10 answers · asked by Miklo 3 in Business & Finance ➔ Investing
Generally you want to research them well before investing. The advantage is that they're very cheap stocks and you can by hundreds of shares and hope they go up very quickly. Usually they go under and you lose your money, but if you get good at it you can clean up.
2007-02-10 13:42:53 · answer #1 · answered by Anonymous 7 · 1⤊ 0⤋
To tell the truth, most penny stocks out there are trash. They are just a way for you to lose your money quickly. However, there are the potential Google's that could be out there trading at a dime per share. The good penny stocks, are just unrecognized but have great potential to become big companies.
Their volatility could bring in huge profits or they could doom you. I wouldn't recommend trading penny stocks unless you are willing to take much more risk but possibly earn lots of money. Sure, high dividend stocks seem boring if you are impatient, but they are usually a sure way to earn money.
To know that a company's stock is a good pick (not only penny stocks but all stocks) the company should have (not in any specific order of priority) 1) good management 2) increasing revenues 3) healthy volume (how often stock is traded) and cash flow(what company does with their money such as investing it)
4) a wanted product/service in a growing industry preferably where demand is greater than supply. 5) not too much debt 6) expanding company.
Another thing that is kind of important is whether the CEO buys or sells shares. The CEO usually knows the most about a company (more than us at least) and if he buys it probably means he thinks the company will do well and vice versa.
Remember to keep in mind that a stock only grows when a company grows. That's why companies that aren't able to expand much more pay you dividends.
A penny stock that I like is: RHWC (Reliant Home Warrant Co.)
you can check out this website:
www.undervaluedpennystock.com
This company is relatively unknown and has a projected profit of $750 Million for the first year. It's trading at around 15cents right now. I'm hoping that when they release their quarter report (with financial information) that the stock will explode in prices and maybe even reach $1 by end of May 2007. I have 100,000 shares in this company, but it is only a portion of my investment. Remember to diversify your portfolio, the most dangerous thing to do is to try to earn a lot of money from high risk penny stocks and then end up losing it all. Many people have lost half of their investment or even all of it just from investing in penny stocks.
Invest with caution and be sure to have family consent because penny stocks could be devastating and affect everyone around you if you make a bad choice.
Having said all that pessimistic stuff, Good luck investing!
2007-02-10 22:33:12 · answer #2 · answered by berelane 2 · 0⤊ 0⤋
Penny stocks are a good investment for a very small portion of your asset allocation. I do between 1% and 2% a year.
I'd suggest you have 5 years (or more) of investment experience (with large cap and later mid cap and small cap stocks).
Many people get into penny stocks through "tips" or on boards like Yahoo Answers. There are few worse ways to find a good penny stock. Why people take tips from unknown people with unknown qualifications and unknown motives is beyond me.
Penny stocks lose a ton of money for a ton of people. Yes there are people that make money on them... but I assure you, they lose many trades. Usually it's their additional skill of minimizing their loses that brings them the "big bucks". These traders are smart, they know the market is smarter than them & they have years of prior experiance.
The saddest part.... You'll read this and say "...not me"!
READ...READ... READ... Pick up some books on this topic. Make sure they're not appealing to your greed to make you rich.
Good luck!
2007-02-10 22:32:40 · answer #3 · answered by Common Sense 7 · 1⤊ 0⤋
Penny stocks offer the opportunity to make a lot and lose a lot. If you want to invest in this area, I would suggest you see what the best traders are buying at http://www.top10traders.com - some of the better traders have made some great picks. You can see what each of them are buying and selling. Some traders specialize in penny stocks. Here are this months best traders:
http://www.top10traders.com/Top10Standings.aspx
Hope this helps.
2007-02-11 11:58:33 · answer #4 · answered by Anonymous · 0⤊ 1⤋
www.positivearticles.com/blog/1322/penny-stocks-arent-all-penny-stocks-a-scam/ - 20k
See this website.
2007-02-14 03:43:18 · answer #5 · answered by sindhukannankattil 2 · 0⤊ 0⤋
You get what you pay for. Why do you think they call it penny.
2007-02-10 21:48:12 · answer #6 · answered by hiderm 2 · 0⤊ 1⤋
It is a crap shoot
2007-02-10 21:54:20 · answer #7 · answered by Anonymous · 0⤊ 1⤋