Penny stocks are definitely getting hotter these days. We cannot deny the fact that there are plenty of people who love investing in penny stocks, no matter what they say about the risks that these stocks are involved with. As a mater of fact, even though most of the stock investors know that these stocks are the riskiest type of stocks to invest with, there are still plenty of them who prefer to buy penny stocks – and make great profits doing so!
Although these stocks are generally more risky, we still could not deny that there are great rewards that await those who know how to invest in this kind of stocks wisely. So the question is, how do we find the best penny stocks to buy?
Identifying Great Penny Stocks
Penny stocks are generally referred to as those stocks that are sold at less than $5 per share, and these are listed in over-the-counter market (OTCBB) or pinksheets market. We can easily buy penny stocks through the help of online penny stock brokers, who are in charge of assisting us in finding great stocks to invest in.
So what makes penny stocks great? Though this may be a difficult thing to explain, we can generally say that great penny stocks are those which have the highest potential of earning profits in the shortest period of time. After all, this is the usual cycle of investing: to invest your money and recover your investment as soon as possible, earn the desired profit, and then reinvesting the money again to accumulate more wealth.
There are some factors that can affect the “greatness” of penny stocks. First, penny stocks that are traded over the Nasdaq SmallCap Market are considered great stocks to buy since the companies that are listed here are obliged to comply with strict listing standards, reporting requirements, and other regulatory measures — thus, we can say that the stocks listed in such are in a way “safer”. Second, the financial aspects of the penny stocks are in good condition and better order. This is referred to the upward trend in revenues, as well as high levels of liquidity, stability and solvency. A high price-to-earnings ratio must also be considered. The capability of the management must always be considered as well.
Investing in Penny Stocks this Year
Usually, we can find penny stocks on the Nasdaq SmallCaps Market, the OTC Bulletin Board and the Pink Quotes. In order to find best penny stocks, it is important for investors to have enough knowledge about the companies that they plan to invest with. Thus, we need to do a lot of research about several companies that sell penny stocks before we finally trust them. Also, we can find the best broker that can give us the best stock tips and help us find the bets penny stocks available.
There are several online tools and strategies that we can take advantage with from our brokerage sites, and these tools will greatly help us in finding which are the great penny stocks for 2012.