Are There Penny Stock Fortunes To Be Made?

There are plenty of ways to identify a good penny stock. In this article, I'm going to discuss some of the most popular methods that many investors find quality penny stocks.

With practice, you'll be able to spot the kind of stocks whose future is actually quite limitless, and you'll be able to get in on the ground floor.

You are going to have to do some digging. You need to know about the specific details about the prospective company. The more you know, the better off you are going to be.

Here are just some of the aspects that you should be asking about when you are researching these companies.

What kind of market do these stocks trade in' This is important because some penny stocks trade in exchanges like NASDAQ Small Cap, or the AMEX, which have more regulations and there is more reporting that has to be done with the shareholders.

The over the counter stocks or pink sheet stocks are a little bit less transparent when it comes to their shareholders.

* Does the company have a solid business plan and good financial numbers? Are they profitable or are they losing money? What are their forward looking expectations.

After that, it's time to look at the fundamentals. What kind of business plan do they have' In what kind of business are they in? Are they in an industry that has a future or is it on the decline?

Start looking at some Balance sheets, income statements, and statement of cash flows. Even if the company is not necessarily profitable, does it have the POTENTIAL to be profitable? That's the key.

Because if you are investing in penny stocks, chances are you will not be investing in a stock with HUGE profits or profit margin.

Check out the news. Has there been any bad press on the company, and/or its management?

Is the company creating any new kind of innovation that's going to rock the industry' Most of the big name companies you see today, were once unknown, until they produced a product that revolutionized the industry.

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