The Right Penny Stock Can Make You Money
Keywords: penny stocks, investing
Most people consider penny stocks to be a poor investment. I, on the other hand, think that investing in a penny stock before that company becomes profitable company is the best way to invest, because you can make a lot more money with penny stocks than would ever be possible with blue-chip stocks. I will now outline for you what you need to know about penny stocks and how to find the best one in which to invest.
Penny stocks are defined differently depending on who you talk to. Stockbrokers define them as any stock that trades below $5 per share. Regulatory agencies sometimes classify them as a stock with a price below $2. But, generally speaking, a penny stock is any low-priced security that trades on one of two exchanges; the Pink Sheets or the OTC Bulletin Board.
The Pink Sheets are an exchange where most startup companies first get listed. There are no listing requirements to be traded on this exchange. A company does not have to have any sales, nor does it have to reveal how many shares outstanding it has to qualify for the Pink Sheets.
The reason why a company tries to get listed on the Pink Sheets, even though their stock will not go up in price because they have no sales to speak of, is because it gives their company more substance and credibility; it is typically easier to attract additional capital, obtain financing, and execute contracts and agreements if a company is publicly traded, even if it is on the Pink Sheets.
Also, it is easier to get transferred from the Pink Sheets to one of the larger exchanges than it is to go from being a private company to hopping directly on to one of the major exchanges, such as the NASDAQ or NYSE. Companies listed on the Pink Sheets trade as ridiculously low as $0.00001 per share, all the way up to $500 per share and sometimes beyond. Foreign companies often have some of their shares sold in the United States by listing them on the Pink Sheets.
The OTC (Over-The-Counter) Bulletin Board is similar to the Pink Sheets. This exchange consists of relatively young companies either with no sales or a small amount of sales. Companies listed on it are sometimes fully reporting (meaning that they reveal how many shares they have outstanding and what their balance sheet looks like). Often, companies go from the Pink Sheets to the Bulletin Board once they are ready to become fully or semi-reporting.
Most publicly traded companies that are now listed on one of the major exchanges (NASADAQ, AMEX, NYSE), at one time or another, were penny stocks listed on the Pink Sheets or Bulletin Board. Rarely does a company go from being private directly to one of the 3 major exchanges. Google is a rare example of a company that was able to do that, because they were so successful so quickly. But, most companies have to pay their dues and edge their way up from the penny stock exchanges to the bigger ones.
So, investing in penny stocks can be an excellent investment because some of these young companies will one day be worth a fortune. The hard part is finding the right company to invest in, because for every successful startup company, there is also one that fails within the first year or two.
To find the right company, there are a few things you need to look for. Number one, you need to do some research and try to find out how many shares the company has in its float. The float is the number of shares that are currently being traded. Companies listed on the Pink Sheets usually do not officially report this number to the public, but with a little research, you can usually find out. It is usually contained in articles written about the company, or in TV or radio interviews with company officials that are sometimes archived on certain websites.
You can also look for the information on message boards or forums where stock traders chat with each other. Simply do a search on Google and read every article ever written about the company, and you will likely find out about their float. This is important because you do not want to invest in a company that already has something like 500 million shares in its float. Companies with this kind of share count are likely having problems moving forward, so they have issued more and more shares to raise money just to stay alive. You want to look for companies that have approximately 5 to 100 million shares in their float.
Other things that you should look for in a new company are barriers to entry, patents, and consumer demand. Here are the questions you need to ask yourself when analyzing the probability that a company will be successful:
1) Barriers to Entry: Are there are obstacles that will make it difficult for the company to sell its products or services?
2) Patents: Is the product that the company is going to sell patented? A patent will prevent other companies from producing the exact same product.
3) Consumer Demand: Will there be a demand for what the company is selling? Sometimes a company has a great new invention or an exciting technology, but if it is not something practical that consumers are going to want or need, then it does not matter how great it is.
Try to set aside some money for investing in penny stocks and start while you are still young. The earlier you get started, the more money you can make in the long run. Just make sure you do your homework before you invest and you should do extremely well.
Jim Pretin is the owner of www.forms4free.com, a service that helps programmers make an HTML form
Previous Articles Highlighter:
How To Sell And Rent Back Your Home (1)
Before deciding to sell and rent back your home, you should do the math to figure out whether you will benefit or not. Find out what your new rental rate is going to be.
Choosing The Right Insurance For Your New Malibu Home (2)
Some companies will have different categories according to the types of things that you own and how this relates to what you will need replaced. After you have assessed the value of everything in your Malibu home, you will also want to add in what you know you will want covered and which category of insurance this will put you into.
Interested In A Home In Malibu? (3)
If you are looking at a multi-family unit, you can expect to have neighbors sharing the same wall as you, such as condos or town homes. A single family home will be completely independent and will usually be shaped differently because the neighbors can't cross the yard.
Homeowners Insurance Guide (4)
This liability policy covers a homeowner anywhere in the world. For example, if a homeowner's children, or dog, or any other pet accidentally damages the neighbor's furniture, or expensive carpet, or any other property, the homeowner is covered by this policy.
Britons 'Would Rather Consult A Hairdresser' On Money Woes (5)
Recently the Motley Fool announced that most Britons have naive expectations about their own ability to pay off debts, with many putting the time span required to pay off the debt at less than half what would actually be required.
'Worrying' Number Of Young Brits In Debt (6)
"People only tend to become wise to debt when the debt catches up with them," she commented. Ms Hannums reported that consumers need to be "totally sensible" when organising their finances.
Borrowers 'Unrealistic' About Paying Back Loans (7)
The findings also showed that the typical borrower has non-mortgage debts of around 11,000 pounds. With the average Briton putting about an eighth (13 per cent) of their salary towards debt repayments, many could be set to see pressure on their repayments last longer than expected.
Homeowner's Insurance: How To Save Some Cash (8)
As with shopping around, you need to conduct some research. Your research should involve striving to keep your premiums and deductibles as low as possible. One way to do this is by not insuring the land your house sits on.
Trading Commodities - Reading Prices (9)
Each futures contracts deals with 100 troy ounces, which makes the minimum tick per contract $10. That's a significantly greater amount than the average stock investor is used to, because prices they are typically move from $.10 to $.25 per share there.
Commoditiy Trading - Financial Indexes (10)
It is the largest of all contracts traded in the financial futures market today. One of the most popular of these is the contract for the Standard & Poor's 500 Index, or the S&P 500.
Trading Commodities - Margins (11)
Depending on what the price volatility is, the amount of money involved, and the quality of your relationship with them, brokers can and sometimes do liquidate your position and don't wait for you to cover.
Myths About Real Estate Agents (12)
Fact: Real estate agents have lives too, and those lives happen to take place in the same physical realm as yours does. While it might seem like they spend a strangely disproportionate chunk of time speaking with you, they are actually trying to be as time-conscious as possible, so that you can move more quickly into your home and they can move more quickly to helping their next client.
The Benefits Of Buying Real Estate In A Bad Neighborhood (13)
This article highlights some of the benefits of buying in a "rough neighborhood". - There is less worry of your neighborhood going downhill because it is already downhill. Good neighborhoods can get bad and bad neighborhoods can get better.
Auto Loan Tips To Keep In Mind When You Buy Your Next Automobile (14)
Just because they offer a low rate to get you into the showroom does not mean that is the rate you will get. For many people the interest rate will end up higher when it is time to sign the papers.
Business Insurance Tips To Make You Feel More Comfortable (15)
Before you sign on the dotted line make sure you have the right business liability insurance. A conscientious business insurance broker will shop around for risks among carriers in the market place for you.
Bad Credit? You Can Still Get A Loan (16)
When getting a credit loan where your rating is not so good you may find that they carry a pre-payment penalty, so you will want to check all information given to you for that.
Asheville NC Rental Houses Abound (17)
Whether you are staying in an Asheville NC cabin, or in a waterfront estate on one of the many lakes, there is always something to do and see. There are four popular man-made lakes in the greater Asheville and Hendersonville areas.
Asheville NC Lakeview Real Estate Can Be An Excellent Investment (18)
Building lot property in the area is available from $75K and up. Homes and town homes are available from the low-$200,000's. Lake Glenville is a clear mountain lake with three natural waterfalls flowing into it.
Dental Insurance - Costs Far Less Than The Consequences (19)
This is an excellent option for people earning a low wage. Dental Insurance Comparisons Sites Slim Down The Bill If seeking private dental insurance, the best place too look is an insurance comparison site on the internet.
Car Loans 'Could Save Britons A Bundle On A New Car' (20)
Issues such as balloon payments - where the payment at the end of the loan is much larger than previous payments - should be considered, as should looking out for any special features a loan might have to make paying for the extras associated with a new vehicle purchase easier.
Newer Articles Highlighter:
How To Sell Your Home If You Are Faced With A Foreclosure (1)
You can use the internet, newspapers, and fliers to find a buyer. After you find someone who is interested, you can move as quickly as you like. Consider all of your options carefully, try not to rush things unless you really need to, and you'll surely have a successful experience.
Finding The Right Student Loan (2)
For these types of programs it is best to start by asking the bank you, or your family does business with for information. Stafford Loans One such student loan you should find out about is the Federal Stafford Loan.
Foreclosure Epidemic Likely Means Additional Tax Liability (3)
Avoiding foreclosure does not necessarily mean keeping the home, however. The foreclosure process is time-consuming for the lenders and often subjects them to the additional time and expense of physically evicting the former home owner from the home after the foreclosure sale.
Student Loan Consolidation Rates - It Pays To Shop Around (4)
But why repay more than is owed? Interest rates are one thing, getting a paycheck every month certainly feels like another. This article serves to help recent Grads determine what the best student loan consolidation rates are.
Student Loan Consolidation Information - What Are Co-Signer And No Co-Signer Loans (5)
Keywords: Student Loan Consolidation Info, Student Consolidation Loan Information, Student Loan Consolidation At the time of researching your student loan consolidation information alternatives you want to investigate co-signer and no co-signer loans.
Choosing Your Malibu, CA Real Estate Appraiser (6)
Banks and most lenders want to know the value of the home for your protection, as well as make sure that the home they are financing is worth the total amount that you take on the loan.
Student Loan Consolidation Information - How Credit History Affects Student Loans (7)
Both parties want to have good credit, first and foremost that requires a FICO of above 650, and the higher the better having a total score less than that will not make getting a loan impossible, nonetheless it might trigger the need to supply further information that may influence the decision and submitting that incidental data to the people who can be influenced is not always easy.
10 Reasons Why People Don't Want To Be Rich (8)
But then I have found that many people actually like their jobs and have no idea what to do with themselves if they had so much money they were permanently on vacation!
Enlightening Students About Credit (9)
Moreover, students are not necessarily known to be the best managers of their money. In fact, when we think about groups that tend to waste their money, the image of students is one of the first that one can recall.
Insurance For The Four Legged Folks (10)
You never know when things might go wrong and you might have to cough up large amounts of dough to pay for unforeseen expenses. That is why most people nowadays have life insurance, if in nothing else.
Getting Your House Ready For The Appraiser (11)
If your house does not manage to pass muster, your hopes of procuring a large amount shall be futile. If you are trying to shift to a new house, get ready to see your house get compared to a number of other "comps".
Borrowing For A Business Venture (12)
Sometimes, if money is required almost at once, the fastest way to meet that need would be to borrow the amount from the owner himself. Thus, the business person will advance the required amount from his own savings.
Secrets To Avoid A Home Foreclosure (13)
They can speak on your behalf with the company that holds the note and will work with them and you to make sure that the home does not go into foreclosure providing that you hold up your end of the bargain, which in most cases means paying a smaller payment amount then normal until such a time that you can once again begin making the full amount.
Of Jargon And Finance Tips (14)
Most online lenders also provide tips on how a customer should look around for the perfect mortgage loans, for instance. They all stress on the need to look around and compare various types of mortgages, before finally making that decision.
British Consumers 'Uninformed' About Personal Finance (15)
Mark Dawson writes for Loan-Arrangers .co.uk where visitors can compare cheap loans online. Then apply for the best rate secured loans and bad credit loans available. visit today www.loan-arrangers.co.uk
Financial Freedom Not Reached Until Mid 50's (16)
The saying goes that life begins at 40 but it is interesting to see our research indicates otherwise. This could be down to a number of economic and social factors, such as rising house prices and people having children later in life, all of which take their toll on the age of financial independence." In addition, the findings indicated that the high property prices in London are "taking their toll" on the over-50s, with a third of such parents living in the capital having their children live at home.
Car Buyers 'Need To Choose Suitable Finance Product' (17)
Meanwhile, Scotland had just under 195,000, followed by Wales and Northern Ireland with 86,000 and 65,000 respectively. About half of all those applying for a personal loan to fund the purchase of a vehicle last year between the ages of 30 and 49, as a fifth (21 per cent) are in their 20s.
Parents 'Increasingly Contributing Towards Children's Property Costs' (18)
And despite only 18 per cent of first-time buyers having asked, or are intending to ask, their mums and dads for assistance, expectations of providing help are putting parents under financial pressure.
You Can Get Loans For Wanderlust (19)
Finding a cheap holiday destination should not seem to be an uphill task. One can always just drive down to the countryside. Or one could check out one's own city.
Consumers 'Worried' At Thought Of Base Rate Rises (20)
In research by ICM commissioned by Intelligent Finance, some 41 per cent of consumers feel either "worried" or "extremely worried" in anticipation of the MPC's monthly meetings. And with the committee voting to increase the base rate five times over the past 12 months, industry experts have predicted that more rises could be due to take place within the forthcoming months, which could consequently put even more pressure on consumers' ability to pay off personal loans and other debts.