Are penny stocks only worth a penny? Well in most cases not even that much, but on the other hand, some $100 stocks are not worth the investment either. I’ve seen yahoo shares go from .78 to $118, back to $4.85 and now 4 years later $23. Home Depot in Dec of 1999 hit $70 a share and now 8 years later it $21.
If your looking for information to learn how to buy stocks for beginners, here’s some that will help you out immensely. Buying a penny stock is just as hard as buying a Dow 30 stock, but the rewards are far greater for a $1.00 stock to grow 100%. It just has to go to $2.00, where as a $100 stock has to go to $200, which is a far greater feat. Most of the time, a $100 stock will have revenues of $2 or $3 billion for its share price. To double in one year, revenues will have to grow to $4 or $6 billion, where as a $1 or $2 stock might have revenues of $50-$100 million. It’s easy for them to grow revenue to 100 or 200 million in a year. This is why the small cap market outperforms the Dow every year.
Just remember that most every company out there was once a stock under $5.00. I have always said that there’s a stock going up over 100% every day in the stock market and if you do your DD’s (due diligence) you can be the one who finds it. Just don’t look for them in the mid – large cap stock. Penny and small cap stocks are where you will find them. Look at the earnings report and make sure they are increasing 50% quarter over quarter minimally and then check out the chart. Look at the volume to see if it has been rising steadily and see if they have been in a trading range for a 3 to 6 months period. The trend is your friend.
Once you see them breakout from that trading range – BUY! The chart will always tell you what to do before the news comes out. Most of the time one or two week after a breakout, the news will come out and push the stock higher. Remember, you want to be ahead of the herd not with them. If you try to follow the herd, it’s likely that you missed the big gains or you got in too late and you missed it all together. Always remember to sell and secure your profits. As Jim Cramer likes to say, “bears make money, bulls make money and pigs get slaughtered.
This is just some of what has to be done, so when you’re ready to start buying stock online, do your DD’s first.Tags: Buying penny stocks, Earnings report, Getting Started In The Stock Market, Investment books, Stock market for beginners