Buying Penny Stocks
photo by kevin rosseel
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Buying penny stocks, are they really only worth a penny? Well in most cases not even that, but on the other hand are $100 stock worth it. I have seen yahoo shares go from .78cents 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 $21
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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, a far greater feat. A $100 stock will most of the time 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 or 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.
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Inside Beating The Stock Market .com we have penny, small, and large cap stocks for you to pick from. Just remember that most every company out there was once a stock under $5.00. I have always said that there is a company 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. 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. 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, always remember to sell and secure your profits.
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This is just some of what has to be done, so do your DD’s and have fun.
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P.S. Want to learn more about the stock market? take a free two week trail with Jim Cramer from TheStreet.com
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Posted in Getting Started In The Stock Market | 6 Comments »
July 21st, 2008 at 10:03 pm
Well said. this is what I do.
July 28th, 2008 at 10:09 pm
Let the DD begin, Apprechiate the heads up!
July 28th, 2008 at 10:43 pm
I’m glad we can help. Happy trading
August 9th, 2008 at 5:20 am
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August 10th, 2008 at 3:44 am
Thanks Marshall. I would need to do some more research on them.
August 18th, 2008 at 9:44 pm
[...] the past, we spoke about buying penny stocks. My partner and I have been into small cap stocks and quite a few of them could be considered a [...]