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Buying Penny Stocks

Buying Penny Stocks

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.

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13 Responses to “Buying Penny Stocks”

  1. otchitman says:

    Well said. this is what I do.

  2. Sirwestcott says:

    Let the DD begin, Apprechiate the heads up!

  3. billy
    Twitter:
    says:

    I’m glad we can help. Happy trading

  4. Marshall Smith says:

    SRCO.OB :- Havens , CEO : increased application flow further reinforces the fact that despite the problems in other sectors of the credit markets, consumer interest in acquiring Powersports vehicles continues to grow.

  5. billy
    Twitter:
    says:

    Thanks Marshall. I would need to do some more research on them.

  6. jo says:

    The point you made about cramer is right you have to be ready to sell when you make a profit in penny stocks. You can make some money but like any other investment you have to work at it and take profits when you can.
    jo recently posted..Dividend stock list.My Profile

  7. Andrew Cole Jen says:

    Particularly challenging thank you, It is my opinion your current readers will probably want way more items along these lines carry on the excellent work.

  8. Dana says:

    Penny stocks are interesting since they offer a wide range of gains and losses. However, the good knowledge to analyze is a must since there is a high risk in there. Many of penny stocks are not worth to invest so it is hard to find the one that worth to invest.
    Dana recently posted..Sept 19, 2011 BBRI Analysis: Confirmed Bullish Harami, MA Resistance, Decreased Volume, and Crossed Up StochasticMy Profile

  9. Rodrigo Valenzuela says:

    @Dana, I completely agree with you. Infact, I believe that any kind of investment is a risk and needs a lot of analysis and research. It is also difficult to decide which stock to invest in. Every investment probability brings risk and confusion.
    Rodrigo Valenzuela recently posted..Seleccion de sitios web que dan muy buenos consejos para conquistar a un hombreMy Profile

  10. Leo says:

    Penny stocks seem to be an average paying investment. I agree with you that following the crowd is not a good idea when it comes to investing. Thank you the interesting tips you have given on investing in penny stocks.
    Leo recently posted..La dieta necesaria para dejar de fumarMy Profile

  11. billy
    Twitter:
    says:

    All investments are risky, it’s a matter of how much of a risk is it. With any investment, you need to do your research and due diligence to help reduce the risk of your investment. Many who lose their money in the stock market are the ones that didn’t do their homework before investing in any stock or any other type of investment.
    Thanks for your comments guys. Have a good day and Happy Trading. :)

  12. Brett says:

    I got burned on penny stocks, I guess every amateur needs to learn this lesson.

    When a couple of my companies got bought I got shafted big time.

    :(
    Brett recently posted..Watch Me Buy a Website Business and Make a Decent Second Income!My Profile

  13. Scott
    Twitter:
    says:

    Penny stocks can be rewarding and dangerous. They do require a lot of research just as normal stocks do except if you are dealing with pure penny stocks, those that trade mostly for a penny or less it can be difficult.

    You will need to learn a lot about charts and how to day trade. This is because fundamental analysis often does not work. Many of these companies are unreliable for reporting profits and book keeping.
    Scott recently posted..Penny Stocks Psychic Review – $7 Well SpentMy Profile

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  1. Penny Stocks | Beating The Stock Market - [...] the past, we spoke about buying penny stocks. My partner and I have been into small cap stocks and ...

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