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5 Responses to “What are good factors to look for in a penny stock?”
Your always looking for a good story with continue earnings each year. You want to see sales going from millions to the billions. The company should also Switch for instance from the bulletin boards to the NASDAQ, NYSE or American stock exchange. Management is important you want employees that can build the company with expertise in the field.
The first thing you need to look for is a good story. Stocks go up because people are prepared to pay more for them. Even if a company is doing well, the price will not increase until people are willing to pay more for the company.
Once you know the story you need to check all the facts and assumptions to make sure that they are true.
The next step is to determine the factors that will cause the price to rise and what will indicate that you have got the story wrong.
For example a small company might be involved in a legal case where if they win they will become hugely successful or if they lose they will go out of business. Winning the case will indicate to you that this may be a good investment while losing makes it a bad investment.
While numbers and statistics work well with large companies that can weather multiple set backs, small companies can disappear with the first bad surprise.
Take the same money for your holiday rather than invest in a penny stock. If you treat your portfolio like your business, would you invest your capital into unknown/bad financial business? If you love casino game then throw all of your chips with one spin and say goodbye to your money.
Promotion of the stock may indicate a scam, but penny stocks almost always have to be sold by promotion. I would first look to see if the company is disclosing information. You cannot tell what you are buying without information. Next I look to see if the stock is cheap, comparing the market capitalization with the assets and earnings, if any. I also look to see if the salaries are excessive or other signs of insider looting. I would avoid companies with reverse splits, frequent changes of name or business, excessive dilution.
Then I would consider the merits of the business and if the insiders are truly devoted to what they are doing.
If you like to invest in penny stock you should invest in Evolution Fuels Inc (EVFN) $.0001 because it as the lowest and it no long going down. if you look as the graph it show every few years it have very high increase in price. such as $1.40-$2.60. so in you bought $100 stock as $.0001 which equal to 1000,000 share in few year you sell it $1.40 year earn $1,400,000. the cost is low but earning it way up there.
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