| There is no doubt that penny stocks are a risky | | | | This is just waiting and seeing which doesnt get |
| and thinly traded breed of stocks issued by | | | | you in on the ground floor of and investment |
| relatively tiny companies. Also, the SEC does not | | | | before the public takes notice. Investing ahead of |
| require penny stocks to follow their reporting | | | | an industry trend is far better. So look for stocks |
| rules. This combined with unclear or unverifiable | | | | in industries that are the edge of more demand. |
| financials can make this stock seem like | | | | 3. Personal Interest |
| something to avoid altogether. Penny stocks can | | | | Theres a saying that you do well at things you |
| be dangerous for investors of all experience levels | | | | enjoy to do. This makes logical sense and it |
| but especially for amateurs just getting their feet | | | | works with stocks as well. If you invest in |
| wet. Here are five tips to help find the best | | | | something that actually interests you then you will |
| penny stock picks. | | | | naturally be more studious and make more of an |
| 1. Profit | | | | effort to choose the best stocks. It can be very |
| First off is the company you are interested in | | | | boring researching stocks that dont interest you |
| investing in experiencing any sizeable profits. | | | | and you are likely not to be as thorough as you |
| Better yet is their profit to debt ration favorable. | | | | should be. |
| Youd be hard pressed to find one of these little | | | | 4. Tenure |
| companies without debt but that doesnt mean | | | | How long has the company been in business? This |
| you cant be picky. In this case the least amount | | | | is not to say that investing in newer companies is |
| of debt with the most profit will be a better | | | | a bad idea but its more likely to be safer investing |
| investment. Another thing to watch is how | | | | in a more established company with some kind of |
| progressive the debt payoffs have been. This | | | | track record. |
| would be a sign of good or bad financial | | | | 5. Bad Behavior |
| management. | | | | Last tip is an obvious one. Stay away from |
| 2. Industry Trends | | | | companies whose operations or transactions have |
| This is one of those methods that almost all | | | | been questionable. Even if the bad press is not |
| people use anyway. If there is a high demand for | | | | completely true it will be difficult for a company |
| oil then people instinctively want to go buy oil | | | | to recover in the short and maybe even long |
| stocks. The only problem with this kind of trend | | | | term. |
| analysis is it really isnt forward looking analysis. | | | | |