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