Information on the Best Penny Stocks
Like many investing terms, what is called a penny stock changes from investor to investor. Some investing experts say that any stock priced below $1 is a penny stock, while others like the United States Securities and Exchange Commission say that any stock priced below $5 is a penny stock. Most investors agree that a penny stock is a stock that has very little current value in the minds of the millions of stock pickers around the world.
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The Allure
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The allure of penny stocks lies in the idea that because a stock doesn't cost a lot of money, it represents something of value that is priced low, much like an item that is on sale at a store. Being priced so low makes some investors believe that one day those stocks will produce gains equal to their blue chip counterparts. Because there are so many penny stocks available, finding the best penny stocks can be difficult.
The Challenge
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The best penny stocks are very difficult to find. First, if it is a new company, very little data is available for review, making it hard to perform any kind of analysis on a stock. Next, any hope of a penny stock rising substantially is almost always speculation. Even stocks with a lot of data available still require a leap of faith by the investor. The reality is that most penny stocks stay penny stocks.
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Finding the Best Penny Stocks
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The way to find the best penny stock is to look for companies that have very little debt, an active pipeline of quality products soon to hit the market and, as a bonus, a company that once was a blue chip stock but may have run in to hard times but has since started making a rebound.
Alternatives to Penny Stocks
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Remember that in order to make money with penny stocks, you will still have to invest a significant amount of money. To make $100, your $1,000 investment would have to appreciate 10 percent, regardless of which stock or stocks you pick. Your $1,000 could either buy 20 shares of a high-quality stock or 1,000 shares of a penny stock. The high-quality stock has a much better chance of appreciating significantly compared with the penny stock. Consider stocks with a proven history of growth, especially if you're a part-time investor.
Where to Go for Help
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There are many subscription services that will give you weekly recommendations of the penny stocks with the best chance for growth. The larger services employ a large team of researchers that can find the information that you may not have access to. Let the experts help you.
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