Having a list of penny stocks to invest in is great. But it doesn’t do to much good if you don’t know how to find the best penny stocks.
Choosing the best penny stocks isn’t that much different than deciding on which stock in the Dow Jones to invest in. The same kind of research is involved. It doesn’t matter if its a penny stock or Wal-Mart.
You’ve got to be able to know that you’re investing in a company with strong fundamentals. Make sure their financial statements are in order. You want to invest in companies that have had a good history of strong profits and profit margin. Its also important to see that the company’s assets keep rising every quarter.
A key component is also the charting of the stocks. If you ever back test penny stocks that have gone up by a lot, it usually broke a major resistance point before it did that. You always want to be on the lookout for that.
Another thing to notice is the news. News reports on a company can turn a small company into a big one overnight. One day, they are unheard of the next day, they are the toast of the town, and more importantly the media.
Another important factor is the whole idea behind the company. Ideas, by themselves are sometimes are a bigger factor in stock movement than anything else. Many large cap stocks got to where they are just by having an idea that really clicked with the public.
I know that covering so many factors is not an easy task. Especially if you consider how many stocks you have to research first. However, there is software that makes the process a whole lot easier.
The developers who created the software have started an excellent newsletter service where they make stock picks based on the criteria above. The software makes about 4 or 5 penny stock picks a month and has an excellent track record.
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