Secrets to Finding Hot Penny Stocks
Author: Buzz ScottThe secret key to any successful penny stocks trading is the preparation. Know what you are buying and why you are buying it. There are a number of factors that can help you to make a more informed and, hopefully, more profitable decision.
Financial Information: The earnings to price equation is always a good indicator of the health, or otherwise, of a penny stocks company. If this ratio is lower than many of the other companies in a similar industry then this is a good indication that the company may be in a great position.
The Board of Directors: Find out about the CEO and directors, do they have a nice history of running this type of company. A penny stocks company with bad trading figures that has just acquired a strong CEO may be about to change direction.
Do the Books Balance? If the company has a good cash flow then it could be a good a good addition to your penny stocks portfolio. But look a little more closely to see if they have debts. A light debt load in comparison to turnover shouldn't be a problem, but if the debt is large then interest payments could begin to stack up and affect the company's profitability.
Know the Competition: A lot of large investment houses also deal in penny stocks. These firms have large research capabilities and resources and do not make investments lightly. If they suddenly start buying unknown and / or lightly traded penny stocks then there may be a good reason, and it may be a short cut to a good opportunity.
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