Great penny stocks - What makes them great, and how can you spot them? Penny stocks is something that a lot of would be investors have very idealized ideas of-they think they can choose one at random, throw a hundred bucks into it and watch it grow into thousands.
It can happen but it's rare, you are much better off learning what makes a great penny stock -read on to find out.
Point 1 Great penny stocks in the past have been the biotech companies.
These are essentially smaller companies that have developed a new form of technology or drug which stands to make them a large profit.
There's a whole industry built around watching these, and at the moment, with a global oil shortage looming, there are some very interesting penny stocks built around the fuel industry.
Point 2 Try and get an idea of the volatility.
Some great penny stocks can be extremely volatile, meaning the price varies widely from day to day, without any particular reason.
Some stocks are just more valuable than others, but with penny stocks, as they are so low in price to begin with, the changes really can be huge.
Point 3 Look for some consistent growth.
You can find a lot of information about a given company on a website like Google Finance or Yahoo Finance.
Find out some of the basic calculations that are done with stocks, for example PE and PEG, and work them out with your prospective stock.
It's a lot easier to spot a great penny stock when you can work it all out in black and white.
Point 4 Look into the competition.
Sometimes even great penny stocks don't do as well as they could, simply because they have a competitor in the same sector doing better than them.
It could come down to something as simple as a competitor launching a new product range, but unless you check out the competition, you're always going to be shooting into the dark.
Choosing great penny stocks is less an art than a skill, and as such can be definitely learned - hopefully you've an idea how from this article.
Click on the links below to see some more great penny stocks information.