There tens of thousands of penny stocks out there but obviously, not all are worth buying. So how do we identify the more profitable top penny stock picks? Read on.
Any newbie who wants to start investing in Penny stocks will always wonder how to identify the more profitable top penny stock picks and how others do it. The fact is, almost 90%+ penny stocks out there are pure duds and worth considerably less than their face value.
Locating dud penny stocks
Locating dud penny stocks is actually much easier than locating the more profitable top penny stock picks. But if you are able to identify the duds, then what remains in all probability, are the more profitable top penny stock picks.
To begin with, Penny stock originate from business that have been downsized (usually bankrupted and restructured), and new businesses. If you are new, I recommend you avoid the former and concentrate on the latter. In my opinion, a bankrupted and restructured company rarely gets rid of all the rotten apples. Ever heard of a top executive or business owner firing or removing themselves from the job? It never happens! Invariably, the business owners or senior executives will find some scapegoats and fire them. The bad apples continue to rule the roost and it is hardly likely that they will outperform themselves the second time round. Hence in my opinion, unless you are sure of yourself, stay away from Great penny stocks of companies that have gone bankrupt and have been restructured. Concentrate instead, on new businesses - the best and more profitable Top PennyStock Picks will invariably come from new businesses.
Another reason why new businesses tend to be more profitable is because no one starts a business with the intention of going into a loss. Every angle is looked into and the best team assembled. The management team is also usually hell bent on ensuring the business is successful - their careers depend on it. Since the penny stocks of new businesses start from scratch, every rise in the penny stock is more profitable to you. If a new stock, having started trading at $0.01 trades at $0.02, that's a 100% rise in value right there. Make new penny stocks part of your more profitable Top penny stock picks.
That said, every penny stock needs to be investigated especially for artificial boosts. A new company will invariably want its stock value to rise so it can leverage better finances and better business deals. Companies often resort to hiring services of shady stock brokers who manipulate the penny stock market to artificially boost the value of the stock.
Research is the key to more profitable Great penny stock picks. Does the business model look profitable? Where are they sourcing the raw material from? Is the raw material source reliable and stable? What are the markets for the finished product? Look into each aspect that has a bearing on the profitability of the business.
Research and investigate each stock separately. The result will be your more profitable top penny stock picks. You can also make use of best penny stocks newsletters. But be careful there - we've also written a ton of stuff on how to select the Best penny stocks newsletter.