Oct 24, 2011

Posted by in Penny Stock | 0 Comments

Insider Tips On Finding The Best Penny Stocks To Buy

Sure methods for finding the best penny stocks to buy

Best Penny Stocks to BuyFinding the best penny stocks to buy can make you a lot of money-there is no debating that. The problem is simple-it is not easy. A lot of people treat penny stocks like they would betting on a sports game-they just want “fast cash”.

If you are just in this arena to make a quick buck and get out, you will almost definitely lose. You need to look at these stocks like you would any other investment. You would never invest in real estate or a business without taking some serious time to analyze it. The same goes for penny stocks.

Fortunately, the research process is not especially difficult-it just takes time. Here are some things to look for to help you find the top stocks shortly. First of all, the best penny stocks will have a good management.

Do not worry-you will not have to do a background check on all the managers. The way to determine the quality of the company is to divide the yearly profits by the yearly sales. This shows you what their profit margins are. The best penny stocks to buy will all have high profit margins.

In most instances well run businesses have big profit margins (there are exceptions, such as grocery stores). This is because they are managing their expenses well. This is one of the best ways to tell how good a company actually is. Also, make sure their long term debt levels are low. While a company with high profits is nice, debt looming on the horizon is a recipe for disaster.

Don’t get fooled by successful companies when looking for the best penny stocks to buy

However, how well a company is run does not qualify it as being one of the best penny stocks to buy. This means little if the company is not undervalued by the market. After all, the only way you are going to make money is finding a stock that will go up in price. Investing in a sound business might sound good in principle, but if the stock price does not go up to reflect it, then it is useless.

One of the best ways to determine whether the price will go up is the price/earnings (P/E) ratio. There is just no way around this fact-the best companies will have a high P/E. There is nothing new about this formula, but it continues to be one of the top ways of spotting sound companies.

In conclusion, you should invest in penny stocks the same way you would if you were actually putting money in the business itself-research. Do not just invest in something because your friend has an “insider stock tip”. Instead, take your time, do your research, and you will find the best penny stocks to buy that will make you money for the long term.

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