Jun 23, 2011

Posted by in Penny Stock | 0 Comments

Canadian Penny Stocks

Buying Canadian Penny Stocks

Canadian penny stocks are generally classified as shares of small public companies in Canada that trade for less than a dollar.  Some financial experts will also classify penny stocks trading for under $5.00 as penny stocks as well.  If you are comparing various financial investment vehicles, it is important to do your research and choose the best opportunities for profitability.  While there is no sure fire way on how to choose the right penny stocks at the right time, there are indicators that you can look out for to make a less risky investment.  Understand which indicators to factor in when comparing Canadian penny stocks to analyze each stock’s growth potential.

Recent Price Movement

If a penny stock has strong price gains and a lot of transactional volume over the course of the last week the stock may be gaining momentum.  Price movement and performance momentum is an indicator all investors in any sector should look for.  When you choose a stock with great transactional volume it is easier to sell shares when you are ready.

Canadian penny stocks Return on Equity

Return on Equity is commonly referred to as ROE in investment terms.  An ROE can be calculated by dividing a stock’s net income by the percentage of shareholders equity.  If Canadian penny stocks have a positive ROE it shows a company is performing well.  The size of a company should not matter as long as the company is turning a profit.

Business Models

One critique of Canadian penny stocks is that companies will send misleading marketing messages to entice buyers to invest in their company.  It is very important to do your homework with these types of stocks when you receive tempting press releases from the company.  If the company’s business model is questionable, go with your instincts.  Always buy stock from a company you believe in or you will wonder why you did not go with your gut feeling.

Penny stock opportunities come and go on a daily basis.  If you are looking for profitable stocks you will need to do your research to make the best investments.  As with any typing of investing, there are risks associated with Canadian penny stocks.  If you know what attributes to look for and what indicators you should consider you can make wise investment decisions.  Always invest in sectors that are favored in the market and choose Canadian penny stocks with potential for massive gains.

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