Mar 16, 2012

Posted by in Penny Stock | 0 Comments

How To Find The Lowest Stocks To Buy

Finding the lowest stocks to buy

The lowest stocks to buy are a hot topic today. Obviously everyone wants to purchase low and sell high, so it is understandable why people would be searching for them. The cheapest stocks as a group, of course, are penny stocks.

If you focus on penny stocks, then you will want to be very selective of which companies you invest in. Sure, every now and then a company will escape the penny stock category and dramatically increase its’ stock price, but these instances are few and far between. Most companies in this category will never become very profitable, and many will go bankrupt. Here are 3 tips to help you start profiting from these stocks:

Be realistic when looking for the lowest stocks to buy

Putting money in penny stocks give you the chance to really make a lot of money fast, but it also gives you the opportunity to lose a lot of money in a hurry. The latter scenario is what happens to many traders. As mentioned, the lowest stocks to buy are selling for cheap for a reason.

Penny stock companies are generally small companies that just started, and bought a shell company because it was less expensive than an IPO. The other possibility is that they do not have a good enough business plan to get a bankers money. In other words, they are not necessarily a bad investment, but in most instances they are very risky.

Look for large volumes

The best of the lowest stocks to buy are those that are being traded in a high volume. However, do not place all the importance on average volume. This number can actually be wrong. For instance, if one company has 1,000,000 shares being traded one day, the average daily volume for the week is 200,000. However, this will not be an accurate reflection on what really happened.

Therefore, focus on firms that have constant high volumes throughout the week. In addition, the number of trades that are investing is important. If one person is doing all the buying or selling, there is not going to be good liquidity.
Liquidity is everything. This is one of the most critical factors in penny stocks. Otherwise, you could get yourself into a situation where the stock price is falling, but you cannot get rid of it. The only option at this point is selling at a discount for a huge loss.

Look for quality management

Try to find a company that is well managed. Look to see who is in charge of it, and find out if they have pioneered other successful startups in the past. If they have a good track record, chances are they know what they are doing.

Conclusion

Penny stocks can either make you a fortune, or lose you a lot of money. Use these tips when searching for the lowest stocks to buy, and you should become profitable shortly.

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