May 16, 2011

Posted by in Penny Stock | 0 Comments

Penny Stocks

Penny StocksPenny Stocks are mainly about Risk/Reward/Ratio’s…and How they can ultimately make an impact on your wealth meter!  Small micro-cap companies are a great way to make a fortune off of the stock market. Each and every trading day one thing’s almost certain: the biggest gaining stocks are bound to be penny stocks.

Now even though many investors and traders have been seeing multiples on their money recently in the stock market, before you decide to go ”All-In” with your money on a small stock, there are some things that you should keep in mind…

While it’s absolutely true that the penny stock investors can make very quick gains. Case in-point,  InterClick, Inc. (NASDAQ: ICLK) is a great example of a penny stock. This technology company providing solutions for data-driven advertising, also combining scalable media execution capabilities with analytical expertise, Interclick company has jumped from a cosmetic bulletin board operation to a 1/4 billion dollar corporation. The company has graduated from Over-the-Counter status to the NASDAQ Stock Market providing in excess of 250% gains during it’s up trend rally.

Fortunately for investors this happens quite frequently and it’s how some of the best investors in the world became the richest investors in the world. Buying some shares for pennies on the dollar and selling at $10 or $20 is possibly the fastest way from being a recreational investor to a savvy money making investor.

In fact, penny stocks are a compelling investment even when the economy’s not so hot. After plenty of due diligence and research, it is clear that small stocks outperformed T-Bills, bonds, and the S&P about two-thirds of the time during many global recessions or economic slow-downs…and they did so by a healthy margin. This is all well and good, but do you really think that you have access to these lucrative companies? Not really. The problem is many of them are not even traded on a major exchange. Where do they trade? Let’s have a look, shall we….

Ringing the register on Over the Counter stocks

OTC MarketsA rule of thumb folks, any stock that doesn’t trade on a major exchange is considered an over-the-counter (OTC) stock… that includes both Pink Sheets stocks and OTCBB stocks.

One of the questions we get a lot here at StockRunway.com  is, “How exactly do I buy penny stocks?” The truth of the matter is that buying penny stocks isn’t much different from buying any other stock out there.

A few places where you will see a difference with investing in penny stocks are in the commissions you pay and your ability to use margin, or borrow shares from your broker. Most brokers have a slightly different fee structure for stocks that cost less $1.

The Road to Pulling Off Penny Stock Profits

OTC stocks frequently bank mind blowing returns for investors. Just look at Lithium Exploration Group (OTC.OB: LEXG),  a US based exploration and development company focused on the acquisition and development potential of lithium brines and other precious metals. Its shareholders just banked 1100%. 

Another being Jammin Java Corp. (OTC.OB: JAMN), a US-based company providing premium roasted coffee on a wholesale level to the service, hospitality, office coffee service and big box store industry. It’s investors have just made in excess of 600% gains.

First and foremost, we feel one of the best ways to find penny stocks with this kind of gain potential is to look out for “growth catalysts”. That’s because without some big event or huge development coming down the road, there’s no reason for investors to care about these tiny companies.

Keep in mind the majority of investors are only interested in making 5%–10% per year. That’s pretty much the maximum you can expect to gain if you are investing in blue chips. Here at StockRunway.com, we view the stock market a little differently.

StockRunway looks for the money multipliers — double-, triple-, even quadruple-digit gains that I told you about just a minute ago. For that to happen, we need some kind of spark to set our penny stocks apart from the rest. After all, there are currently over 6,000 to choose from making it quite time consuming for the average investor to sift through and dissect which are worthy and which aren’t.

So, what kind of catalysts can make penny stocks pop? Let’s look at one huge  catalyst driver:

It is known as “In-Sympathy” – The stock market definition and meaning: A price movement in one security which results from a change in the price of a similar security usually located in the same sector or industry giving it a boost and showing relative strength or weakness depending upon the underlying stock and it’s direction.

Coffee Penny Stocks1. Best example of this circumstance recently would be 2 Commodity Coffee stocks that come to mind. As you might already know Jammin Java Corp. (OTC.OB:JAMN) has been ”In-Play” for several months now due to the Brazilian and Columbian coffee harvest taking it on the chin during the winter months with colder than expected temperatures causing coffee outputs to be at the lower end of the expected spectrum.

2. Penny Stocks that turned into Momentum Runners on Sympathy of JAMN momentum were: 1) Baristas Coffee Company, (OTC.PK: BCCI) was formed to create a national brand of drive-thru espresso stands.  It is accomplishing this by acquiring established businesses that fit its model, opening new locations, and by franchising. BCCI has made a strong push from $.20 to over $.80 today for a gain of over 300% recently thanks to JAMN “In-Play” momentum driving force.

3. Healthy Coffee Intl. (OTC.PK:HCEI) has a niche, giving coffee a twist. It is focused on bringing health to the world’s largest and most popular drink, coffee. The company’s proprietary formulas combine the health benefits of Ginseng, Reishi Mushroom, and other top quality ingredients with the world’s finest coffee beans to create a line of deliciously healthy instant gourmet coffee drinks. HCEI also benefiting from JAMN strong demand and interest has seen it’s stock price jump from under $.05 to $.40 recently in the last few weeks for a staggering move in upward of 800% for it’s investors and traders that have taken note.

There are many other driving forces that should be considered when thinking about buying penny stocks. A few other catalysts are “take-over or buy-out candidates” , “civil or legal cases” and “IPO’s or New Issues” being released to the market. We’ll get into these other driving forces at a later date, for now digest what the Captain has expressed and addressed which will ultimately help your investing and trading ability in the near future.

Sure Penny stocks can be a risky investment for many, but if you make informed decisions and approach your penny investments with the same thoroughness that you can use in your other investments, you too can unlock a whole lot of profit potential. Add another notch in your belt as you have taken a giant step in the right direction to become a savvy, “well-oiled-machine” trader.

We hope this small prepping course on investing in penny stocks has offered you a educational learning curve that can be implemented in your trading strategy in the future.

Stay tuned for further updates to follow in the future.
 
Folks, Trade Smart, Stay Tuned & Most Important Stay Onboard the StockRunway!

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