Oct 20, 2011

Posted by in Penny Stock | 0 Comments

What Are The Top 10 Penny Stocks?

Why finding a list of the top 10 penny stocks is a waste of time

Top 10 Penny StocksFinding a list of the top 10 penny stocks online would be a nice and convenient way to invest. A lot of people are searching for such lists on Google today. The problem is, even if a site were to offer what they believed the top 10 stocks were, it would not work.

The reason is simple-supply and demand. If such a list existed, the demand would soon outweigh the supply, resulting in a price increase. Therefore, when the initial recommendation was made, those stocks might have been good investments. However, if a lot of people have found that list before you (and they will if it is published online) then you would be too late to capitalize anyway. Finding a list of the top 10 penny stocks and then investing is not a viable way to make long term income.

Instead, you are going to want to take a long term approach-finding your own profitable investments. This is more difficult than finding a list of the top 10 penny stocks, for sure, but it is the only way to make money. To find such stocks, you first have to come up with your strategy. You could either be a day trader or a long term investor.

The strategy of finding the top 10 penny stocks.

Both methods work. The difference is, the first option is much more time consuming and is harder to make work long term. The second option is still not easy, but in general is less time consuming and stressful, and you do not have to spend nearly as much time online to be profitable. Pick one or the other, and do not try to dabble in both. Being a jack of all trades might sound good, but it is not the most profitable option, and will result in you missing opportunities by spreading yourself thin.

If you opt to go the long term route, then you will need to analyze the business itself. In this instance, look at things like the income statement, profit margins, cash flow, long term debt, etc. A good company should have low amounts of debt, good cash flow, as well as high profit margins. It will be hard to find all these variables in stocks selling for less than $1, but it is possible.

Finally, look for stocks that have a high P/E. This is important because it shows that a company’s stock price is undervalued by the market. No matter how good the company might be, without an undervalued stock price it will not make you much money. Mastering these fundamental analysis skills will be more time consuming than finding a list of the top 10 penny stocks, but it will also be much more profitable.

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