Oct 14, 2011

Posted by in Penny Stock | 0 Comments

Tips On Finding The Top Penny Stocks That Actually Work

Why doing research is critical to finding the top penny stocks

Top Penny StockThe top penny stock picks are a source of constant debate today. Some traders say to only invest for a few hours or days at a time, to capitalize on the small movements in price. Others say to invest for the long haul.

Both ways make money-there is no denying that. The problem with many investors is that they do not take the time to do the proper research. They just make their buying decisions based on hoping that the stock price that will go up, rather than an informed decision. This is not the way to invest.

This field offers incredible opportunity for the educated investor. If you are willing to put in the time and effort, you can make good money. Here are some things you should look for:

First, try to find stocks with a high P/E. This process is not complicated, and is well documented online. The top penny stocks usually all have this component.

Also, the best ones should contain low PEGs. This is the price/earnings/growth ratio. You figure it out just like it sounds-figure out the price/earnings ratio, and afterwards divide it by what analysts think the P/E will do for the next 36 to 60 months. In most instances the lower this number the better, as it indicates a company that is currently undervalued and that also has a good long term outlook. The top penny stocks will generally all have low PEGs.

Patience is important when dealing with top penny stocks.

Cash flow is vitally important when it comes to penny stocks.

These investments are obviously very cheap, and therefore a slight rise in price can make you a fortune. Therefore, if they do go up to a sufficient level, it might be time to sell it. However, if there is not a lot of action on that stock, you might have a hard time. In turn, you will end up holding it for too long, and could possibly lose money in the long run.

In conclusion, finding the best investments in the penny stock world is somewhat difficult. It would be nice if you could just look online and find a convenient list of the “top 10 penny stocks”. However, even if you did find such a list, it would be completely useless to those who get in on it late (almost everyone). Instead, taking your time and doing your research is the only way to find the top penny stocks.

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