penny stocks<\/a> that have delivered an exceptional return of 100% not in years but in a few months. When you have picked an excellent company that has a proven management team, healthy financial health, and growing market share, you have just hit the jackpot. Sit tight and the stock will turn your investment multifold within a year.<\/span><\/p>\n <\/p>\n
Investing in penny stock requires only $5 \u2013 When you want to buy a blue-chip stock like Facebook and Amazon you must have $300 in your trading account. But when you are going to invest in penny stocks you can start investing as low as $5.<\/span><\/p>\nWhat are the Cons when a retail investor starts trading in Penny Stocks?<\/span><\/strong><\/h2>\n <\/p>\n
Even if the penny stocks are trading at exceptionally lower prices, there is room for moving upward. But investing in penny stocks is much riskier than most of the blue-chip stocks.<\/span><\/p>\nA penny stock can empty your bank account \u2013 Many retail investors find it attractive since they hear the success stories of penny stocks that have delivered a whopping return of 1000% within 3 years. But do remember 99% retail investors lose money while investing in penny stocks. <\/span><\/p>\nOnly a few exceptions namely Timothy Sykes, Tim Grittani, have been able to make money by investing in penny stocks. So before investing in penny stocks stay cautious since this can lead you to bankruptcy.<\/span><\/p>\n <\/p>\n
Prone to Manipulation \u2013 In most of the cases, promoters and insiders of a shell company enlist their company in OTC platforms and Pink Sheets to deceive the investors. They make use of the \u2018Pump and Dump\u2019 strategy to make money by manipulating the price.<\/span><\/p>\n They buy the shares of the company in bulk deals that lead the share price to higher levels. When a retail investor like you and I find it an attractive investment opportunity since the price is up, they dump the shares and retail investors suffer a huge loss.<\/span><\/p>\nYou won\u2019t find accurate pieces of information \u2013 Before investing in any stocks an intelligent investor analyzes the earnings results, assets, and liabilities. But when you are investing in penny stocks you will hardly find these pieces of information, since major brokerage houses don\u2019t cover these cheap companies.<\/span><\/p>\n <\/p>\n
The chances are higher that you will lose significantly your investment when investing in penny stocks without analyzing the earnings and valuations.<\/span><\/p>\nLow Trading Volume \u2013 Suppose a penny stock has delivered a return of 100% within a month. But to whom you are going to sell your shares when the trading volume of the penny stock is 10 and you have 10000 shares. Unlike blue-chip stocks that have over a million trading volumes a day, the majority of penny stocks have a trading volume of 100 a day.<\/span><\/p>\nHighly Volatile \u2013 Unlike blue-chip stocks that are less volatile, penny stocks have high volatility. A penny stock can surge 20% a day, on the flip side, a penny stock can deep 30% a day.<\/span><\/p>\nRisky companies \u2013 Since the penny stocks trade in Over the Counter Bulletin Board and Pink Sheets, it can be assumed that they are the low-quality companies, that is why they are listed on pink sheets.<\/span><\/p>\nLow Market Capitalization \u2013 Since the trading price of penny stock is below $5, most of the penny stocks have low market capitalization. Additionally, they trade infrequently, which means you will find it difficult to sell when you want to offload the shares.<\/span><\/p>\nHow to Find Quality Penny Stocks to Invest<\/span><\/strong><\/h2>\n <\/p>\n
When you are about to include penny stock in your portfolio, the biggest challenge is to stay clear of \u2018Pumps and Dumps\u2019 scam of penny stock by its promoters and insiders. Here are the key parameters you should watch before investing in penny stocks.<\/span><\/p>\nConduct a deep study about the company \u2013 When you take an informed decision especially when you are investing in penny stocks the chances are higher that you will make money by trading in penny stocks. Don\u2019t invest in penny stock solely because it is available at cheap prices below $5. You should run thorough research about its business model, peer competition, earnings, before investing in it.<\/span><\/p>\nWhether the company has a high debt \u2013 You are free to invest in debt-free stocks or stocks with marginal debt. Stay clear of stocks that have a huge debt to equity ratio.<\/span><\/p>\n <\/p>\n
Calculate the Liquidity Ratio \u2013 The Liquidity Ratio reveals what assets and liabilities a company has. When the liquidity ratio is greater than 2 then it is clear that the company has twice assets to repay its debt obligations. The higher the liquidity ratio is the better the investment opportunity is.<\/span><\/p>\nCheck out whether the Stock is Volatile \u2013 After deep research look out whether the stock witnesses price volatility. Pick a stock that has price volatility to make money by trading in penny stocks.<\/span><\/p>\nLook out the Trading Volume \u2013 To whom you are going to sell your 1000 shares when the trading volume of a penny stock is 50 a day. Don\u2019t invest in penny stocks with less than 1 million trading volume daily.<\/span><\/p>\nWhether the promoter has pledged the shares \u2013 It’s crucial to watch whether the promoters of a company have pledged the share of the company. Avoid the companies whose promoters have pledged the company\u2019s shares.<\/span><\/p>\nTop 7 Best Penny Stocks to Buy Right Now<\/span><\/strong><\/h2>\n <\/p>\n
When you want to invest in blue-chip stocks you should have $100 in your trading account, but you can start investing in penny stocks when you have $5 in your trading account. Many an investor finds penny stock a lucrative investment option to gain 100% within a quarter, not in 5 years.<\/span><\/p>\n After you have conducted independent research you will find quality penny stocks that are trading below $5. Here are the 7 Best penny stocks to buy with strong fundamentals that are available at $5.<\/span><\/p>\nGenius Brands International (GNUS)<\/strong><\/h3>\n <\/p>\n
Genius Brands was incorporated in 2006 by Bababan Howard Alan. Genius Brands International operates in the Consumer Services Sector. This is a content and brand management company that is engaged in developing, and marketing children\u2019s entertainment products. The company\u2019s headquarter is located in Beverly Hills, California.<\/span><\/p>\nLet\u2019s check out Genius Brands International\u2019s fundamentals,<\/p>\n
Market Capitalization \u2013\u00a0$300 Million,<\/span><\/p>\nShare Volume \u2013\u00a0<\/span>12,240,011<\/span><\/p>\nBeta \u2013\u00a0<\/span>2.27,<\/span><\/p>\n52-Week High\/Low \u2013\u00a0<\/span>$11.73\/$0.05.<\/span><\/p>\nWaitr Holdings (WTRH)<\/strong><\/h3>\n <\/p>\n
Waitr Holdings was established in 2008 and is engaged in food ordering and delivery businesses. The company connects the local restaurants and consumers via mobile and desktop. Consumers can browse foods and choose the menu accordingly. Waitr Holding\u2019s headquarter is located in Lafayette, Los Angeles, California.<\/span><\/p>\nLet\u2019s check out Waitr Holdings fundamentals,<\/p>\n
Market Capitalization \u2013\u00a0394 Million,<\/span><\/p>\nShare Volume \u2013\u00a0<\/span>2604679<\/span><\/p>\nBeta \u2013\u00a00.41,<\/span><\/p>\n52-Week High\/Low \u2013\u00a00.26\/5.85.<\/span><\/p>\nOrganiGram Holdings (OGI)<\/strong><\/h3>\n <\/p>\n
This company is engaged in the production and sale of medical marijuana products namely Strains, Cannabis, Vaporizers, etc. The company was incorporated in 2010 and its headquarter is located in Moncton, Canada.<\/span><\/p>\nLet\u2019s check out OrganiGram Holdings fundamentals,<\/p>\n
Market Capitalization \u2013\u00a0331 Million,<\/span><\/p>\nShare Volume \u2013\u00a0<\/span>19664069<\/span><\/p>\nBeta \u2013\u00a01.01,<\/span><\/p>\n52-Week High\/Low \u2013\u00a01.01\/3.64.<\/span><\/p>\nNokia Corporation (NOK)<\/strong><\/h3>\n <\/p>\n
Nokia Corporation was founded by Fredrik Idestam in 1865 and operates in the Technology sector. This company is engaged to build network infrastructure, and provide technology and software solutions. The company\u2019s headquarter is located in Espoo, Finland.<\/span><\/p>\nLet\u2019s check out Nokia Corporation\u2019s fundamentals,<\/p>\n
Market Capitalization \u2013\u00a0<\/span>22 Billion,<\/span><\/p>\nShare Volume \u2013\u00a0<\/span>19,423,505<\/span><\/p>\nBeta \u2013\u00a00.57,<\/span><\/p>\n52-Week High\/Low \u2013\u00a0<\/span>2.34\/5.14.<\/span><\/p>\nCharlotte’s Web Holdings (CWBHF)<\/strong><\/h3>\n <\/p>\n
The company started its journey in 2013 and operates in the Healthcare sector. This company deals in the production and distribution of wellness products namely beverages, food, and powdered supplements. The company\u2019s headquarter is located in Boulder, Colorado.<\/span><\/p>\nLet\u2019s check out Charlotte\u2019s Web holding\u2019s fundamentals,<\/p>\n
Market Capitalization \u2013\u00a0724 Million,<\/span><\/p>\nShare Volume \u2013\u00a0<\/span>479,607<\/span><\/p>\nBeta \u2013\u00a02.26,<\/span><\/p>\n52-Week High\/Low \u2013\u00a0<\/span>2.10\/ 9.33.<\/span><\/p>\nAphria (APHA)<\/strong><\/h3>\n <\/p>\n
Apharia was established by Cole Cacciavillani and John Cervini in 2013. The company operates in the Healthcare sector. This company works in the production and supply of cannabis for medical purposes. The company\u2019s headquarter is situated in Leamington, Canada.<\/span><\/p>\nLet\u2019s check out Aphria\u2019s fundamentals,<\/p>\n
Market Capitalization \u2013\u00a0<\/span>2 Billion,<\/span><\/p>\nShare Volume \u2013\u00a0<\/span>16,163,717<\/span><\/p>\nBeta \u2013\u00a0<\/span>2.66,<\/span><\/p>\n52-Week High\/Low \u2013\u00a0<\/span>1.95 – 8.88.<\/span><\/p>\nVOC Energy Trust (VOC)<\/strong><\/h3>\n\u00a0<\/figcaption><\/figure>\nVOC Energy Trust was established in 2010 and the company has been operating in Energy Sector. What makes it the best investment is that recently the company has announced a dividend that is to be distributed to its shareholders. The company\u2019s headquarter is located in Houston, Texas.<\/span><\/p>\nLet\u2019s check out VOC Energy Trust\u2019s fundamentals,<\/p>\n
Market Capitalization \u2013\u00a0$39 Million,<\/span><\/p>\nShare Volume \u2013\u00a0<\/span>63,469<\/span><\/p>\nBeta \u2013\u00a0<\/span>1.90,<\/span><\/p>\n52-Week High\/Low \u2013\u00a0<\/span>1.26\/5.11.<\/span><\/p>\n7 Rules of Investing in Penny Stock<\/span><\/strong><\/h2>\n <\/p>\n
For many retail investors it\u2019s been a lucrative investment opportunity to multifold their investment corpus by investing in penny stock. The biggest reason why investors want to invest in penny stock is that since investing in penny stocks doesn\u2019t require huge investment capital.<\/span><\/p>\n They find it perfect investment in hope of skyrocketing return when picking suitable penny stocks. If you want to invest in penny stock do consider the following points.<\/span><\/p>\nDon\u2019t Invest a Lion\u2019s Share in penny stocks<\/span><\/strong><\/h3>\n <\/p>\n
Invest 10% in penny stocks of your stock portfolio. When you have a stock portfolio of $1000 then don\u2019t invest more than $100 on penny stocks. You should invest in penny stocks what you can afford to lose.<\/span><\/p>\nDon\u2019t diversify your penny stock portfolio to 10<\/span><\/strong><\/h3>\nWhen you are investing in penny stocks don\u2019t diversify your stock portfolio that consists of 10 stocks. Instead, invest in 3 stocks after proper analysis. This will help you to track the performance of the penny stocks and it is easier to monitor when you have 3 penny stocks instead of a portfolio of 10 penny stocks.<\/span><\/p>\n