Penny shares can be a great alternative to regular stocks.
Huge profit potential
Due to their nature penny stocks have a huge potential to make you large profits. Rather than aiming t make say 10% or 12% per year as you would with regular stocks, investing in penny stocks can easily deliver returns of 50% - 200%.
look at an example. Consider two stocks, one of which is a penny stock and is currently quoted at $0.05 and a regular stock that is quoted at $5.00. Now lets assume both companies are in the same industry and are of equal size.
Assume both companies sign a new lucrative contract with a new customer and both their shares rise in value by 10 cents. The regular stock would now be worth $5.10 which equates to a 2% rise from its original price. However the penny stock would now be worth $0.15 which is a massive 300% rise in price. Assuming you had bought £1,000 of stock at the original price you would have just made $2,000!
Where to find profitable penny stocks
This can be the tricky part. There is often much less data available for penny stocks as opposed to those traded on the main exchanges such as the Dow Jones. This makes stock selection much harder. Often only the professional traders have the knowledge of where to get this information.
There are several newsletters that can be subscribed to where you will be provided with a list of pre selected stocks. Such newsletters can be a great help when selecting stocks however they do vary in quality so be sure to try and pick a good one.
For more information about stock picking please click here.
Tags: Income, Newsletters, Profit, Shares, Penny Stocks