Best Penny Stocks: Avoid the losers and find only the best stocks

How to find the best penny stocks

Finding the best penny stocks to buy and resell at a huge profit is every investor’s goal. Oh how nice it would be to push a couple buttons on some software, or even just be emailed a pick at the top of a best stocks list - a buy here, a sell there, and you have a fortune. You may have had that dream last night, but of course, someone had to wake you up just when you hit the golden jackpot.

Unfortunately, we live in the real world, where cons and scams abound, and the naive are brought to their knees. So how does one avoid the danger and attract the treasure at the same time? You can use a new invention called elbow grease induced stock research. What? You expected some new fan dangled robot to do all of your investing research for you? Nope! In this case, Heston would be upset to learn that NRA now means No Robot Available.

So enough of the laziness. Here’s how to find the best penny stocks to invest in by the tried and true method. Since penny stocks are notorious for having limited information for a potential investor to retrieve and analyze, we recommend that you begin your search on the NASDAQ Small Cap or NYSE exchanges. Companies listed on these exchanges are regulated by the SEC and must file quarterly and annual reports. These reports contain detailed information and audited financials that will provide a potential investor with a view of a company’s financial health, future prospects, and past performance. You want to review these before you buy any stock.

Financial information can be offered to investors for free, pay-per-use, or on a subscription basis. Yahoo Finance and Reuters are excellent examples of free financial sites. You can enter a company’s symbol and get an assortment of research options ranging from financials to different SEC filings, news, announcements, and research reports.

Create a chart or table for pertinent information about each company and its stock. Compare each company’s revenues, earnings, assets, liabilities, stock price, earnings per share, intrinsic value, and trading volume. Having all the information together provides an at-a-glance comparison. Then it will be easy to choose which of the stock picks to buy from your final list of the best penny stocks.

Buy the best stocks with a well formed plan

When you’ve finished making your list, and you are ready to begin investing, it is imperative that you are diversified. Decide up front the maximum percentage of your portfolio that you will invest in any one stock.

Then, never go over that amount. Always keep in the back of your mind that penny stocks are very risky. While they have the potential to spin into a big pay off, there is the same potential for them to tank. It is not impossible to go broke and lose 100% of your invested money in a day if you are not diversified. You must be prepared to experience losses. But, don’t ever take those losses personally, or let your emotions force you into a get-even mode. That’s the best way to lose even more. Instead, step back, examine what happened, and see if you can learn from it.

Review the evaluation criteria that you have used to invest in your picks for the best penny stocks. Have a look at your trade journal to see how the stock performed before and after your buy order. You may just need to revise your selection criteria or tweak your trading strategy plan. Developing your selection criteria for finding the best penny stocks takes time, but if you do it correctly and have the discipline, you may begin to fill your bank account with many pennies of your own!

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