The Best and Worst Penny Stocks Picks

When you are deciding on your penny stocks picks, make sure you can easily identify the characteristics that make a penny stock a good deal or a bad deal. While there are some things that cannot be controlled, and the information you gather may be misleading, but there are always some signs that you can heed initially before you proceed.

Characteristics of the Best Picks

The best penny stocks picks are those of companies with a high potential for growth and increase in stock value. These are the criteria that usually make them identifiable.

Good Market

These stocks must be on a veritable penny stock market. Examples of these are NASDAQ, AMEX, and SmallCap. This means that the stocks can be trusted because they are adhering to certain regulations and requirements that their exchange imposes upon them.

Good Trading Volume

A good volume makes the shares more tradable and the increase is usually on a bigger scale.

Good Business Plan and Earnings

Do research on the respective stocks, ensuring that the financials of the company are stable and that they are making some profit.

Positive Trend

Choose the stocks that are making more money every year. The trend must be going upwards.

Good Recommendations

Listen to professionals and reviews. If the stock reviews are good, you might want to look into it. Just be careful that the hype is not part of a pump and dump scam.

Characteristics of the Worst Picks

The worst penny stocks picks, ones that you should avoid at all times in all markets, usually have one or several of the following criteria:

Bankrupt Company

Some penny stocks belong to companies that are going bankrupt. It is to be anticipated that their stock value can go nowhere but down. If the company goes completely bankrupt, the shares will be worth zero.

Five Letter Ticker Symbols

The meaning of the fifth letter is usually negative- such as bankruptcy or failure to produce reports.

Pink Sheet Market

Trading stocks that are of this market is usually unreliable because there are no minimum standards imposed on the participant companies.

Fractions of a Penny

Penny stocks are often below $2 but if they go as low as say, $0.05, that is not a good sign.

Poor or Dubious Reporting History

A poor history of reports may mean that the company has something to hide or is not doing well. An absence of quarterly and year-end reports, or the sporadic delivery of such, may be an indication of the company’s poor performance.

Looking at the stocks’ overt characteristics are never a surefire way to tell that they will be successful, but sometimes the best penny stocks picks are right under the noses of people who know how to spot them.