Recommended Penny Stocks to Invest In
When it comes to penny stocks (also known as pink stocks), a main dilemma that most investors face is selecting which specific stocks to put their money in. Because of the many penny stocks that are being traded on the various over the counter (OTC) exchanges, it is very difficult to discern which stocks would reap gains from those that would lead to major losses.
If you have difficulties in determining which pink stocks you should invest in, here are some important tips from prominent traders and brokers worldwide.
First, you probably have heard of pink stocks being defined as shares costing less than $5 per share. However, if you want to make a wise investment, go for stocks that cost less than $1 per share. These genuine pink stocks can go up to $1 or more per share. So, if you sell your stocks during a price peak, you are sure to generate profits that are double or even triple in value from your initial investment.
Let us take a look at a concrete example. If you have invested $1,000 in stocks that cost only 2 cents each, you stand to gain $500 in profits if you sell these same stocks when they go up in value to just 3 cents.
Another important characteristic that you should take note of is that these stocks should rise and fall within a comfortable range. These are safe stocks to invest in because their movements are predictable, and you don’t have to worry about their getting de-listed. One way to determine if a penny stock is stable or not is by learning how to read penny stock graphs. Aside from being assured that these stocks trade within a safe range, you can be able to determine the specific factors – called “indicators” – that cause these stocks to rise and fall in value.
Global events and the consequent increase in supply and demand of certain products as a result of these events are good examples of penny stock indicators.
To give an example, the recent destruction of key cities and towns during the earthquake and tsunami in Japan early this year has seen a significant increase in the value of pink stocks of companies that supply both raw and finished materials for reconstruction. Examples of stocks that have made substantial gains were those belonging to iron ore and scrap steel industries. Also, because Japan’s thriving electronics industry has been affected as well, there was an increase in demand for silicon chips from smaller companies, which again led to a rise in the value of penny stocks.
As contrasting examples, reports of outbreaks of diseases in the animal industry have resulted in major declines in penny stock prices. This occurred during the bird flu epidemic which led to the culling millions of diseased poultry. Similar events also took place with the swine flu and hoof and mouth disease outbreaks.
For 2011, these stocks that have been making a killing in the various exchanges are those from technology and biotechnology companies. Among the penny stocks that come highly recommended are those being offered by Denarii Resources (DNRR) and Global Nutech, Inc. (BOCL).
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