- Penny stocks are the stocks which are easily accessible at the price of a penny that’s why it’s called Penny Stocks.
- It are very Low stocks, costing merely in range of Rupees 1 to Rupees 10.
- These small company’s stocks are highly speculative.
- Companies involve in Penny Stock transactions are usually growing company with restricted cash and other resources.
- Investment in these stocks involves a high-risk with low trading volume and also has less investor attention.
How to Identify Best Penny Stocks?
It is not so easy in identifying the best penny stocks. However, the method given below will help you to find out the best penny stock for investment.
- The company involve in Penny Stock dealing should have competed several years in the business.
- The product or services or both must be visible in real terms.
- The holding of the Promoter in penny stocks should be around 30-40% least.
- The Penny Stock should be less volatile.
- The Company must have the ability and potential in terms of doing business and earning good profits.
- The Company should be capable and competent in the corresponding sector.
Penny stocks can rise from Rs 5 to Rs 50 within a year, whereas a blue-chip companies like Reliance Industries will find it hard to give 10 times returns in even 10 years.
Investing your money in penny stocks is like gambling. You’re investing in a company which has no fundamental in the expectation of earning a high return. Penny stock involves high risk and high reward. If you are a conservative investor then there is a BIG NO for investing in penny stock.
If you are having enough surplus money, then you can go ahead and start investing in the penny stocks. You can make good money or you may lose entire money, the risk vest with you only. As the old saying goes “NO PAIN NO GAIN”.