| Nowadays, getting higher returns on investment is | | | | Third, you have to ask for their latest audited |
| possible even when you do not have a long | | | | financial statements. Although net profits are also |
| investment horizon or large sums of money to invest | | | | important, you just do not look at the bottom line, |
| in blue chip companies. This is where penny stocks | | | | however, since good cash flow is the more important |
| come in. Technically speaking, these stocks trade for | | | | consideration in choosing the best penny stocks to |
| less than 5 dollars per common share. They are | | | | buy right now. After all, you want your company to |
| traded in over-the-counter transactions rather than | | | | have a steady and stable supply of cash to operate |
| through exchanges. There are some significant gains | | | | successfully especially as net profit can be deceptive. |
| possible from these investments, often in the range | | | | Think intangibles like depreciation, write-offs and |
| of 50 percent within a few short months. | | | | goodwill. |
| Criteria for Picking The Best Penny Stocks | | | | Fourth, you must do your research in terms of the |
| So, now that you have decided that these stocks | | | | quality of management. You can never totally rely on |
| are worth your money, the next decision would be | | | | numbers and figures for indeed company |
| to pick the best ones to buy right now. Timing is | | | | management is more than just numbers and figures! |
| everything. You can follow certain criteria in the | | | | It helps to make decisions in investment when you |
| choosing although it must be emphasized that there | | | | have knowledge of the good credentials, good |
| is no hard and fast rule in penny stocks investment. | | | | experience and good ethics of the people running the |
| First, you have to calculate the Price-Earnings (PE) | | | | company at the highest levels. |
| ratio of the penny stocks under consideration. This is | | | | When considering the matter of the best penny |
| the most basic formula used in stock trading, which | | | | stocks to buy right now, you have to be |
| can be arrived at by dividing the stock price with the | | | | knowledgeable about many things, from the general |
| earnings per share. Now, you can compare all the PE | | | | state of the economy to the general state of the |
| ratios of the common stocks, of which the ones | | | | company. |
| possessing the highest ratios maybe the best penny | | | | Common Pitfalls In Choosing The Right Penny Stocks |
| stocks to buy right now. The emphasis is on maybe | | | | Always keep in mind that these stocks may be |
| as the other criteria must be considered in the final | | | | diamonds in the rough that can yield more than |
| decision. | | | | double, even triple, your initial cost of investment in a |
| Second, you must compute for the Price/Earnings | | | | short time but the risks are still very high. You have |
| Growth (PEG) ratio, which is simply the PE ratio | | | | to take the necessary precautions to protect |
| divided by the projected growth in the nest 3-5 | | | | yourself against risks like fraud from unscrupulous |
| years. This time, you will opt for the penny stocks | | | | brokers, stock manipulation, limited liquidity and |
| with the lower PEG, preferably those with less than | | | | absence of financial reports, among others. |
| 1.0 ratio. | | | | |