Thursday, December 26, 2013

Why Carefully Selected Penny Stocks And Low Single Digit Stocks Can Have Such Great Potential Compared to Other Stocks'

Now lets compare the universe of penny stocks and low single digit stocks with more conventional stocks. If we are talking about a well known stock thats a household name theirs going to be a ton of analysts covering the stock so theirs going to be very little thats not known about the company. This is more of a negative situation than a positive situation. Unlike penny stocks or low single digit stocks many of which tend to be thinly covered by analysts. This can give investors in these stocks a great advantage. The simple reason if the stock is thinly covered by analysts theirs bound to be some things about that stock that few investors are aware of.

Most research Investment firms will not even cover a stock that trades below 5 dollars. Generally speaking penny stocks or low single digit stocks are considered to be of to poor a quality to invest in by most research investment firms so  in many cases stocks trading below 5 dollars are not even covered or followed by any analysts.

So why is it that penny stocks or low single digit stocks have so much greater potential than more conventional  stocks. Size matters many of the largest well known household names that most everyone is familiar with today were at one time small unknown companies. Walmart for example was once a very small unknown company so was Mcdonald's. The really big gains in these stocks were made many years ago when they were very small unknown companies. Once the stock of a company becomes a household name the really big gains have already been made. Its discovering and investing in the stock of  a company with excellent prospects when its a small unknow company that will lead to huge gains in the stock price.

Some Excellent resources on penny stocks

Penny Stock Investing Newsletter

Manhattan Calumet Value Stock Hotline

Red Chip Companies

Smallcap Strategist

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