Why Investing In Penny Stocks Or Low Single Digit Stocks Of Companies That Do Over 100 Million Dollars In Annual Sales Is Usually A Good Idea'

I will try and make this as simple as possible. Investing in penny stocks or low single digit stocks that have sales around 100 million dollars a year or higher is a good idea for several reasons

First the larger a company is thehigher the likelihood that their going to have a more diverse line of products or services. A great example of this might be say a comapny that does 20 million dollars a year in sales and the only product that they make is mops and buckets. The success or failure of the  business will depend on how good or bad the market for mops and buckets does. If theirs a price war between all the companies engaged in the mop and bucket business thats going to be really bad for business. If theirs a fire at the companies one and only  manufacturing facility and they have to shut down for three months thats going to be really bad for business. Say because the company is so small they are very heavily dependent on one or two companies for a very large percentage of their sales. Say walmart is their largest customer. Walmart makes up 40% of their annual sales. Thats 8 million dollars out of 20 million dollars in annual sales. What if one day walmart tells the company that they buy all their mops and buckets from hasta la vista baby. That will be very bad for business indeed. So you can see why favoring larger companies over smaller ones can give investors such a big advantage. Now what if the company was much larger and more diverse say not only did they have a manufacturing facility where they made mops and buckets they had a manufacturing facility where they made cleaning chemicals for commercial cleaning. They owned a manufacturing facility  where they made hand soap. They also owned a  manufacturing facility that made filters for commercial use
Another example might be a food service company with a  very small chain of fast food locations say they have just five locations and do 15 million dollars in annual sales. Say one of their locations has a fire and is not reopened for nine months think of the impact that will have on the compamy. But lets say that the company had 30 locations and did 90 million dollars in annual sales and their was a fire at one of their locations and they were not able to reopen for nine months because they have 30 locations  the impact on the compamy is much less because that location makes up only  3% of their annual sales. Now we are not talking about a companies doing billions of dollars in anual sales these companies might be doing say 130 million dollars in annual sales. Its still a small company but not so small that a lack of diversification could do them in.

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