Thursday, January 9, 2014

Why Its Best To Avoid Penny Stocks Or Low Single Digit Stocks That Have Emerged From Bankruptcy'

Generally speaking I Im not a big fan of companies that have emerged from a chapter 11 bankruptcy. they just do not seem to perform very well in most cases. I do not really know why. It could be that a lot of their best management people have left for greener pastures during the bankruptcy process. It could be that much damage has been done to the company during the bankruptcy process. The creditors generally care little about the business their goal is to maximize the  monetization of the companies best assets. The best most profitable parts of the company may be sold off to satisfy the creditors. Leaving the lesser quality divisions of the company to survive the bankruptcy process. Many companies in  bankruptcy  have filed  bankruptcy before for a second time. That tells me that many of these companies are not of the best quality. If a company has issued warrants when they exit bankruptcy. I would prefer buying those warrants rather than the shares of the company exiting bankruptcy. The warrants can be purchased for pennies on the dollar in some cases and if theirs a solid recovery in the performance  of the company the warrants could be worth 20 or 30 even 50 times what they were issued for when the company emerged from bankruptcy. You also put very little money at risk when you buy stock warrants in a company. Because generally speaking the warrants trade for pennies on the dollar in some cases. You can get a hugh payoff for a small investment by buying the warrants instead of the shares in the company.

Some Excellent Penny Stock Investing Resources

Penny Stock Investing Newsletter

Manhattan Calumet Value Stock Hotline

Red Chip Companies

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