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Use this simple system to find potential penny stock winners

by , 05 September 2014

Finding the best penny stocks to invest in can be a daunting task.

There are a lot of small companies that fall into the penny stock category. But where do you start when it comes to filtering through them?

You need a system to help you. Let's take a closer look …

Unearthing a penny stock winner means research

To unearth a diamond penny stock, you need to look for companies that have the potential for huge growth.

You’re looking for companies with a new product, technology or service that could be a breakthrough in the company’s respective field.

Finding the ‘next big thing’ isn’t an easy task, the team of experts at Money Morning US explain. That’s why research is vital. You need to do your homework.

You should:

  • Review the company’s profile by visiting the company’s website.
  • Request information directly from the company you’re interested in. This could include asking for information about its finances, its products, risk assessments and future opportunities.
  • Walk away if a company isn’t forthcoming in providing information. A company should be just as interested in minority shareholders as large ones.

Try to pinpoint a catalyst that will send the penny stock soaring

A catalyst can be some sort of event or unique situation that could send the stock price through the roof.

One example of this is when the company’s product or service is ready for market. With certain types of products, companies can spend years on research and development.

You want to find out when the company is ready to take the product or service to market. So look for launch dates.

This means the company is ready to sell its products and services.

Another example is if the penny stock looks like it’s a candidate for a buyout. Usually, these companies will fill a market niche that a larger competitor wants.

When a buyout takes place, it’s usually at a premium to the current share price. If you own shares, that means you’re in for an instant gain.

So there you have it, a simple system to help you find potential penny stock winners.

Use this simple system to find potential penny stock winners
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