The Real Value of Penny Stocks
The Real Value of Penny Stocks A penny stock is a stock that has a value of less than $5 per share. However, most companies that trade as penny stocks have a value of less than $1 per share. Most companies trading at this value are smaller companies or companies that don’t have the resources needed to earn a listing on the NASDAQ or NYSE. Therefore, what might the real value of a penny stock be to an investor?
Invest Before the Company Makes it Big If you have a hunch that a new company trading under $5 a share could become the next Google or Microsoft, you could make a large profit on your investment. In addition to great upside potential on a penny stock, the potential losses may be limited due to the low price per share. That makes it possible to invest a portion of your portfolio in a penny stock, hold it while watching how the company does and then decide when to sell without having to break the bank.
The Volatility of Penny Stocks Could be Good for Day Traders Penny stocks tend to be more volatile than other stocks. This could present an opportunity for day traders or those who are looking to make a quick gain before cashing out. In addition, the low price of a penny stock means that huge gains can be made just from the stock going up a few cents per share. For those who are looking to make quick profits from penny stocks, it is important to use stop losses or other means to lower downside risk in the event that a stock experiences wild swings up or down.
Make Your Money Fast A large cap stock may grow a few percent each year. This results in a wait time of years or decades to get the same types of returns that you could get from a penny stock. Remember, it is a lot easier for a stock to go from a few cents to a few dollars than it is to go from $10 a share to $100 a share in a few weeks or even a few months.
Penny stocks may not be a good investment decision for everybody. However, if you are looking for quick gains, penny stocks are the way to go. In just a few days, you could see the value of your investment double, triple or go even higher. If you do your homework, you may even find that your penny stock of today becomes the Google, Amazon or Coca-Cola of tomorrow.
This post was repurposed for distribution. To read more articles just like this from Jonah Engler, visit his main website at JonahEngler.com.