Thursday, May 23, 2013

Penny Stock Investment

Investment in stocks is one of the popular options of investments for an individual investor. There are a wide variety of stocks trading in the Stock market. Penny stocks offer a good opportunity for gaining above average returns. Penny stock investment is recommended for investors with a good risk appetite. Penny stocks are good avenues to invest if they are researched thoroughly.

Most of the larger and popular stocks are widely followed by market analysts, institutional investors and the public. In most cases, there is no opportunity to benefit by investing in these popular companies. Hence most investors investing in these type of return fail to beat the benchmark index. Penny stock investment, on the other hand involves identifying penny stocks which are trading at a good price. Good price indicates a price at which the stock is undervalued. By investing in undervalued penny stocks, investors can possibly earn a much better return than investing in stocks of popular companies.

Penny stocks are stocks that trade at a less value per share. You will be able to buy a large amount of shares relative to a blue chip stock. In most cases, penny stocks are also not listed on the main national exchange. Due to this, Penny stock companies have relatively less regulatory requirements. Hence, they are able to concentrate more on their core business. Most penny stocks have a certain amount of uncertainty surrounding their business. For instance, if the company is operating an Oil refinery in an African country, the uncertainty involves the regulation and largely depends on government approvals. Hence, before getting into a penny stock investment, it is recommended to research the company and stock thoroughly. If you are a technical analyst, the chart will guide your entry and exit points. Trading and Investment in Penny stock is both an art and science. It is truly rewarding if done rightly.

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