What are Penny Stocks?
While there's no hard-and-fast definition, penny stocks are generally considered to be any small-cap security trading for less than $5. In reality, the term is a misnomer, because a penny stock definitely doesn't have to trade for pennies, and a large-cap company trading for under $5 doesn't have the qualities of a penny stock, either.
Penny stocks are shares of small companies that are sold to raise capital to cover operating costs or to fund growth. The difference is that, when you invest in big board stocks, the companies are mature and well established in the marketplace. The potential for further growth and expansion is limited by their size, whereas micro-cap companies are so small, there is plenty of room for growth. In other words, They can make MASSIVE GAINS !
What are the advantages Penny Stocks have to offer vs. Big Board Stocks?
Penny stocks are usually more volatile than average investments, but that can also increase the potential for profits. Pennies make faster moves than your typical dividend, big board buy and hold stock. For many investors, the appeal in Penny Stock lies in the price. With minimal cash outlay required to take a position, it enables investors to own a piece of a high potential Company inexpensively.
There have been tons of penny stocks that generate gains for investors of 500%, 1,000%, 2,000% or more, and because these companies have relatively few shares outstanding compared to big boards, these gains can often be achieved within a very short time frame. The key is learning about the companies before everyone else.
Some industries produce more penny stocks than others. The most common lately are going green, or energy companies. There are also an abundance of penny stock opportunities in biotech start ups and Technology. Of course, that is only a few wanting investors can find penny stocks opportunities in countless sectors and companies once they start to carry out some research. The free newsletter provides tips on Hidden Penny Stock Companies. Sign Up and Profit!
To conclude we would like to take you back to the question at the start of this article. What are Penny Stocks? In the end, the answer will probably be "the most profitable investments you will ever make! "
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