Find More Of The Best Penny Stocks In 2016

| January 8, 2016

Want to find more of the best penny stocks in 2016?

Be very, very picky.  This is a time to be selective, to be demanding, and to ignore penny stocks where a lot of different things have to go right in order to make money.

2016 will be a year when you can expect things NOT to go right.

When penny stock pump and dump promoters tell you a stock will absolutely explode once the big new distribution deal is signed…

Or once the federal regulatory approval comes through…

Or once the price of such and such a commodity recovers…

Stay away.  Hang onto your money.  Protect your portfolio because penny stock investing doesn’t have to be scary.

The best penny stocks of 2016 will have 3 distinct characteristics.  

If you can find all 3 of them wrapped up in one single penny stock, you should feel confident making an investment.

The Best Penny Stocks Characteristic #1

The company is making money.

There are enough good penny stocks out there turning a profit to keep you away from the losers.

Insist on profits.  Make this a deal breaker.  Unless you have a very good reason, walk away from penny stocks that aren’t turning a profit.

The Best Penny Stocks Characteristic #2

The stock lurks in the shadows, the company is quiet and away from the glare of publicity.

You can find penny stocks that nobody pays attention to and aren’t followed by a single Wall Street analyst.

That’s not a bad thing.  And it’s definitely a good thing when you’re interested in a penny stock that is not in the clutches of a promoter who wants to run up the price and sell.

2016 will probably be another rewarding year for the pump and dump crowd.  Ignore the promotions.  Throw away the glossy brochure that shows up in the mail.

When dishonest promoters buy lots of shares in companies that are little more than a post office box and a business license, stay away.

The story always ends the same sad way.

If you are interested in a penny stock and you’re not sure if its involved in a pump and dump promotion, keep in mind that you can’t always get a definite answer by searching online.  Many of these scams take place offline.

But you can stay away from stocks that don’t trade on one of the leading exchanges, which will minimize the chances of this happening to you.

Stick to stocks on the NYSE or NASDAQ.

And make sure there’s decent volume.

The Best Penny Stocks Characteristic #3

Insist on basic financial health.  Big dreams and good stories don’t pay the bills.

Keep in mind that stock price matters.

Lower priced shares usually mean you’re looking at a lower quality company, a company that’s sickly and not in the best financial shape.

Yes, the upside with penny stocks can definitely be exciting.

Just remember that when you’re looking for stocks that trade for less than $5 a share, chances are you’re looking at a company with an unhealthy balance sheet.

Take a look to see what the problem is.  Most of the time, you’ll find mountains of debt, little or no money in the bank, and not much revenue coming in.

Two More Things To Keep In Mind…

Don’t rush in, but don’t be cruel, and decide to ignore a stock if it’s a bit flawed.

Let’s say you don’t find all 3 characteristics in one single penny stock.  Maybe you’ve only got 2.

Get this on your penny stocks watch list.

And what about the big picture for penny stocks in 2016?  How will they do?

Well… in 2015, here’s how the Russell 2000 performed.  This is an index that tracks 2,000 small-cap domestic stocks.

Russell 2000

The Russell finished the year down 4.41%.

By comparison, the Dow was up 0.21%.  Flat.

The S&P 500 was off 0.73%.  Flat.

Wondering how penny stocks will perform as a whole in 2016 is good to think about, but what’s better to think about is the individual stock.

And never forget to think about when you want to take your profits and sell.

As you can see from this chart, penny stock investors who took their money off the table in June made a smart move.

But…

Timing the market is as impossible as predicting the market.

That’s not to say we can’t have an opinion.  What do you think?

How do you think 2016 is shaping up for penny stocks?

It would be great to hear from you.  And if you have a question about a stock or investment idea, shoot us an email.  You can also leave us a comment on the website.

Good investing…

Brian Kent
Penny Stock Research

Note:  If you’re interested in learning more about Brian Kent’s Penny Stock All-Stars premium service… and learning about the stocks we’re trading for profit… you can get the inside scoop on penny stocks here.

 

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Category: Penny Stocks

About the Author ()

Brian Kent is the Editor for PennyStockResearch.com. He also pens Penny Stock All-Stars, an investment advisory focused on discovering small-cap and micro-cap stocks that are destined to become the market's next Blue Chips.

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