Hot Penny Stocks – What You MUST Know TODAY
Hot, Hot, Hot Penny Stocks… Should You Invest?
There it is… the constant drone of novice traders looking for hot penny stocks to buy.
Every time I meet with investors, talk to friends, or even mention that I trade penny stocks, I get the same question, “What are the hot penny stocks to buy now?”
What a loaded question.
Trading penny stocks is much more than just jumping on the hottest penny stock out there. You can’t just pull a list of hot stocks and buy one or two… and expect to make money.
It doesn’t work like that. Sorry to burst your bubble.
How do hot penny stocks really work?
Stick with me, and I’ll show you what I’ve discovered…
What Are Hot Penny Stocks?
So, let’s start with the basics. What are hot penny stocks?
These are companies who have seen their stock price move in a big way.
Take this company – Medical Marijuana $MJNA as an example.
At the end of 2012 and the start of 2013, there was news… big news about the legalization of “pot” or marijuana in Colorado. Many saw this as the opening to a new industry and there was a rush to make investments in the space.
As you can see, for a time, $MJNA was one of the hot penny stocks everyone was following. Volatility in the stock spiked and the price ran up.
As a hot penny stock, the price skyrocketed!
There are thousands of examples, but let me share a secret with you…
What many penny stock investors don’t realize… a hot penny stock isn’t always going up. Sometimes that hot penny stock goes down too!
I’ll share some of those examples with you in a moment.
But you’ve got to realize VOLATILITY is what makes penny stocks hot. It’s the big move in the stock price that gets everyone worked up.
But pause for a moment and ask yourself… what causes a hot penny stock to move? What creates the volatility?
In order for a big move to take place, you need one of two things…
A lot of sellers – if the penny stock price is falling.
Or,
A lot of buyers – if the penny stock price is climbing.
Now here’s where you’ve got to use your brain power… what drives a lot of people to either buy or sell a penny stock?
News, right? Not always…
Why Are Penny Stocks Hot
The hottest penny stocks have a few things going for them… the number one mover of a company is news. Good or bad news moves penny stocks in a big way.
Things like blowout earnings, new deals, partnerships, new customers, new products, new financings… there are millions of different news stories that can juice a penny stock higher.
For $MJNA, it was a new piece of legislation that pushed that stock up!
The same applies to the downside too.
News about missing earnings, lowering expectations, deals gone bad, partnerships breaking up, customers leaving, product problems, new competition, running out of cash…
I could fill a book with all the things that can go wrong… and the longer you trade stocks, the more you’ll see a hot penny stock fall apart.
But is news the only thing driving massive buyers and sellers to the hot penny stocks?
No – Of course not.
In additional to real news, we have his ugly cousin… Rumors.
Rumors are nasty little stories spread predominantly by teenage girls and Stock Market Scam Artists looking to take your money.
I’m not trying to scare you, I’m just sharing my experience.
I’ve seen rumors spread by greedy brokers, by chat room participants, by fake press releases, by dishonest newsletter writers, and by management teams.
Rumors, like real news, come in millions of different forms. It can be stories about being a takeover target, games about partners and what they’re really doing, outright lies about product capabilities, and even fraud over financial statements.
Normally the rumors are started by Pump & Dump Artists.
You’ve heard me rally against these jerks time and time again. Their favorite target is penny stocks. They buy a bunch of stock, spread a rumor, drive the price higher… then dump the stock on the unwitting. Of course THEY cash out in a big way.
These rumor spreaders are so brazen they don’t even hide what they’re doing.
Often they say it right in their legal disclaimers…. You can learn more about these Devils of Wall Street here…
But before we move on, let me show you what a pump and dump chart looks like:
Unless you’re really lucky… you’re losing money in a pump and dump deal… no doubt.
Now you know why penny stocks get hot… and what drives the buying (or selling) demand behind these penny stocks.
I’m sure many of you are wondering…
Why Doesn’t My Broker Tell Me About Hot Penny Stocks?
HAHAHAHA…
Sorry. Let me compose myself… You’re kidding right?
HAHAHAHA… “a-hem”…
Your broker will NEVER tell you about hot penny stocks today, tomorrow, or ever!
Look, your broker’s job isn’t to make you money… it’s about making HIM money and making sure he doesn’t get sued in the process.
Think about it… if your broker puts you in some common everyday mutual funds, an ETF, or a blue chip stock or three… he gets paid and you’re invested. Barring a massive market meltdown, you’ll see your investments plod along… never really making big money… but never losing big money either.
He gets his paycheck and avoids getting sued.
Contrast that with a broker who tries to amp your returns with hot penny stocks. He tries to make some suggestions… then his suggestions take a loss or two.
It will happen.
You will lose money every once in a while with penny stocks… that’s part of learning to trade.
In that case, our dear broker’s novice investors complain about the loss. They get an ambulance chasing attorney to file a lawsuit. The broker gets slapped down. The broker dealer quietly settles the lawsuit. And a few months later, your broker friend is looking for a new job.
He’s NEVER going to recommend hot penny stocks to watch – EVER. It’s just too risky for him.
Hot penny stocks are 100% incompatible with brokers and their advice.
So, if you want to trade hot penny stocks, you’ve got to do the work yourself…
How To Find Today’s Hot Penny Stock
If you want to find the hot penny stocks for today, you’ve got to look at the big movers of the day.
Hop on over to your favorite stock screener and start trying a few different searches.
I’m partial to the FinViz.com site.
I call it my Hot Penny Stock Finder!
Their tool is great – and free. But it doesn’t cover some of the smaller stocks traded on the OTC markets. Maybe they’ll add that detail in the future.
Nevertheless, it’s a great place to start.
Look for the stocks that are making big moves. Look for those near 52-week highs… or those with big moves over the last week, month, or quarter. Eventually you’ll come up with a hot penny stocks list.
This is where you start to look for your own ideas. Maybe you scoop up a few of these penny stocks… or maybe they lead you to an industry that’s super hot right now.
If you see the same types of stocks popping up over and over again on your screen, pay attention! (More on that in a moment…)
But that’s only half the battle… The big money is made by finding the hot penny stocks for tomorrow.
That’s a tougher nut to crack…
How To Find Tomorrow’s Hot Penny Stock
This is where the crystal ball comes in handy. Just look into your glass orb and say the magic words. You’ll be rewarded with the names and ticker symbols of tomorrow’s hot penny stocks.
Is your crystal ball missing?
Well, to be honest, mine’s never really worked… so don’t worry… there are other options.
There are a few things you can do to try and identify the future hot penny stocks.
First, look for hot industries.
Here’s an example…
The bottom line in red is the Dow Jones Industrial average. As you can see, since the beginning of 2014, it’s climbed about 10%.
The black line is the most interesting one. This is an industry that’s outperformed the averages by almost 7x!
Don’t you think you’d be better off investing in hot penny stocks… in a hot industry… like the one above?
Of course!
Investors clearly are flocking to this industry and when good things happen, stock prices spike!
So, what industry did I show you?
That graph is the $XBI – the SPDR S&P Biotech ETF. Think there are some HOT, Hot, hot penny stocks in the biotech space… you better believe it!
Just remember, the hot industry changes all the time… in six months it might be technology, or energy companies, or BANKS!
Here’s a hot tip… finding a hot penny stock in a hot industry isn’t the only way.
The hot penny stocks I like to focus on have a great story.
These are companies launching new products, digging new mines, drilling new wells, developing new drugs, creating new software, building new social media platforms.
I like to look for small penny stocks that have big business announcements in front of them.
Like this company…
In 1984, you could have picked up shares of Amgen $AMGN for a whopping $4.25 a share… split adjusted that’s a price of just $0.08.
Yep, 8 cents a share for one of the world’s best biotech companies.
As I write this, the stock’s trading for $157 a share… that’s a 196,150% return.
Let me put that in perspective… a $300 investment, yep, 300 bucks would be worth an astonishing $588,751!
More than half a million dollars!
What made Amgen so special? The news around this business was fantastic. They kept launching new products, making new discoveries, and growing… and growing… and growing.
Unfortunately, trades like the Amgen one are rare.
You’ve got to have an iron stomach when it comes to investing and trading penny stocks. But that doesn’t mean you can’t make it happen!
Keep your eyes peeled and you might grab the next Amgen tiger by the tail!
Now that I’ve got you thinking, I’m sure you’re looking for more hot penny stock ideas. You’re probably wondering…
Where Do I Find A Hot Penny Stock List?
This is a great question. And it might be one I can help you with.
I’m planning to add to my article rotation a review of the hot penny stocks for the month. That means once a month I’m going to look back on the markets, try to identify the best penny stocks… and tell you all about them.
Starting right away.
So if you subscribe to my newsletter Penny Stock Research… I’ll send you the information like clockwork.
And if you’re not a subscriber – shame on you.
Just kidding. Just visit the website and do a quick search for Hot Penny Stocks… I’m sure they will pop up on the search results.
Just a warning… these won’t be hot penny stock picks.
I’m not going to encourage you to run out and buy these stocks. Think of this as a penny stock research list. A list of hot penny stocks to research and look into.
As you gather more and more information, you’ll no doubt find some interesting penny stocks with the potential to make it big.
So for all you skeptics out there asking…
Are There Really Hot Penny Stocks To Buy Now?
You’ll just have to wait for my next article where I expose the hot penny stocks for today!
Did you like this article? I know it went a bit long… if you liked it, share it, like it on Facebook, tweet it, comment below on the blog… or email me your thoughts. I’d love to hear from you!
Good trading…
Brian Kent
Penny Stock Research
Note: Brian Kent has been trading the markets for more than two decades and now writes and edits for PennyStockResearch.com. You can sign up for the penny stock research newsletter a trusted source for the truth about penny stocks! Sign up today and get a free research report – http://www.pennystockresearch.com/free-reports/.
Category: Penny Stocks
