Penny Stocks – How To Find The Next Big Penny Stock

| July 10, 2009 | 0 Comments

Now that we’re right smack dab in the middle of the release of our new, sub-$1 penny stock trading service, we’ve been getting a lot of questions.  But one seems to keep showing up over and over.

“How do I find such great, little stocks?”

For obvious reasons, it seems to be a very popular question.

Now, let me say this first.  A lot of hucksters on the internet make outrageous claims about trading penny stocks.  Don’t believe them. There‘s really no special formula that separates the winners from the losers 100% of the time.

Don’t listen to their claims of making BILLIONS using insider secrets.

I’ve been involved in the financial markets for years.  What I’ve learned may surprise you.

There is no magic formula or secret sauce.  The key to identifying great penny stocks is lots of research and lots of reading.  It’s hard work.

Don’t be surprised.  You don’t need a high priced computer, fancy software, or a PHD in mathematics.  What you do need is intense focus and a love of reading.

Searching for a great stock is like searching for Prince Charming.  You’ll “kiss” a lot of frog companies before you find the prince.  I’ve put together a quick list of how I start my research into great penny stocks. It’s something you can start applying right now to your own research.

Simple Screens

I’ve had great success getting ideas from simple screens run on Zacks.  If you don’t want to pay for a subscription, try the free finance portals. Websites like MSN and Yahoo Finance have screening tools as well.  These screens are great at cutting down a list into bite size pieces.

And best of all, I can focus on a few key metrics (like revenue or earnings) to help refine my picks.

Follow the Leader

Sometimes the best stock ideas come from other investors.  It makes sense.  If you’re looking for great penny stocks, figure out what the great investors are buying.  It’s easy to see what top performing fund managers and billionaires are investing in.  Just hit the SEC website and search through a list of their holdings.  You never know what idea you’ll find.

Read, Read, Read

If you’re always looking, you’re bound to find something.  I’m constantly devouring financial websites, newspapers and magazines.  I don’t limit my reading to financial publications.  Some great ideas can sprout from industry rags and off beat news sources.

Don’t forget the lists!  Sometimes you’ll see great ideas on the “New High” or “New Low” list.  Check out the “Most Actives” as well…

The Lynch Method

The last idea I’m going to leave you with was “invented” by a great fund manager, Peter Lynch.  He doesn’t manage money anymore, but in his day he was the best.  He was always looking around for great investment ideas.  Often they were right in front of his face.

Lynch was famous for going to a mall or grocery store and exiting with a bunch of new investment ideas.  He’d find great products that people were snapping up left and right.  He’d research the companies making those products, and often invest in their stock.

He found some huge winners using this simple strategy… a strategy anyone can follow.

You now have four easy ways to identify great penny stocks and uncover the next big winner.  Once you’ve got a list, then the real research begins.

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Category: Penny Stocks

About the Author ()

Robert Morris is the editor of 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. The Wall Street veteran and small-cap stock specialist is also a regular contributor to Penny Stock Research. Every week, Robert shares his thoughts with our readers on a variety of penny stock-related topics. In addition to Penny Stock Research, Robert also writes frequently for two other free financial e-letters, ETF Trading Research and the Dynamic Wealth Report. He’s also the editor of two highly successful and popular investment advisories, Biotech SuperTrader and China Stock Insider.

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