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Varchild2008 (85.81)

How to earn THOUSANDS of dollars in PENNY Stock Investing

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March 10, 2009 – Comments (7) | RELATED TICKERS: DPS , MSM , ATVI

1) Listen to all naysayers.. read their articles...hear them out..Anyone who thinks you shouldn't invest in Penny Stocks is 100% correct....you shouldn't... unless...unless...unless you have good enough, sound reason to believe in a company's near term and longer term future.

2)  To identify a penny stock worth buying...you simply need to identify growth potential, partnerships, contract backlogs, earnings report growth, recession resistant strength if any, and a whole host of other things.

If you invest in a company that is NOT recession resistant then you will suffer with a company that will stay as a penny stock for years if not an entire decade.  The reward is still there if you have the patience.....

3)  Do you want to have a "lottery ticket" penny stock that may or may not net you some income before you turn 80 years old.... Or do you want a penny stock that fits the "growth stock" mold that trades at a ridiculous 8 p/e or less.... and is essentially a penny stock due to investor confidence issues and not due to the True Strength of the Company behind the share price?

It's like throwing money at a Regional Bank after pouring through the bank's earnings potential, product competitiveness, debt ratio, and so on.  After you went through all that information and conclude the Bank is not only a survivor but a tremendous VALUE stock to invest in.... Then why in the heck not buy the Bank Stock?

Just because a Penny Stock exists... .Does not mean you discount ever even thinking of investing in it or ever even thinking of turning a profit on it.   No...  A penny stock is simply a company you need to do some homework on.

I did my homework on "American Defense Systems" after hearing about the company on one of Jim Cramer's shows.  Jim Cramer dismissed the company as speculative.

I am here to say that based on the press release related to the "Reset Program" there's nothing to fear here regarding the company's bad debt ratio.  Well sure... You can fear share dillution.  You can fear shareholder's taken a hit.... You can fear a lot..

But what I mean.. is that this company like so many other example penny stocks I can think of have contract backlogs stretching out YEARS and no company just goes "bust" when they have all of that revenue and income and profit coming at them.

The company projects a 52% revenue gain this year over last.
The company consist of a conglomerate of 3 different companys...because they acquired the Armored Barricades for Police Officers business.

I can think of a lot of things this company can do to protect the interests of their shareholders and limit the impact of the Debt covenants they may certainly trip over soon.  They can spin off one of their businesses.  They can ask the financial institution for an easier interest rate on their 15 million loan.

There are options.

You can sit in FEAR of investing on the BUY / LONG side...

or you can get in while the getting is good.

Hey.. I invest in companys like (MSM)  (ATVI)  and (DPS).... But I don't abandon the high risk penny stocks when I see one shining like a JEWEL in (EAG).

As of typing this.... EAG is trading up nearly 30%.   That's $1000 in the bank baby as I astutely bought tons of shares near the bottom!

7 Comments – Post Your Own

#1) On March 10, 2009 at 11:21 AM, biotechmgr (35.86) wrote:

I like penny stocks only for a trade. I have been down the road of belief in a great technology only to be disappointed. I was lucky to get out at 10% loss instead of 90% at one point.

Anyone looking at penny stocks should use mad money only and a fraction of your assets only. Having said this, and believing this is a bear market, I believe there is no room for penny stock speculation in this market.

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#2) On March 10, 2009 at 11:46 AM, russiangambit (29.31) wrote:

I made some money trading penny stocks long and short. Just for the fun of it. I never really had enough conviction to put enough money on a penny stock . They are very risky, they have a tendency to do nothing  for a year and then jump , and you better watch out because if you are on a wrong side and on margin you'll be destroyed.

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#3) On March 10, 2009 at 1:02 PM, Varchild2008 (85.81) wrote:

I tried trading and got killed massively over and over.  I don't do trading.  Trading never works for me whether I use a 5% rule or even smaller than that or larger.

I simply buy and hold.

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#4) On March 10, 2009 at 1:12 PM, spenglowe (< 20) wrote:

 

where do you find Financial Info on penney stocks? 

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#5) On March 10, 2009 at 1:57 PM, Varchild2008 (85.81) wrote:

Well... It helps if you are familiar with the bank.

Take (MROE) which is a relatively unheard of bank that has dropped to Penny Stock status in recent past.... That is Monroe Bank and it happens to be close to where I live....

So I want to do research on it?  I can walk in and ask questions and obtain information such as:

CD rates
Money Market Rates
Saving Account Rates

Website Address:  Which will give you lots of other info.

I can then compare their offers against other major banks in the area and ask the simple question....

Is this Bank competitive and viable?

If YES then you have a good company as long as Debt Ratios are OK.

To research Debt Ratios... You look at the balance sheet for Cash flow and Cash flow per share... Hold that against "LT Debt Short Term and Long Term Debt."

If Cash far exceeds Debt then you have a good debt ratio.

Standard and Poor's along with Morningstar can also give you some information on a lot of these "unheard of" penny stock banks.

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#6) On March 10, 2009 at 2:01 PM, Varchild2008 (85.81) wrote:

Oh (MI) Marshal and Ilsey has been a Penny Stock for months trading at or below $5.00 a share.  Probably leaping into the stratosphere today.... 

But... That bank is just another example of a reigonal bank that if it's in your area or if you are doing business with them it can be rather easy to just compare their products/services against other financial institutions.

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#7) On March 10, 2009 at 2:12 PM, Varchild2008 (85.81) wrote:

Some penny stocks though (aren't banks) and (aren't companys you can waltz in and examine)....

These companys fall into either of 2 categories:

1)  Recently IPOed so no Financial Info exists yet.

2)  Financial Info. exists but it is flaged "Unaudited."

3)  Financial Info. exists but you may have to dig through the company's website under "investor relations" or dig through Morningstar /  Small Cap Websites / Standard and Poor's  websites...

The financial info. may not be in the balance sheet that your brokeridge provides.... But, it may still exist somewhere.

Websites like "Agoracom" provide forums for discussion on some penny stocks.   Sometimes this is an area to look into to find financial information....

Other times there simply may not be any financial info because the company hasn't filed any to the SEC.  Maybe the company hasn't earned a single Profit nor made a single Sale.

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