Since starting with PennyStocks.com aprox. 3 months ago, I had a 109% cash gain to my account, this by following the stocks closely and following (not all) but most of your advices, keep up the good work! Also I realize the gain was made in troubled time for the nasdaq and world wide stock market, so I am impressed.
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Basic And Buzz Word Penny Stocks
June 26th, 2006
To continue our discussion, there are two more pseudo-sectors of the penny stock markets that you should learn about.
Basic Penny Stocks Businesses
(Rendering Plants, Factories, Assembly Lines, Production Factories, Casket Production, etc...)
The most important factor for straight-forward, or basic businesses, is earnings. A rendering plant, like Darling for example (ticker DAR) needs to be making money. The more money they make, the greater their share price should go.
If a company exists to take a car bumper, dip it in rust-proofing, then ship it back to the assembly plant, that company had better be making a good profit. This is because their upside is limited, their business options are few, and their task is so basic.
There are times when penny stocks like this are excellent investments, and investors can make really good (and safe) returns from the most boring penny stocks. Specifically, I am talking about when a profitable company gets a lift from a secondary factor. For example, the costs of the resources the company uses gets cheaper, or the price they can sell their finished product for gets higher, or both. They suddenly get a good boost in earnings, since it costs them less to make more.
Alternatively, they could streamline operations (new factory is half to the distance to most customers), or get increased orders from their customers.
This is penny stock leverage in action, when one of these basic businesses suddenly increases their sales or lowers their costs, and sees a magnified effect on their earnings.
Penny Stocks in Buzz-Word Businesses
(Bluetooth, VoIP - Voice over Internet Protocol, WAP - Wireless Access Protocol, DotCom, etc...)
Nothing is more subject to a trading mania, or less deserving, than whatever the current buzz-word stocks are.
It was the Dot-Com's in 2000 (crash), the Biotechs just after that (crash), etc... Lately, its been Bluetooth, which is, among other things, the concept of short-range consumer advertising customization. In English, it just means you could walk into a store, and the current products and specials that would appeal to you specifically could show up on your cell phone screen.
You like Seinfeld? Walk into the video store and suddenly your phone is telling you there is a discount on the season three DVDs. How did we ever live without Bluetooth?
You know what - that's actually not a bad idea, or flawed concept. Think of ambulance attendants getting your full medical history, allergies, and medications when they arrive on scene.
It's just that investors in penny stocks may put way to much stake into this technology. Perhaps Bluetooth (or whatever Buzzword revolution is going on at the time) may change the world, it probably won't. Either way, it is going to cost way more to develop it and put it in place than they will ever make from it in the next thirty years. That's why you can see that Bluetooth-related stocks are up while they heat their office by burning cash.
For those of you who have been following the Peter Leeds Blog, that is the end of our discussion on the sector road map for penny stocks.