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Penny Stocks In Pharma, Retail, Airlines
June 23rd, 2006
Pharmaceutical Penny Stocks
Unlike the biotech penny stocks whose focus is on research and development, the pharmaceuticals have proven and saleable products in hand, and their focus is primarily on marketing and sales.
There is plenty of money to be made by penny stock investors in Pharma stocks. This sector is very prone to Over Reaction. When a pharma company has dozens of different drugs and products, they are insulated against the negative impact from bad news or events surrounding any one of their products.
However, bad news about a single drug they sell may drag the penny stocks' share price down significantly. This happens all the time in the pharma sector. Investors hear bad news about a drug, then they sell shares in that penny stock company. Never mind their may be another dozen products that the company owns which are selling like crazy. Never mind that one drug only accounted for 5% of sales.
On the heels of news story about, "drug ABC may not really work," or "drug ABC may actually increase your risk of..." the pharma penny stock company that makes that product often drops sharply and trades at discount prices. Investors overreact, wise pennyt stock investors buy at bargain levels.
Airline Penny Stocks
Sometimes investors turn away from a penny stock because that say, "there are just too many unknowns." Well, with airlines you don't need to worry about the unknowns. All the reasons you should stay away are actually quite well-known.
Besides being a highly competitive industry, and a logistical nightmare, airlines have dozens of major threats to their share price, any one of which could singlehandedly cut your investment dollars in half. Possibilities include, but are not limited to, Labor Union strikes, rising fuel costs, terrorism, mechanical reliability, aging fleets, weather impacts, administrative issues, just to name a few.
It is possible to make some profits from airline penny stocks. However, if you own a single share of an airline penny stock, you officially own a single share more than I ever will.
Retail Stocks
Retail can be boring, but there are plenty of opportunities for the investor in penny stocks.
Few sectors are more prone to Trading in Sympathy than retail. Is it going to be a poor holiday season? All retailers take a hit. (Even those that are actually doing great!) Is consumer spending up? All retail stocks get a little bump up, even those that are doing horribly. If you are a retail penny stock, your stock will trade in sympathy to the retail sector, even if your actual results are directly opposite to the rest of the industry.
In other words, investors in retail penny stocks may be able to find stores that are performing very well trading at a discount, just because of unjustified sympathy due to a poor retail climate.
A way to help spot these opportunities during a tough time for retail penny stocks may be to think, "consumers are not buying very much lately, but what are they actually buying more of?" The answer may lead you to your penny stock opportunity.
Next Blog I'll talk about 'Basic' and 'Buzz-Word' penny stock businesses. In the mean time, check out Penny Stocks by Peter Leeds for the top buying opportunities from the penny stocks markets.