Just would like to say I started with $1000 in my E-TRADE account & I'm over $4000 just a few months later and would have more if I would have just listened to your advice more. I'd like to say "Thanks and keep up the good work!"
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Penny Stocks Road Map By Sector
June 21st, 2006
If you drove 50 miles an hour in a 30 zone, you could get in trouble (speeding tickets, car accidents...)
However, if you drove 50 miles an hour in a 50 zone, you would probably be alright.
Unlike on the roads, there are not helpful signs providing guidance in the penny stocks market. That is unfortunate, because the rules do change significantly, depending what type of penny stock sector or industry group you may be investing in.
If you gain an understanding of the differences between the various sectors of penny stocks, it will go a long way to providing you with even better returns from your investing efforts. Here are some of the differences that you need to know.
Resource Production Penny Stocks:
(gold and precious metals mining, oil and natural gas production)
The most important thing here is to learn their RLI (Reserve Life Index). In other words, how many years until the wells run dry? Or, at this rate of mining, how many years until there is nothing left to mine?
If you can't find this out through their financial statements or their web site, call the Investor Relations contact and ask. A penny stock company may be making boatloads of money, and be trading at attractive prices (on the surface) but if they only have an RLI of 2.5, that stock may soon be in for a world of hurt.
Now, the RLI can be extended if they actively pursue new deposits, but the success of such efforts will only help if they are successful in their exploration or acquisition strategy. A lot of penny stocks try to extend their RLI, only to come up short.
Personally, I like to see penny stocks with a double digit RLI (10 years or more) and an active exploration and acquisition strategy to hopefully extend it faster than it is wearing away.
Another consideration for resource production penny stocks is the cost of producing. Each company can produce a barrel of oil at a different cost. It takes some companies more money to mine an ounce of gold than others.
Since there are no competitive advantages between one ounce of gold and another, or between one barrel of oil and another, the penny stock company that produces with the least cost wins.
Picture 'Joe's Mining' bringing gold to market at a cost of $200 per ounce. Now compare that to 'Dave's Mining' bringing it to market at a cost of $250. Joe's Mining will be making a lot more per ounce, and can use those profits for further exploration, or to acquire more mining property. And if the price of gold on the open market falls, there will be much less pressure on the lower cost producer then the higher cost producer.
We'll pick up this conversation tomorrow, with coverage and opinions about other sectors in the penny stocks market. Future sectors of the penny stocks markets that I will discuss include Resource Exploration, Biotech, Airlines, Retail, and more.
And in the mean time, if you want to benefit from the help of the penny stock professionals, visit us at PeterLeeds.com. We remain committed to finding you the absolute best in penny stocks.