How to analyse a stock before investing
5 Top Ways To Spot Penny Stock Potential Purpose
Is to outline simple ways to quickly assess any penny stocks future prospects. We highly recommend employing as many of these tips as possible for each penny stock before investing, as this class is very high risk.
First, keep an eye on the Money Flow and On Balance Volume technical indicators. This is recommended, as these indicators usually match share price movements, and at times, even precede penny stock price direction providing an early indication if you should buy or sell stock.
Second, watch for spikes in trading volume, especially when a company announces good news, or has a positive event occur. Generally share prices increase after such events and extend gains in the near future before buying demand declines. A good signal to buy stock is when its price is increasing whilst intraday trading volume is at least two times higher than average.
Next look at company management and review what they have achieved in the past. Because you are better off investing in a company where management has previously doubled or tripled the value of a few companies, as opposed to investing in management that has directed stagnant growth or lead companies to bankruptcy.
Next think about investing in companies that are growing in market share. We love to see market share growth, as it signals higher sales, increased product acceptance and increased pressure on competitors. You can easily attain a company’s market share through contacting it’s investor relations.
Lastly, if a company’s name, product or industry is constantly in the media, it is highly advised to investigate why this occurring. Because not only could you invest in the next biggest thing before it takes off, but hype alone can push share prices to new highs in the short term.
5 Top Ways To Spot Penny Stock Potential Conlusion
We hope you enjoyed reading ‘5 Top Ways To Spot Penny Stock Potential’. If you’re new to investing or are unsure what penny stocks are, follow the link below for a quick run-down.
Click on the link below to read a quick summary of Wall Street Journal’s latest posts.
Click on the button below to read 6 Best Penny Stock Websites.