06 Nov

Penny Stocks to Watch

Superstars of Trading is a leading stock picking newsletter with long successful track record. Run by a full-time professional trader, Superstars of Trading delivers the best penny stocks to watch and the hottest penny stocks to buy in the market today.

We teach members to become successful traders and investors, and help them grow their portfolio and net worth, allowing them to become financially independent.

04 Mar

How to Invest in Penny Stocks

invest in penny stocksPenny stocks are a much maligned investment option due to the negative press they receive driven by often unscrupulous activities that plague the industry. Pump and dumps, the practice of artificially inflating a stock price in order to sell stock at a higher price, is the most well known tactic used by many penny stock owners and shareholders.

These practices are actually present in every equity market, the effects on penny stocks are pronounced due to relatively less liquidity, low investor sophistication and a lack of information.

Are Penny Stocks Risky?

And while penny stocks are inherently more risky that larger cap stocks, such as those listed on the NYSE and NASDAQ, it should be remembered that some of the largest companies listed in the United States were once considered penny stocks. There is no better example than Apple, which in 1996-1997 traded below $4. It is now trading at $420 and is the largest company in the world by market value. Other examples of stocks that now trade above $25 but were once considered penny stocks include Green Mountain Coffee Roasters Inc, Netflix Inc, and VirnetX Holding Corp.

Penny stocks can provide for tremendous growth opportunity in one’s investment portfolio if you know what to look for.

First, doing your homework is critical. Read the guide ” penny stocks for dummies ” thoroughly. Take a look at the industry the company operates in. Is it a growth industry? Is there potential to expand overseas? Are there any political or regulatory burdens the company faces?

You must take the time to read through all of the company’s SEC filings. This will help you understand the business they are in, and how the company is performing now, and plans to grow in the future.

Look for red flags. Has the company changed its name, ownership and industry over the years? Does the company rely heavily on related party transactions for its revenues, or loans? Has the CEO or senior management ever been the subject of an SEC inquiry?

You also need to do research on the company’s management team. Do they have a history of running or growing companies? How relevant is their previous experience and education? A reputable and trusted management team is a critical factor when deciding whether to invest in a penny stock.

Finally look closely at the company’s valuation. While it is often expected the penny stocks have little revenues, and/or high debt levels (especially start up companies), the value of the company should reflect this. If the value of the company is not in line with its financial statements, and there is no adequate explanation for this, there could very well be manipulation of the stock. In which case, stay away.

04 Mar

What is the Best Financial Newsletter to Subscribe to?

best financial newslettersWhether you are just starting out on your day trading or investing journey or are a seasoned professional, financial newsletters, trading chat rooms, investing blogs and forums can play an important role. And there are a plethora of free and premium options to choose from.

Used wisely, such medium can provide a wealth of knowledge and give you an important source of real time information when making an investment decision.

The question is, which sites should one subscribe to?

A good place to start is by doing some research by looking at review websites like Feed the Bull and Investimonials. They give lists of newsletters, chat rooms etc and have unbiased reviews from users.

Find one that has plenty of positive reviews from users. Beware that many of the reviews may be fake or biased. You also want to find a stock newsletter that is owned and run by a reputable, experienced trader or investor. They will help you find the top penny stocks today. Look at the person’s biography, history of advice and commentary and trading performance. A good place to start is by following the individual on Twitter (this is usually free), to get a feel for the type of advice or commentary they provide.

Now, you also want to follow someone who has a good track record of investing. Research their performance on sites like Profit.ly or Covestor. These sites track investor’s actual investments, and are pretty difficult to manipulate or cheat with. Transparency in this industry is still a relatively new concept but is rapidly gaining popularity.

As mentioned, you have a choice between free newsletters and fee based newsletters. In this game, the old adage “you get what you pay for” is generally pretty true. Often, free newsletters are publishing information that is paid for by the company they are “recommending”. You can check a website’s disclaimer to see if this is the case. Premium newsletters generally make their money from subscriptions, and as such, have less of a conflict of interest and are perceived to be less biased.

There are also many free investing forums made up of hundreds or thousands of contributors. These sites can be valuable in providing investment ideas and relaying real time news. You want to spend time familiarizing yourself with other members to get a feel as to who is trustworthy or worth paying attention to. As is the case with many community based sites, there are often contributors or posters that ulterior motives.

Twitter feeds and lists are also a good source of real time news and opinions. Again, you can search the review websites mention above to find reputable, trustworthy investors to follow.

Finally, spend time closely observing the investors or traders you wish to follow. Pay attention to their communication style, trading or investment philosophy and approach, and if possible, their verified investment track record.

It is important to remember that any financial newsletter, chat room, or forum is just one source of information that you can use to help form your investment decision.

04 Mar

What are the Best Growth Penny Stocks?

best growth penny stocksA lot of people wonder which penny stocks they should invest in for long term growth. As there are literally thousands of penny stocks, it is very difficult to determine which have the best growth prospects.

First, let me explain that not all penny stocks are created equally. You need to sort the “wheat from the chaff” because the penny stock industry is plagued with shady and corrupt practices. Many of the penny stock companies, typically listed on the Pink Sheets or Over-the-Counter Bulletin Board (OTCBB), are created for no other reason than for its owners to use deceitful stock promotion tactics in order to sell shares for profit. These companies usually have no actual business and no prospect of generating any revenues in the future.

However, there are many legitimate growth penny stock picks to invest in. Examples of companies that were once considered penny stocks include Green Mountain Coffee Roasters Inc (NASDAQ:GMCR), Netflix Inc (NASDAQ:NFLX), and even Apple (NASDAQ:NFLX) once traded below $4. There are hundreds of more examples of stocks that once traded below $1 and are now trading above $10 and listed on major exchanges.

So, how do we know which companies are legitimate and offer the best growth opportunities?

First, you should run a scan of stocks using multiple criteria. This could be stocks that are currently trading under a certain dollar amount, stocks with a market capitalization under a particular threshold, or those that have a price-earnings ratio under a particular value. All of these indicators will help identify a potentially undervalued stock.

Next, look at the industry. Look for stocks in growth industries. This changes over time, but today for example, growth industries might include mining companies (particularly in commodities like gold, silver, molybdenum, rare earth metals), commodities such as coffee and battery technology companies that might grow with the increasing demand for longer life batteries in electric vehicles  and more powerful consumer electronics such as smart phones.

Once you have narrowed down the industry, you must complete due diligence on individual companies. Read through the company’s SEC filings and annual reports to determine their business operations, growth plans, current profitability, financial health and ability to raise finance in order to expand. Also, a solid management team is critical to a company’s success.

You can also call the company directly and ask to speak with senior management or the CEO. Ask them about their growth plans, financial situation and anything else you need to have comfort in your potential investment. You will be surprised how accessible these individuals can be in smaller companies.

Finally you could consult or subscribe to an investing or penny stock newsletter for an additional source of information. There are some very reputable ones out there, such as Shiznit Stocks, but be careful all are certainly not created equal.

Stock liquidity, or lack thereof, is not necessarily a bad thing. Just because there is a lack of trading volume does not mean you should shy away from investing. Often times it simply reflects the fact that there is no media coverage on this particular company, they lack an investor relations function, or maybe sophisticated investors have not yet discovered the company and its growth potential.

Once you have narrowed down the field of penny stocks that have a realistic potential for growth, you should then apply sound risk management rules to your investing.

Invest small amounts at regular intervals, rather than one large sum. Dollar cost averaging, whilst frowned upon in some circles, is often a good way for the average investor to accumulate shares in a company at a reasonable overall cost.

If circumstances change with the company or its industry, don’t be afraid to admit the investment is no longer considered a growth opportunity and reduce your position accordingly. Often times, taking a loss is the best decision you can make.

On the flip side, if you start seeing real progress and growth in the company, look to acquire more shares if the stock price is going up.

Penny stocks have the potential to offer tremendous growth opportunities that large cap stocks simply cannot. If you complete your due diligence and apply sound risk management to your investing, you can really super charge your portfolio with these investments.