It’s impossible to know with a 100% certainty that a penny stock will grow in price. With that being said there are some indicators that you could check to see if the company you want to invest in is more likely to succeed or a fail miserably. This useful information is here to help you decide and pick a good penny stock.
Check the intangible assets
Company that has a high percentage of intangible assets is likely to have big fluctuations in the value of their stock. Intangible assets are intellectual property that’s evaluated periodically. Company that has higher percentage of intangible assets is better for buying because if a company changes the third party evaluator its value can go up drastically. That’s when you sell it. You can find the intangible assets of the company in its balance sheet.
Check the industry
This is a no brainer but it should be mentioned. If the company you’re trying to buy penny stocks from is selling newspaper, clothes, railroad services or something other non-proprietary or nearly extinct, that’s not the boat you should be climbing on.
Check the staff
Do a simple search about key members of a company (CEO, CFO and CTO). If they had previous businesses that failed that’s ok as long as it didn’t involve a scandal or any sign of unethical behavior.
Ignore the income statement, check the cash flow statement
Income statements are easily set up to overstate the revenues and understate the expenses in order to appeal more to the public and banks. Don’t get fooled, check the company’s Cash flow statement. That’s where you can find the real information.
Check the products
If you want to educate yourself further simply purchase a program that will provide even more important information for choosing your penny stock. Alternatively you can skip all the hard work and get the software that will choose penny stocks for you. Both products have a 60 days money back guarantee so your risk in this case is minimal but potential gains are significant.