The good things about penny stocks are that the prices of shares are normally low. Therefore it creates an incredible amount of leverage available to the investor that isn't often found in the "blue chip" stocks, such as Google, IBM, or FedEx. The average "blue chip" company can trade nearly hundreds of dollars per share. Therefore it is difficult for those stocks to double. On the other hand, a penny stocks that's trading at literally pennies per share can double rather rapidly. In this way it doubles whatever initial investment. Since it would be much easier for a stock trading at 10 cents per share to double to 20 cents per share (a 100), but the chance of the penny stock doubling is much higher than the "blue chip" ever doubling owing to the bulky price per share of the "blue chip".
The investor can reap the benefits of using the proper resources and tools. The good thing is that this whole process can be done in the comfort of your own home. The only measure you should concern is total returns. More money can be extracted if the percentage return is high. Investors who make a lot of research, they can find a bargain in the penny stock heap.
The most essential thing in a penny stocks is to analyze the industry it's in. Small caps, in general, are inconsistent more than larger companies. If you are considering a junior precious metals miner, observe what the large miners are up to. The research requires great time and effort to go through all of these tasks, but this is beneficial also.
The investor needs to ensure what, if anything, the underlying asset the company is deal with is doing. Using the junior miner as an example, confirm you are at ease with the direction the metal the company is mining is going. If you think gold will not continue to rise, you probably shouldn't invest in a gold miner.
The investor needs to look at is market share. Obviously, most penny stocks don't control a large share of their market. But make sure the company you are looking at has a strategy for that. And if it doesn't, confirm that the industry is growing fast enough to create an opportunity for the company.
