Article Categories

»	Arts & Entertainment
»	Automotive
»	Business
»	Careers & Jobs
»	Education & Reference
»	Finance
»	Food & Drink
»	Health & Fitness
»	Home & Family
»	Internet & Online Businesses
»	Miscellaneous
»	Self Improvement
»	Shopping
»	Society & News
»	Sports & Recreation
»	Technology
»	Travel & Leisure
»	Writing & Speaking

Reprint Article Code

Category: Articles » Finance » Article » Article Code

Penny Stock Research guide

Penny stocks also referred to as small caps, micro caps and nano caps are low-priced issues, often highly speculative and selling less than $1 a share. Initially penny stocks were mostly a matter of derision but gradually over the years some of them have developed into investment caliber issues. "Penny stock is a high-risk stock that has a short or erratic history of revenues and earnings." A broader definition of penny stocks refers to the company's market capitalization instead of its stock price. Market capitalization of a company is calculated by multiplying it stock price by the ... read more

Article Title:

Article Body:

A broader definition of penny stocks refers to the company's market capitalization instead of its stock price. Market capitalization of a company is calculated by multiplying it stock price by the amount of shares outstanding. This number provides you with the total dollar value of all the shares in the organization at that instance of time.

A case in point can be Microsoft that has a market cap of around $300B and Dell that has a market cap of $70B. The classification of a company in small cap depends on the concerned broker. While for some organizations companies below $2b in market cap are considered to be small cap, for several others, small cap companies will only be under $1B.

Penny stocks have a great significance in the life of investors. With the help of penny stocks investors can incur huge gains in very short period of time as small as minutes and hours. Though the volatile market of penny stocks has many drawbacks yet the outweighing positive point is that investors can incur hefty benefits in nit just few days but in few hours.

Penny stocks are more enticing due to their cost-effectiveness. Unlike blue chip stocks the penny stocks demand less investment that can go a lot farther. For instance accumulating 10,000 shares of a penny stock can cost only $1000 dollars while same number of shares in a blue chip might cost as much as $10,000,000. Similarly penny stocks offer the advantage of occupying a large position in a company for minimum amount of money. For example a $5000 investment in a blue-chip company will provide the investor only a negligible share in the overall company whereas the same amount invested in penny stocks will offer you a complete 1% stake in the public company. Moreover if over the year that company expands and grows successful, your profits and shares can simply multiply.

However penny stocks too have quite a few shortcomings. The foremost disadvantage as is the volatility of the market. If on the one hand the volatility is beneficial for the investor on the other hand it can be fatal too. Investors can incur huge losses if the market fluctuates in an unwanted way. Due to the high-risk factor involved many investors completely stay away from investing in penny stocks and few others invest only a small amount of money in it.

Another drawback is that unlike stocks such as NYSE or NASDAQ, listed on more global exchanges, penny stocks have less financial disclosure requirements and release less reliable financial information in comparison to its other big counterparts. Moreover lack of easily accessible and trustworthy information about these companies provides space for temporary establishment of sham companies that can deceit and harm the investors.

Author Bio:

Some other recently published finance articles

Tenants With Poor Credit Even Enjoys Loan by Turk Malloy
Tenants lack of collateral which raises doubts in their minds about availability of loan. Now tenant loan has come with a great relief to these kinds of borrowers. But with poor credit ...

The UK Consumer's Guide to Shopping for Car Insurance Online by Mary Simone
To be truly successful at shopping for car insurance online, the consumer must find the best deal available on the Internet, not merely the first offer for cover ...

Are You Throwing Your Money Away? by John Cranley
Dear Readers, My story, ...

Easy personal loan to finance your desire! by frank howard
Whatever the reason it may be you can seek a personal loan to finance your desires whether you are planning to ...

Bad credit consumers can still find sources of financial assistance by Martin McAllister
In the last few years, consumer debt in Britain has been spiralling: from credit card debt to large mortgage burdens, it seems ...

Setting up a Merchant Account by John Tillman
Simply explained, a merchant account is the way to accept credit cards as a form of payment for products and/or services on your website, online store (like Ebay), or brick and mortar retail establishment. That's it; ...

Publisher Guidelines

You may reprint this article electronically in your newsletter or on your website, free of charge.

If you reprint this article from our site, then you must keep everything intact. This includes the articles title, author name, articles body, authors bio / resource box, the links contained within the article, all copyright notices and the link pointing back to our site. All links within the article must also be made active / hyperlinks.