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Hot Penny Stocks and Cheap Penny Stocks – Where’s the Connection?
By Penny Stock Investor | November 10, 2009
In finding hot penny stocks, you might think that cheap penny stocks are not the way to go. After all, there is a reason why these penny shares are cheap, right?
Right. However, hot penny stocks can be cheap penny stocks. How? I will tell you. I will also let you in on secrets on how to spot hot penny stock picks. Here goes…
Hot penny stock picks do not always have to come from high profile names nor should they necessarily be the high priced ones. It might surprise you that some of the best penny shares are cheap penny stocks.
In all the years I have been trading penny stocks, I have heard of a lot of traders who keep looking for NASDAQ hot penny stocks and kept on ignoring cheap penny stocks. These are traders who wish to make big bucks overnight.
In my case, cheap penny stocks are some of my hot penny stock picks primarily because they are cheap and I don’t want to risk too much of my capital.
Another reason why I like them is because, most of the time, low-priced penny shares have the greatest potential to increase their prices and provide high returns in the long run through penny stock investing.
But just betting on cheap penny stocks is not enough. One should know why they are cheap and whether they have the potential to become hot penny stock picks in the long run.
When I look at low priced penny shares, I also research on the year-to-year financial performance of the companies that own them. Do they have the ability to ride out a financial storm? Do they have histories of increased earnings year after year, no matter how minimal?
I always keep in mind that general opinion about a certain penny share is not always correct. Just because one particular stock doesn’t attract much investment, it doesn’t automatically mean that it is worthless. As we all know, penny stock trading is not exactly a mine for information.
You want to know which are hot small cap stocks? Conduct your own research and don’t just rely on the number of investors getting attracted to a particular share.
Currently, in my opinion, the hottest penny stocks are those that belong to small and mid-sized telecom or mobile companies. Firms that have proprietary technology in these fields are most likely to produce high returns in the long run.
Hot penny stocks are not always the highest priced ones. You might be surprise by how much return cheap penny stocks can give you. Me, I always go for the low-priced ones with the most potential for growth and long-term earnings.
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