beware of penny stocks

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Beware of Penny StocksBy www.ProfitableInvestingTips.com

Several years ago we wrote abouthow to invest in penny stocks. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

The common rationale for investing in penny stocks is that they are cheap. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

It is the mistaken belief of naive investors that these stocks have nowhere to go but up.http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

For the beginning investor with a small amount of capital penny stocks can seem attractive. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

They wonder how to invest in penny stocks. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Before looking at how to invest in penny stocks lets see what we are talking about. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

These are stocks that typically sell for less than $5 a share ($1 by some definitions) and, thus, allow the investor to buy a block of shares for less than if buying 3M for $86.20 a share of Google for $595.47 a share. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Penny stocks are often companies that are starting up and have a net worth in the millions instead of billions. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Because few if any stock analysts follow penny stocks they can be sleepers with a large degree of hidden value. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

How to invest in stocks, in general, is to know the fundamentals of the stock. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

This can be difficult with penny stocks. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Thus penny stocks can be traps into which the unsuspecting investor might fall.http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Beware of penny stocks. If you have unique insight into the company you may know something that stock analysts do not. This can be very profitable. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

If you do not have any special insight into the stock you may be in for a rude awakening when the stock that sold for pennies now is out of business. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

We are not the only ones to advise investors to beware of penny stocks.http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Price per Share versus P/E Ratiohttp://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

USA Today writes aboutpenny stocks.http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Beginning investors are often attracted to penny stocks thinking the low per-share price means theyre cheap. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

But this thinking is misguided. Keep in mind the per-share price by itself doesnt tell you much about a stock. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Its the per-share price compared with the companys profit, revenue or cash flow that tells you if the stock is actually cheap or not. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Some penny stocks could be the most overvalued stocks you can buy if the companys profits are evaporating, the company loses money or has poor prospects. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Penny stocks are also prime targets for scammers. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Their low per-share prices make them easy targets to be manipulated. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

They are also at risk of being delisted from the exchanges. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Most online brokers allow you to buy penny stocks, but most charge added surcharges. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Only 15 stocks in the Russell 3000 trade for less than $1 a share. Avoid those.http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Share price compared to profit is the price to earnings ratio (P/E ratio). http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

A high P/E ratio indicates that the stock is expensive and a low P/E ratio indicates that it is cheap. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

In our recent article about therisk of higher interest rateswe note that blue chip stocks are being bid up and more risky stocks, such as penny stocks, are being bid down as investors flee to quality. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Beware of penny stocks at a time when interest rates and thus the cost of doing business are going to go up and putting pressure on weak companies. http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

Always remember that there is a reason why a stock sells for pennies and that reason may simply be that the stock shows very little promise of long term success.http://profitableinvestingtips.com/penny-stocks/beware-of-penny-stocks

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