| North American micro-cap investors have access to | | | | numbers, smart penny stock investors focus most of |
| thousands of penny stock opportunities, each | | | | their attention on the non-financial information. In |
| competing for your attention - and dollars. But of | | | | other words, they look at the company's strategy |
| these, only a small fraction will ever deliver the | | | | and business model to determine whether or not a |
| lucrative short-term returns that make investing in | | | | stock has the potential for high short-term growth. |
| penny stocks so attractive. It's critical that you do | | | | Some of the things you should consider include: |
| solid research and careful due-diligence before risking | | | | Company Offering: Closely examine the products or |
| your hard earned capital. | | | | services offered by the company and compare them |
| The financial media and the major Wall Street | | | | with other key competitors. Look for products or |
| analysts rarely cover micro-cap companies. As a | | | | services that serve a large niche market while |
| result, investors may need to do more original | | | | differentiating from the competition through lower |
| research and get information from other sources. | | | | pricing, better technology, a unique approach, etc. |
| These might include the target company itself, or | | | | Customers: Who is the company's target market? |
| firms such as OTCMarketBulls which specialize in | | | | Look for a large base of potential customers with |
| analyzing penny stock opportunities. | | | | the resources and interest in purchasing the products |
| The information you use to assess the investment | | | | or services being offered. |
| value of a micro-cap company will often be quite | | | | Distribution Channels: Look for companies with a clear, |
| different than that you would use to examine a | | | | concrete strategy for delivering their product or |
| large, blue-chip corporation. For stocks listed on the | | | | service to their target market. |
| major exchanges, an investor will typically use | | | | Marketing Strategy: Pay close attention to a |
| financial and stock price information to determine | | | | company's marketing and public relations activities. |
| whether a stock is worth buying. You might look at | | | | Are they effectively reaching their target audience? |
| 52 week stock price highs and lows, profits, debts | | | | Also look at the company's investor relations and |
| and other markers. | | | | stock promotion efforts as these can affect share |
| However, relying on financial and stock price | | | | prices. |
| information alone to assess micro-cap investments | | | | Management Team: Get to know the company's |
| can be very misleading. The best penny stock | | | | leadership. Look for relevant experience, past |
| investments are small, growing companies which likely | | | | success and an enthusiastic vision for short and |
| haven't yet seen a lot of trading activity. With heavy | | | | long-term growth. |
| investment in start-up, research and development or | | | | OTCMarketBulls uses these and other measures to |
| marketing, these companies are likely showing small | | | | select stocks to watch for our newsletter (click here |
| or negative earnings and may have high | | | | to subscribe - Hot Penny Stocks). While no research |
| debt-to-equity ratios. And for small, rapidly growing | | | | can fully eliminate your risk, proper due diligence can |
| companies, financial statements get out of date very | | | | greatly increase your chances of picking a winner for |
| quickly. | | | | your portfolio. |
| While you should never completely ignore the | | | | |