| So, you want to know how to VALUE a penny | | | | DEF Company ( also looking for GOLD ) |
| stock do you?... Ok then class, we're about to begin: | | | | 20 million shares o/s |
| Penny shares | | | | 0.55 ( Current Price ) |
| The term " Penny Stocks" ( or Micro's )simply implies | | | | 20,000,000 x 0.55 = $11,000,000 |
| JUST THAT....stocks that trade under $1.00. Now, | | | | UUUMMMM DUH.....Which one is a BETTER |
| without getting too technical... from time-to-time | | | | VALUE?!?!?!? |
| certain stocks that once traded in pennies, can | | | | YOU'RE RIGHT!!! ABC Company gets my money!!!!! |
| breakthrough that IRON CLAD ceiling of $1.00. From | | | | You see people.... |
| here ( $1.00 )....to "usually" the $5.00 level.... you are | | | | This idea behind the advocacy of penny shares is |
| now dealing with SMALL CAPS ( Small Capitalization ). | | | | that low priced shares have more potential to rise, |
| So... with a PLETHERA of penny stocks to choose | | | | and therefore investors should do their stock-picking |
| from.....how does one PROPERLY place a value upon | | | | by selecting from among penny shares. |
| it's shares?.....I mean, the VERY reason they're trading | | | | The idea is fundamentally flawed. Looking at price |
| under $1.00 tells us all something..... do you wanna | | | | alone, without any indication of what value a share |
| know what that is? Oh....you do?.....GOOD!!! 'cause i'm | | | | has is not meaningful. A share price can only be said |
| telling you anyways.....lol... | | | | to be too high or low relative to earnings per share, |
| THEY HAVE NO EARNINGS!!!! NO INCOME!!!! (usually) | | | | assets per share, or some such similar measure. |
| So, with that said.... how do "we" compare one to the | | | | It is not possible to say what a share ought to be |
| next to determine whether or not "we're" getting | | | | worth without properly valuing it. Once a real |
| ripped off? SIMPLE!!!! | | | | valuation technique has been used, the fact that it is |
| MARKET CAP / MARKET CAP / MARKET CAP!!!! ( | | | | a penny share is irrelevant. |
| Market Capitalization ) | | | | The falsity of the idea that penny share are in some |
| Once you've set your sights on a JUICY penny | | | | way special is evident if one considers that a |
| play....you need to do 3 VERY simple things: | | | | company can decide whether its shares are penny |
| 1) Find out the TOTAL ( very important ) number of | | | | shares are not by consolidating or splitting its shares. |
| shares issued and o/s ( outstanding ) | | | | What little value techniques based on the penny |
| 2) Take the current price ( the price you see | | | | share idea have is attributable to the fact that penny |
| TODAY in the market ) | | | | shares tend to be those of small companies and |
| 3) Multiply the TOTAL # of shares o/s by the | | | | those whose price has fallen from more conventional |
| current price. | | | | levels. The former are more likely than large |
| TADA!!!! You're done!!!! ( how hard was that?!?! | | | | companies to have good growth prospects. The |
| )example: | | | | latter are more likely to be recovery stocks |
| ABC Company ( lets say they looking for GOLD...have | | | | Investors are better off using the more precise |
| a property or 2 ) | | | | technique of screening by market cap to find small |
| 6 million shares o/s | | | | companies, and looking at historical data to find |
| 0.30 ( Current Price ) | | | | recovery stocks. |
| 6,000,000 x 0.30 = $1,800,000 | | | | ( now apply what you've learned to my previous |
| Now... the trick is to find another company that does | | | | postings!!! ) |
| the very same thing ( looking for GOLD ). Apply the | | | | Let's make $$$$ together!!!! |
| same multiple to that company now. Compare the | | | | This article was written by placer_foot of |
| two. | | | | Stockhideout. |
| So, with that said... let's compare ABC Company to: | | | | |