| Research is the cornerstone for successful penny | | | | of the product or service of the penny stock |
| stock investing. Without learning how to research you | | | | company. To find customers, request them from the |
| will have to resort to following other people's advice. | | | | sales department or management of the company. |
| Anyone can obtain and refine their research skills if | | | | Be aware that the customers probably given to you |
| they are willing to put in the effort. Here are several | | | | will already be prescreened, so probe deeply with |
| tactics to help you find promising companies and | | | | questions. An example: Ask how long has he used |
| some of the best penny stocks: | | | | the product or service or has he been dissatisfied in |
| | | | any manner? You're seeking direct and honest |
| 1. Determine the size of the company. This is an | | | | answers. |
| important step as a company with many employees | | | | 6. Determine the competition. Every company in |
| needs to meet a higher payroll than a company with | | | | every industry has competition. Try to evaluate if a |
| a few employees. The more employees a company | | | | company has opportunity in the market they serve |
| has, the more revenue and cash on hand it must | | | | or is the competition so entrenched, common sense |
| have to pay those employees. This is also an | | | | tells you the company may have difficulty surviving. |
| indicator that this is not some small company | | | | You're looking for companies and stocks that have a |
| operating out of a closet and just looking to pump up | | | | very good chance of capturing market share. |
| its stock. | | | | 7. Does the company belong to any trade |
| 2. Is the company hiring? You can find this out by | | | | organizations? Trade organizations are usually |
| looking up the company profile on a financial website. | | | | restricted to members who meet strict criteria. When |
| If the information is not available, contact the | | | | you see a business listed with a reputable trade |
| company and request to speak to a human | | | | organization, you know the business must be |
| resources manager or high level employee. If you do | | | | meeting the requirements of membership and is |
| get in touch with a manager, ask them what | | | | serious about their business reputation. |
| positions they are hiring for. A company that is hiring | | | | 8. Contact creditors. Creditors are good sources for |
| is looking to grow and expand. | | | | determining the financial strength of a company. By |
| 3. Call the company and pose as a current or | | | | contacting creditors you can find out how much |
| potential customer making a product inquiry. If you | | | | money the penny stock company owes. Creditor |
| find enthusiastic and thorough responses, this is a | | | | information may be difficult to find, but if you can, |
| good indicator of a positive environment. On the | | | | this is a good due diligence tactic. |
| other hand, if you find a lack of professionalism and | | | | 9. Review the SEC Filings. Reporting public companies |
| timely response, this should raise a red flag. | | | | are required to file quarterly and annual reports. You |
| 4. Call the suppliers of the company. Getting a hold of | | | | can find this information from the SEC or online. |
| the suppliers may be difficult as small companies just | | | | 10. Visit the company. It's not as crazy as it sounds, |
| aren't forthright with this information. If you can't find | | | | especially if you looking to invest a sizable amount of |
| suppliers on your own, you can call the company and | | | | money. By visiting the company, you will find signs all |
| ask for them to name a few. The goal here is to find | | | | around you of the condition of the company. By just |
| out how suppliers view the company. If a company is | | | | being welcomed in the first place indicates the |
| in good standing with its suppliers [which usually | | | | company has nothing to hide. |
| means it's paying its bills], than this is another good | | | | These research tactics are fundamental in nature, but |
| indicator. | | | | will go a long way in helping you distinguish the real |
| 5. Contact customers. Customers are the very users | | | | penny stock companies from the rest of the pack. |