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How to Pick a Great Stock

Jan 16, 2008
Those who pick stocks are not always accurate but over time the average is usually a positive one. There are so many opportunities to jump on hot stock picks throughout the years. Learning which ones to jump on at the right time will translate to wealth. Unwisely jumping on the wrong picks at the wrong time can cost you a lot of money.

Penny stocks are definitely risky and that is a factor when deciding what picks to recommend. Great effort is made to minimize risk as much as possible but risk is always there, even more so with penny stocks. As a general rule of thumb you should never invest more than 20% of you whole portfolio in penny stocks.

There are a number of factors used to calculate a good pick. You can use these factors on your own or simply follow our picks. A couple of these factors include recent industry news, upcoming company marketing campaigns, and growth history. There are of course other factors used in this calculation as well.

Watching the industry of a particular stock is very important. The behavior of any stock depends on the direction of the industry it falls under. Penny stocks are definitely sensitive by nature to this. If you own a penny stock in the oil industry and the price of oil starts to go down then you wont be making much money. This is not to say that stocks cant go up in value during an industry downward trend because they can but in general it is the opposite.

If you get your hand on a juicy piece of information about a company before it hits the news stands you are going to make some serious money. Usually the best information to get your hands on is the fact that a company is about to launch a new marketing campaign. Marketing means more stock awareness which means more investors which means more money. Stay on the edge of the news and you will profit tremendously.

Past performance is not always a good predictor of future performance. However, if that history has been consistent and you have no reason to think that the future would be any different then past performance may be a great factor in deciding whether to lay down some money on a particular stock.

We have our own list of factors that we use to determine our best penny stocks and it is a formula that has been consistently successful. Create your own list of factors to vet a stock or follow our picks. Never invest with money you cannot afford to lose.
About the Author
Scott Johns conducts research and analysis of stock market picks for a penny stock analysis company. To check out Best Penny Stocks and Picks for some of his company's latest picks.
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