What Are Pennystocks?

Pennystocks are capable of turning small investments into huge profits. You hear this a lot about certain stocks but a penny stock is uniquely capable of making this come true. The key is not in the value of the company behind the stock. Instead, it is the stock’s low price, which makes it very powerful.

If you buy into a $500 stock from some mega corporation, what are the chances that it will double in value overnight? The chances are slim, to say the least. Your profits will be determined by the number of shares that you hold and the proportional increase in the value of those stocks. This is what many new investors do not understand. If you can only afford to buy 100 of those $500 stocks, then even an increase of five whole dollars in the stock value would only net you $500.

With pennystocks, you are in a completely different situation. These low-priced shares are usually worth less than a dollar a piece. These stocks go through price fluctuations just like any other stock. However, imagine a penny stock worth just 50 cents per share. With the many that you used to buy 100 of those mega cap shares, you could buy 100,000 of these shares. This stock only needs to gain ten cents in value to earn $10,000 for you.

Where Can I Find Pennystocks?

Finding pennystocks can be a little more difficult than looking for regular stocks. They are not usually listed in the major stock exchanges because their companies have not filed with the SEC. However, you can find them in the over-the-counter market, in which you will buy the pennystocks directly from the present holders of the stock.

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