Penny stock fund

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What are Penny Stocks?

  1. penny stock is a relatively low-priced stock which has a smaller market capitalization. In India, stocks which trade under Rs. 10 falls in this category.
  2. penny stocks are thinly traded and even if the price zooms in the next few days, you may not be able to off-load all the shares. Any attempt to sell in large quantities only brings the price down.
  3. Penny stocks has a higher level of volatility, resulting in a higher potential reward and a higher level of risk.
  4. Since they are prone to price manipulations, sudden delisting and regulatory scrutiny are an added risk.

Price manipulations in Penny stocks

Since the market cap is low, they are easily manipulated by operators who lure unsuspecting investors and dump worthless shares on them. They first create a buzz around a stock, trade among themselves to push up the price, and then nudge investors to buy at high prices. When the price rises, they sell their shares, causing prices to plummet. Remaining investors are left with what is in many cases a worthless security.

Penny stocks are hard to vet

Public companies are required to file regular reports to present the status of their business via audited financial statements. They’re also required to meet minimum standards to be listed on major exchanges, often including a floor for earnings, number of shareholders and the market value of those shares, among other things. These stocks are constantly tracked by analysts and researchers, who quickly bring out any blemishes in the business into the light of the day. On the other hand, penny stocks have very low number of analysts covering them. Also, the financial statements of these companies are less comprehensive and transparent, making them very difficult to research and accurately price.

Penny stocks can be hard to sell

You don’t make any money on an investment until you sell that investment and realize a gain on the sale. Penny stocks bring together the dangerous combination of low liquidity and high volatility. They’re often hard to unload, due to all of the above and because the market for these securities is smaller. At the same time, they can be subject to wild and rapid price swings, which means the price could shift dramatically before you find a buyer.

If the low price is the main attraction here, you should know there are other investments that are similarly low-cost but come with far less baggage. If you want to earn high returns by taking high risk, Mutual funds is the right way to go. Scripbox’s research team has curated the Small & Midcap portfolio just for this reason. This portfolio consists of 3 funds that have historically given high returns with high volatility. These funds invest in smaller size firms which have the potential to grow at a much faster pace.

It has delivered an annual return of 21% over the past 10 years. A monthly SIP of Rs. 5000 in this portfolio started 5 years ago is worth Rs. 4.93 lakhs today.

So, instead of betting on obscure penny stocks, you can invest in Mutual Funds which are professionally managed by fund managers, whose every day job is to track the markets and manage investments. All mutual funds are governed by SEBI and are highly secure and transparent. You can start investing with as low as Rs. 500. In short, mutual funds today, provide the right ground for investing with the least effort, and with the potential for maximum returns.

Start your investments in the best mutual funds at www.scripbox.com

Sours: https://scripbox.com/mf/avoid-investing-in-penny-stocks/

How to Invest in Penny Stocks for Beginners

For many beginner investors, the first logical stop is penny stocks. As the name suggests, penny stocks are those companies that trade with a low share price, often less than $1. It's understandable to see why rookies get hooked by the dream of buying into a company for only few cents and then selling for a substantial profit when the price trades back in the multi-dollar levels. The extremely low prices allow an investor to hold thousands of shares for a relatively small amount of invested capital. With that scale, the gain of just a few cents per share can translate into big percentage returns (the reverse is also true, of course).

But here's a fair warning: Such stocks are generally considered to be highly speculative and high risk for several reasons: their lack of liquidity, large bid-ask spreads (how much the ask price exceeds the bid price for an asset), small market capitalization, and limited following and disclosure.

Still, if you feel you are ready to start trading penny stocks, continue reading.

Key Takeaways

  • Penny stocks are those companies that trade at share prices often less than $1.
  • Penny stocks often trade off the major market exchanges because the big stock exchanges, such as NYSE and Nasdaq, have listing requirements which must be met, among them a minimum share price.
  • Lack of liquidity can be a major challenge with penny stocks; it's not uncommon for an investor to get stuck in a position for several days or weeks until there is enough supply or demand to enter or exit a position.

Understanding Penny Stocks

The Securities and Exchange Commission (SEC) defines a "penny stock" as a security issued by a small-cap or micro-cap company that has a market capitalization of less than $250 million. Others define penny stocks as those that trade at less than $5 per share (though some experts choose to adopt a lower cut-off value of $1 per share). They often have little or no financial history, or a bad one: The underlying company may be close to bankruptcy. Think of them as the opposite of blue-chip stocks, in short.

A penny stock usually trades off the major market exchanges. That's because the big stock exchanges, such as NYSE and Nasdaq, have listing requirements for the companies trading on them. Nasdaq will delist a company's shares if it fails to maintain a minimum closing bid price of $1 per share following 180 days. As a result, people interested in trading penny stocks often turn to the over-the-counter market (OTC). The OTC Markets Group organizes securities into tiered marketplaces that reflect the integrity of the operations, level of disclosure, and degree of investor engagement.

How To Invest In Penny Stocks

Narrowing Down Trading Candidates

Now that you understand where to trade penny stocks, the next step is to determine what stock to trade. One popular method is to use stock screening tools, such as the one found on the OTC Markets website or Finviz. Screening for stocks with a price under $1 is the easiest way to narrow down the trading universe. From here, you can filter the list down further depending on your strategy and risk tolerance. Maybe you are only interested in penny stocks that conduct business within the sector of drug manufacturing, for example. In this case, you’d make the necessary adjustments and then run the filter. 

Once you get the hang of using Finviz’s stock screener, your list, based on the filter above, should look something like this:

No.TickerCompanySectorPrice ($)
1ASRTAssertio Holdings, Inc.Drug Manufacturers0.99
2CPHIChina Pharma Holdings, Inc.Drug Manufacturers0.67
3NEPTNeptune Wellness Solutions, Inc.Drug Manufacturers0.66
4RMTIRockwell Medical, Inc.Drug Manufacturers0.65
5SNDLSundial Growers, Inc.Drug Manufacturers0.72
6TLGTTeligent, Inc.Drug Manufacturers0.45
7TXMDTherapeuticsMD, Inc.Drug Manufacturers0.77
8ZOMZomedica Corp.Drug Manufacturers0.60

Source: Finviz.com | as of Sept. 11, 2021

Opening an Account

There are many factors to consider when opening a trading account, such as ease of transferring funds, fees, and customer service. Brokers specialize in different areas, so take your time to shop around for one that will meet your needs. For penny stock investors, one aspect to pay particular attention to is the fee structure. Some brokers charge commissions on a per-share basis. This structure is usually set at a certain rate for an initial number of shares, and then another rate for each additional share.

A per-share structure may be better suited for investors who are buying a relatively low number of shares and may not be the best for penny stock traders. It may prove more useful to choose a broker that offers a relatively low flat rate per trade, regardless of how many shares are involved. The lower the flat rate, the less impact that fees and commissions have on the final return.

Understanding the Risks

When it comes to trading penny stocks, it's extremely important to understand the risks involved. Since most institutional investors, such as mutual funds, index funds and money managers are prevented by charter from trading penny stocks, these equities generally lack a following in the investment community. Therefore, liquidity is a serious concern: It's not uncommon for retail investors to get stuck in a position for several days or weeks until there is enough supply or demand to enter or exit, experiencing serious price fluctuations along the way. With penny stocks, it is easier for traders to manipulate prices and make them look weak or strong.

The Bottom Line

When it comes to investing in penny stocks, tread with caution. In most cases, these companies are small-cap stocks and are susceptible to major volatility. If you feel like you understand the risks and are ready to proceed, the first step is to find a broker, fund an account, and then find a suitable trading candidate. Stock screeners are probably your best bet in narrowing down the universe of stocks so that you can find one that meets your trading style and risk tolerance.

Sours: https://www.investopedia.com/articles/investing/091114/how-invest-penny-stocks.asp
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Forget Penny Stocks: 2 ETFs That Can Double Your Money With Zero Effort

Penny stocks may seem like a smart option, especially if you're on a tight budget. These stocks often trade for less than $1 per share, so you can get a lot for your money -- even if you can't afford to invest much.

However, penny stocks can be incredibly risky. They're often extremely volatile, experiencing dramatic price shifts from day to day. It's also often harder to sell penny stocks, so you could end up stuck with your investments when you're ready to get out.

Four stacks of dollar bills, each getting progressively higher.

Image source: Getty Images.

Finally, it's nearly impossible to thoroughly research these stocks. Penny stocks are often issued by smaller companies that don't have as much public information available as larger corporations. That can make it challenging to determine whether the stock is a good investment or not.

Fortunately, there are other types of affordable investments that don't carry nearly as much risk. With these two exchange-traded funds (ETFs), you can double your money with no effort.

1. Schwab US Small-Cap ETF

The Schwab US Small-Cap ETF(NYSEMKT:SCHA) tracks the Dow Jones U.S. Small-Cap Total Stock Market Index. It contains close to 1,800 holdings spanning a variety of industries, including healthcare, information technology, financials, and industrials.

Small-cap stocks can sometimes be riskier and more volatile than larger corporations. However, they also have higher potential for growth, so you could experience higher-than-average returns.

This ETF was founded in 2009, and since then, it has experienced an average rate of return of around 14% per year. At that rate, if you were to invest $1,000 right now and didn't invest any additional cash, you'd double your money in around five years.

You could earn even more if you were to continue investing consistently. Say, for example, you invest $1,000 now and also continue investing $100 per month. If you were earning a 14% average annual return, you'd have:

  • Close to $10,000 in five years
  • Nearly $60,000 in 15 years
  • Around $480,000 in 30 years

Keep in mind, too, that ETFs require very little upkeep. They perform best when you leave them alone for as long as possible. All you need to do is continue investing and let the fund do all the heavy lifting.

2. Vanguard S&P 500 ETF (VOO)

The Vanguard S&P 500 ETF(NYSEMKT:VOO) tracks the S&P 500, meaning it contains 500 of the largest companies in the U.S. It's generally considered one of the best representations of the stock market as a whole. This makes S&P 500 ETFs one of the safest types of investments out there.

Despite their relatively low level of risk, S&P 500 ETFs can still experience high returns. Since the Vanguard S&P 500 ETF was created in 2010, it has earned an average 15% annual rate of return.

Similar to the Schwab fund, investing $1,000 right now would double your money within around five years with no effort. In addition, if you were to invest $100 per month earning a 15% annual return, here's how much you'd have over time:

  • Just over $10,000 in five years
  • More than $65,000 in 15 years
  • Nearly $588,000 in 30 years

You don't need to put your money behind extremely risky investments to make a lot of money in the stock market. By investing in these ETFs instead, you can grow your money easily and safely.

Sours: https://www.fool.com/investing/2021/03/19/forget-penny-stocks-3-etfs-that-can-double-your-mo/
07 रूपये का PENNY शेयर बड़े - बड़े MUTUAL FUND पैसा लगा कर बैठे हैं - Latest Share Market Tips

Definition of 'Penny Stock'

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Proposed definitions will be considered for inclusion in the Economictimes.com


Definition: Penny stocks are those that trade at a very low price, have very low market capitalisation, are mostly illiquid, and are usually listed on a smaller exchange. Penny stocks in the Indian stock market can have prices below Rs 10. These stocks are very speculative in nature and are considered highly risky because of lack of liquidity, smaller number of shareholders, large bid-ask spreads and limited disclosure of information.

Description: In western markets, shares that trade below $1 are usually called penny stocks. But this basket also includes stocks priced under $5. Penny stocks are highly risky, but some of them also have the potential of turning a small investment into a fortune. For example, if you own 50,000 shares of a penny stock priced at $1, even a $1 rise in the share price can give you $50,000 in a single day. This is not possible in the case of a large stock, because it would require large capital to buy such a large volume of shares. There are a lot of downsides to penny stocks too, as they are prone to price manipulations, sudden delisting and regulatory scrutiny. One can move the stock by buying thousands of shares and create a spike without leaving any cue for the average investor to know whether the spike in price is genuine or manipulated. Also, penny stocks are more prone to scams, as they are often not regulated by a national-level stock exchange. Because of all these risks, stock exchanges put these types of stocks in a different category, called as trade-to-trade basket. In this category, no intraday share trading is allowed. Transactions have to be compulsorily settled on gross basis, which means you must deliver the shares on the same day if you have sold them or take delivery if you have bought them.

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Sours: https://economictimes.indiatimes.com/definition/penny-stock

Stock fund penny

Penny Stocks to Watch for October 2021

Last month, I talked about how to handle investment losses gracefully, reaping the hard lessons of the stock market as you re-assess your trading goals. Almost as important as coping with loss is the way you handle your successes.

If you have invested thoughtfully in a well-researched stock (or even if you've just encountered a real stroke of good luck), you may find yourself with more money than you know what to do with. This "victory lap" period can be an intensely dangerous time for investors, however. Many forget all the hard-won wisdom they've learned down the line and start throwing their money into any stock with an exciting story.

Instead of throwing caution to the wind, put even more of your time into due diligence. Trust your instincts, but stay cautious, avoid getting greedy, and keep a close eye on those fundamentals rather than the narrative a company's Investment Relations firm is selling.

Below, you'll find some updates on some intriguing and high-potential equities, as well as a few new ones I've been looking into. May they bring you even greater profits as you proceed along your investment journey.

Some of the set-ups I describe below may no longer be relevant or intact as of the time you read this article. Please conduct your own due diligence. Many stocks mentioned here were also discussed in the Peter Leeds Newsletter. Peter may own shares in some of the investments mentioned, in which case that fact will be clearly indicated. Please note that penny stocks are notoriously volatile.

First, Some Updates

BRF S.A. (BRFS)

I introduced BRF S.A. (BRFS) to readers of this column in September, and the ticker's activity since then has been nothing short of ridiculous. We're talking intense volatility here, just as I had predicted last month—but even I wasn't expecting this much of a rollercoaster. 

The good news is that the bulls seems to have wrested control away from the bears, at least for now. As of the end of September, when I was writing this update, BRFS was ultimately up 8% over the past month and 12.35% over the past week—all on the back of zero news from the company itself.

I think it's likely that we'll see more volatility from this Brazilian food company, but I remain optimistic on its prospects given strong financial ratios and still-much-cheaper valuation than its peers. In particular, if it manages to climb above the $5.20 resistance level, BRFS shareholders could see some substantial gains ahead.

Sigma Labs, Inc. (SGLB)

In contrast to BRFS, Sigma Labs, Inc. (SGLB) had a hard September, heading up to $4 by the middle of the month but then careening downward again. This resulted in an overall 7.5% drop from the time I featured the stock in this column until the last few days of the month.

Basically, investors were mildly enthused by a contract win. However, the excitement wore off, and now Sigma Labs stock is stuck at around $3.15 levels.

Despite my disappointment that its initial climb wasn't more sustainable, I believe that it's too early to give up on SGLB. The earnings per share (EPS) figures are simply too excellent to ignore (65% growth this year, 35% growth projected for next year), and the balance sheet is rock-solid.

In addition, with 80% of manufacturers purportedly looking to increase their use of 3D printing technologies, Sigma Labs could be a major winner over the next year.

Entravision Communications Corporation (EVC)

Since I included Entravision Communications Corporation (EVC) in the June 2021 edition of my "Penny Stocks to Watch" column, it's had a fantastic run from around $4.73/share to a peak of $8.11 at the beginning of September. (That's an approximately 70% theoretical profit for readers.) Even at its current price of $7.11, shareholders are looking pretty smart right now.

In my opinion, Entravision's penny stock days are likely behind it, barring some catastrophic event. Its moving averages are pointing to a "Strong Buy" signal, and its relative strenth index (RSI) has returned to normal (i.e., not overbought) levels.

One potential issue is that EVC is doing SO well—as with, for example, its consolidated adjusted EBITDA ascending 932% over the prior-year period, as of the second quarter of 2021—that it will be difficult for the stock to continue hitting this momentum.

The kind of triple-digit revenue and EPS that Entravision is seeing could turn into what Wall Street analysts call "tough comps," meaning the stock may struggle to return to its previous highs and skittish investors could consequently abandon it if/when its results grow less exciting.

While I believe it's highly possible that EVC will continue to climb by at least 20% more over the next few months or so on the back of its global expansion plans, it looks for now as if it may be taking a breather. Lower entry points may be ahead, so watch this one closely.

Some New Ones

PaySign, Inc. (PAYS)

PaySign, Inc. (PAYS) is undoubtedly one of the strangest penny stocks I've come across in my many years combing through these low-priced equities. It quite literally deals in "blood money," providing prepaid gift cards to American plasma donation centers, which subsequently use them as incentives to bring in potential donors.

The blood garnered from American donation centers is often sold to pharmaceutical companies and then used in medical treatments for hemophilia and autoimmune disorders, as well as for chemotherapy. Two-thirds of the global blood supply comes from the United States, and sales of blood plasma products come to around $25 billion per year.

In 2020, plasma donations in the U.S. dropped around 20%, and PaySign's revenue suffered given that it makes money from the fees on its prepaid cards. As of the end of 2020, the group's sales had plummeted around 30% on an annual basis. Meanwhile, the world is facing a shortage of many important plasma-based medications, without which people will most certainly die.

Even though the delta variant is still a major concern, there are many signs that PaySign's plasma business will recover in 2021 and 2022. (In fact, the company says that donations are already recovering significantly on a month-to-month basis.) The government stimulus will end or has already ended in most states; childcare has opened back up; and people who are afraid of contacting COVID are likely already double-vaccinated.

The company is therefore expecting a large resurgence of business in the third quarter of 2021 and beyond, to the tune of "a range of $29 million to $32 million, reflecting growth of 20% to 32%, and adjusted EBITDA of $350,000 to $1.9 million," per management's comments in the second quarter 2021 earnings call.

This represents tremendous upside potential for PaySign, in my opinion, and combined with a strong balance sheet and price-to-free cash flow (P/FCF) ratio of 5.04, I believe that the company is almost certainly undervalued.

Alto Ingredients, Inc. (ALTO)

Alto Ingredients, Inc. (ALTO) is a penny stock right now, but I don't expect it to stay that way for very long. Not with projected EPS growth next year at 71.54% and a forward price-to-earnings (P/E) ratio of 5.32, both of which suggest that 2022 will be an excellent year for ALTO shareholders. And not with—in my opinion—a recession-proof suite of products involving "specialty alcohols," which are used in such diverse (and in some cases essential) goods as cosmetics, cleaning products, pharmaceuticals, animal feed, pet food, and biodiesel feedstock.

Like many of its low-priced peers, ALTO is a turnaround story. Despite its large roster of blue-chip clients—with household names like Chevron, Cargill, and Procter & Gamble among them—its five-year revenue history is dispiriting.

More recently, however, the company has been pivoting from an ethanol manufacturer to a specialty alcohols producer. Its sales have subsequently shot up over the past two quarters, climbing approximately 30% and 35%, respectively.

Unfortunately, Alto Ingredients' cost of goods sold (COGS) has also increased over those periods by roughly the same percentages. I believe that this is a necessary stage in ALTO's journey toward sustainable growth, however, as the group undertakes to transition its facilities toward producing specialty alcohols.

The full fruit of its turnaround may take a few more months to appear. But once potential shareholders get a load of all of ALTO's abundant potential, I think its prices may skyrocket—and relatively soon, at that.

Best Brokers for Penny Stocks

Interactive Brokers

Interactive Brokers' very low per-share trading commission of $.005 ($1 minimum per trade) and up-to-the-split-second real-time margin calculations are ideal for penny stock traders. IBKR Lite clients can trade penny stocks for $0.

Pros
  • Low commissions, maximum 1% of trade value for IBKR Pro, $0 for IBKR Lite

  • Streaming real-time data, including account information 

  • IBot, IB’s AI-powered online assistant, can help find features

Cons
  • Data streams on only one device at a time 

  • Traders Workstation a steep learning curve

  • IBKR Pro customers charged fees to trade, though they are low

Charles Schwab

Schwab's research pages point out the exchange on which a stock trades, which will keep you informed of the inherent risk. There are a variety of platforms available; the StreetSmart platforms have customizable charting and streaming real-time quotes. Schwab does not charge trading commissions on all stocks (including penny stocks) and ETFs.

Pros
  • Excellent screeners available on StreetSmart Edge

  • Free access to a wide array of news feeds

  • Strong customization and personalization options on StreetSmart Edge

Cons
  • The sheer number of features and reports available sometimes overwhelming

  • Transaction history for just 24 months online

  • Uninvested cash not swept into a money market fund

Penny stocks are volatile and can generate catastrophic losses. Price levels in this article are hypothetical and do not represent buy recommendations or investment advice. Keep in mind that it's your responsibility to make trading decisions through your own skilled analysis and risk management.

Peter Leeds is the author of several books, including the international bestseller, "Penny Stocks for Dummies." He and his team also issue a newsletter devoted exclusively to penny stock picks and analysis, as well as a popular YouTube channel PeterLeedsPennyStocks.

Sours: https://www.investopedia.com/updates/top-penny-stocks/
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