Penny stock picks provides a wonderful opportunity to investors to make good return on their investment. Like any other business or investment penny stock picks also involves risk however understanding fundamentals will help you to stay ahead in this game. A time when lot of emphasis is given on investment it is very wise to investment 5 percent in penny stocks and if your investment portfolio doesn’t have penny stock then you are definitely missing out significant opportunities. This article will help you to assess and evaluate penny stock picks.

First let us understand the meaning of penny stock. Penny stock constitutes of companies with a market value under $200 million and a share price less than 5 dollars. These emerging companies due to its small size tend to be more volatile than blue chip companies.

Now let us discuss fundamentals which are very important and will definitely help you in choosing the right penny stock.

• Study and research company profile thoroughly. Find out the industry they are into and how is their performance in that respective sector. There are few industries in which the growth is very high so investing in them would be a profitable deal.

• Never touch stock of a company with value under $10 million as investing in these companies would be risky because of two reasons first they may anytime wind up their business and secondly due to low market capital and volume traders can easily manipulate these stocks.

• It is good to only invest in companies which are listed in main exchange. Companies which are listed in little known exchanges may be fake and if you investment in these stocks then the chances are that you will lose your hard earned money.

• Financial documents are very useful in learning and assessing financial position of the company. It contains information like total market cap, book value, yearly highs and low and lot of other vital information. Learn how to evaluate these financial statements you can take service of an expert to learn it. Your right decision will help you earn lot of money in future.

Most important thing to remember about penny stock is that the price of shares can easily be manipulated so very carefully research and understand pros and cons before making any investment.

You can hit a jackpot by investing in share market. Some people think success in share market depends on sheer luck but it is not true. In this field expertise and market knowledge plays important role. You can make a fortune if you know how to pick up the right stock, when to enter the market and when to exit.

So carefully choose your stock and invest today.

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