The Best Penny Stocks To Buy… How We Find Them

| November 5, 2014 | 0 Comments

money-magnifyFinding the best penny stocks to buy…

Every morning I roll out of bed and get myself to the office.

I’ve got one goal.

Find the best penny stocks to buy today.

It’s a simple task, but it’s not easy to do.  I spend hours and hours reading, writing, taking notes, and doing research.

It’s a “boil the ocean” type of job.

What’s that mean?

When I was on Wall Street, every new analyst would get a boil the ocean project.  It was a project that had no possible end… you just spent time on it every day… updating databases, identifying industry trends, finding new companies, finding new technologies, finding new entrepreneurs.

The project never ended – like boiling the ocean!

Anyway, every day my job is to find the next great penny stock… and it never ends!

But I’m not complaining…

Today I’m going to share with you some secrets on how I work…

How I Find The Best Penny Stocks To Buy

When it comes to identifying the best penny stocks, you’ve got to have a system… and this is my system…

I look at things like:

  • Great stories from other sources
  • Inspiring industry news
  • Global views of the markets
  • Random finds…

So let’s look at the sources one by one.

Finding the best penny stocks to buy from other articles…

As you can imagine, I read.  I read a lot.

I’ll start by looking at the top news stories, and that often starts with Yahoo news… then it’s on to company specific alerts that are forwarded to my email.  Then I hit the major news sources… The Wall Street Journal, Investor’s Business Daily, The Financial Times.

Then it’s onto the blogs…

I target small business blogs, looking for ideas, trends, and topics.

Now to be honest, I don’t find a ton of new penny stock ideas with this initial research.  But what I do get is a good macro picture of what’s going on in the markets.

For example, how oil prices are trending, what impact offshore drilling has versus onshore.  What oil consumption changes are looking like.

I also look for industry news and country specific news – China’s growing, India’s selling gold, Brazil is opening up oil drilling.

These little bits of information help me gather up a bigger picture of what’s happening in the world.

What you’ll find interesting is my lack of focus on the markets…

You see, while I keep an eye on the S&P 500 and the major markets, I really don’t focus on those data points for my trading.

Penny stocks are all about the company… and less about the market… so unless the market is in a freefall (where I’ll stop buying for a while), it really doesn’t impact my research and trading.

Finding the best penny stocks to buy from industry news…

So at this point I’ve got an idea that seems to be everywhere…

Let’s use Gold as an example…

I like gold and while I wouldn’t recommend buying the shiny metal for your safe, I would look at some of the penny stock gold players.

So, once you get honed in on an idea, you start focusing on the industry.

There’s more than just having an idea, you’ve got to dig in.  Who’s finding gold (the exploration companies)… who’s mining it?  What about processors and middle men between the producers and end users.

Who uses gold… what industries are they in, what percent of their costs is made up of gold… in the Jewelry business, it’s expensive!

This gives you a GLOBAL view on finding the best penny stocks to buy…

Now keep going… start digging in… start looking for gold exploration, miners, producers, users… and start looking at the small penny stocks in that industry.

So how do you find the penny stocks?

By now you should have a list of company names… players to give a look at…

Focus on the big players first… These won’t be penny stocks but it’s the start of the path.

Read their filings and press releases…

Read the company filings, many list trading partners, customers, competitors… jot those company names down and keep going…

Your list is growing!

Once you’ve gone as far as you can, visit the exchange websites.  Plug in your company list and see who else they put in that industry or sector.

Jot down those companies…

As you go through the exchanges, you can visit the NYSE, the NASDAQ, the OTCBB, the pink sheet markets…  all list other companies by industry.

Now you probably have a list of 150 or 160 companies (or more) in one space.

Now you can take a global view and look at international exchanges like London, Canada, Japan, Frankfurt, and others (if you don’t mind international investing).

By now you should be up to 200 or more companies… and if you’re doing it right, more than half of them should be penny stocks to research further.

Researching individual stocks is a whole other article!

So that’s how I find my best penny stock ideas…

But there is one more type of find that I’ve got to explain… It’s the random ones.

Randomly finding the best penny stocks to buy…

You see, when you’re doing all this research, you’re going to come across some random companies.  They won’t fit into the industry you’re focusing on… they may do something strange and different…

They are the square peg that doesn’t fit the round hole!

These are the most important ones to keep an eye on… often times they benefit from great trends in one industry, but would normally be classified in another.

For example, I found an investment called Primedia who did real estate magazines… while researching the real estate market.  They didn’t fit into the industry… they didn’t have a nice neat classification… but I made 700% on my investment all because I kept my eyes peeled.

I hope this helps answer your question on how to find the best penny stocks to buy!

What do you think?

Am I right on… or am I way off?

Did I forget something?  Let me know by responding to my email, or leave a comment on the website!

Profitably Yours,

Penny Stock Research

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Category: Investing in Penny Stocks, Penny Stock Tips

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