The Key To Picking Winning Penny Stocks

| July 16, 2012 | 0 Comments

When I look for small cap companies to invest in, there are several important factors I consider.  However, one aspect stands out above all the rest.  If a company has this key ingredient, I’m willing to overlook almost any other drawbacks.

I’m talking about innovation.

Regular readers know I’m a huge fan of innovative companies.  They are the game changers… and the stocks with the best chance to make investors a fortune.

To give an example of why innovation can be such a big deal, let’s look at Amazon (AMZN).

Last week, I wrote a bit about AMZN’s innovations.  I mentioned how rumors are swirling that the company will be entering the smartphone market.

Since then, more information has come out – and it appears the rumors are true.

Here’s what’s really interesting…

Amazon can leverage its strengths to make a huge splash in the smartphone world.  After all, the company is a leader in both content providing and cloud computing.

You see, an AMZN smartphone would have access to all the content a user has in their cloud.  That means books, music, movies, games, and more already being used on a Kindle or Kindle Fire.

Think of all the possibilities with the ability to share between various AMZN devices.

More importantly, it gives Amazon several business model options for their new smartphone.  They don’t necessarily have to just build the phone… they could also serve as the carrier.

The company could possibly subsidize the cost of a cell phone plan through advertising and selling content.  In other words, you might be able to buy an AMZN smartphone and bypass cell phone companies altogether.

Talk about a game changer…

This model could completely turn the telecom industry on its head.  That’s what I’m talking about when I refer to innovation.

So how does this apply to penny stock and small cap companies?

In some cases, a small company may have their own innovative ideas and products.  If you think about it, a lot of today’s leaders started out small.

On the other hand, some smaller players’ products may compliment a big company’s innovations.  If you take AMZN for example, there might be small companies providing parts or content for the new smartphone.

The key is finding ways to make innovation a part of your investment strategy.  It can really do wonders for your portfolio.

Yours in profit,

Gordon Lewis

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Category: Penny Stock Tips, Technology Stocks

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