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Penny Stocks – Good or Bad for Investment

You might have heard about Penny Stocks. Penny Stock is stock available at the cost of a penny. Penny stock is also known as a Junk or Bhangar stock with no fundamentals. Penny stock investment in the rich-poor game. Investors generally remain attracted towards penny stocks as these stocks are cheap and may yield good returns for the investors. Penny stock price range is Rs.1 to Rs.10.

Positive of Penny Stocks –

Positive points related to Penny Stocks are given below –

  • These type stocks are cheap so you can buy these stocks in bulk. You can turn your small investment in to big investment.
  • If the identification of penny stock is done rightly it can give you very good return. These type of stocks are winners of tomorrow.
  • Some Stocks are stuck up as penny stock due to temporary period and it can bounce back and give skyrocketing returns.

Negative of Penny Stocks –

Negative points associated with Penny stocks are given below –

  • It is very hard to find out information about these stocks.
  • Volume transaction in these shares are less so it is very risky to deal with these type of stocks.
  • These companies do not have durable competitive advantages. Investment in these type of stock is done purely based on speculation.
  • These type of company are fundamentally weak or with No fundamentals.
  • Sometimes financial results of these company are also questionable.

penny stocks

How to Trade penny Stock?

Follow the rules given below while trading with penny stocks.

  • Don’t Invest large amounts in the penny stock. Total allocation of these type of stocks in your portfolio should not increase more than 10%.
  • You can keep maximum 3 Penny stock in your portfolio. Keeping multiple stocks like this in your portfolio is risky affair.
  • These type of stocks required continuous monitoring. You cannot adopt invest and forget strategy.
  • Don’t invest on tips. Investing in junk stock based on tips is very risky.
  • Don’t try to average out price by buying additional stocks.
  • Don’t get carried away by success in junk stocks.

Penny Stock Performance in 2017

The performance of penny stocks in 2017 was very good. Many penny stocks have surged by 500% in 2017. One such stock is Padmalaya Tele. A stock of Padmalaya Tele rose up to 496% in year 2017. Other penny stocks that gave very good returns are C&C Construction 318%, Magnum Ventures 237% and Toyam Industries 203%.

Good penny stocks for Investment

As per me penny stock investing is risky affair. However, if you want to invest in penny stock here are good penny stock for the investment. These penny stocks may give very good returns to the investors.

  • R Systems International Ltd – R System International is Computer software company. It is a small cap stock trading at Rs.45. Historically this stock has given good performance and one can expect good return from this stock.
  • Pasupati Acrylon Ltd – Pasupati Acrylon is textile yarn company. The stock is trading at Rs.27. Volume transaction in this stock is average. One can think of buying this stock.
  • PTL Enterprises Ltd – PTL Enterprise is trading company. The stock price of PTL Enterprise is Rs. PTL Enterprise is tyre sector company. The prospective of this stock seems to be good. One can plan to invest in this stock.

Over to you –

What is your take on penny stocks? Is it good or bad for investment?

Do share your views in the comment section.

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