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Crucial Criteria Found in Great Penny Stocks

Part of the Penny Stocks For Dummies Cheat Sheet

When you find a penny stock that exhibits the following characteristics, you may have uncovered an investment that will grow in value for the coming months and years:

  • Growing market share in an expanding market.

  • The shares represent compelling value at current levels compared to other stocks in their peer group when based on financial valuation ratios, such as price-to-earnings or price-to-sales.

  • Approaching profitability through a combination of growing revenues and expense reductions.

  • A management team that has had great successes with previous businesses.

  • Solid intellectual property (patents, trademarks, and copyrights) that ensures survival against the much bigger players in the space.

  • High product acceptance among customers, which results in very low customer attrition.

  • Effective marketing, which is not only profitable but also accentuates the brand.

  • Indications, through technical analysis, of higher near-term prices based on money flows, share price momentum, and buying indicators such as moving averages.

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