Penny Stocks For Dummies, 3rd Edition
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Your contact at the penny stock company will usually (but not always) be very optimistic for the company's prospects. Take her hopes and expectations with a grain of salt. Instead of trusting everything she tells you, try to delve into her answers to glean what she is really saying.

If she says that the penny stock company is growing rapidly, but also says that the headcount is half what it was a year ago, then something does not make sense. Ask for clarification.

If she tells you that the company is expecting to sign a huge, new contract, don't believe it until the contract is signed and announced to the general public. IR contacts are notorious for explaining what they hope will happen as if it were assured. Almost every company has a big contract in the works that they can't speak about just yet. Their hopes turn into reality only about half of the time.

More important than the actual details and numbers that the IR contact tells you is her morale. Great penny stock companies on the rise have employees who love what they do, are excited about what's to come, and thoroughly enjoy telling you every detail of the company's story.

Getting to the point where you can spot the difference between pleasant responses and genuine excitement takes a lot of patience and more than a single phone conversation or two. The good news is that you start to find how to interpret management and IR comments with your first few phone calls and improve even further with each subsequent conversation. Talking with IR reps will soon become an effective and profitable research technique.

About This Article

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About the book author:

Peter Leeds is a highly respected authority on penny stocks who has been quoted in major media outlets and published in Forbes and Business Excellence Magazine. His popular Peter Leeds Stock Picks newsletter, available at peterleeds.com, has sold more than 42,000 subscriptions. He has more than 35,000 YouTube subscribers.

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