A penny stock in general trades for under five dollars a share, and as the name implies, sometimes for pennies. Most of the time they’re young companies, or start-ups in speculative markets like mining or technology.
Buying Canadian penny stocks can lead to a big payday when you make the right choice. But the odds against success are high. Penny stocks are almost always involved in riskier ventures, such as finding mineral deposits that can be mined at a profit, commercializing unproven technologies or launching new software.
What’s more, it’s hard for any new company to grow into a profitable business, and it’s even harder in pioneering fields. But it’s relatively easy to launch a stock promotion that purports to have answers to social problems or ways to profit from emerging technologies.
That’s why penny stock promotions are always more common than legitimate start-ups. Penny stock promoters love to make deals—however indirect—with major, household name companies. They find it far, far easier to sell stock to the public if Goldcorp, BHP Billiton or some other major mining company has agreed to look at possibly financing exploration of their mining claims, or if Apple or Intel or some other household-name multinational has agreed to make them a “channel partner” and perhaps someday sell their revolutionary software or “cloud” application. The link with a major gives them instant credibility, especially with investors who are willing to buy penny stocks.
In fact, when a penny stock shoots up on the news of big-company involvement, and the property/program/revolutionary software is still in the early stages of development, it’s often a good time to sell.
There’s room for penny stocks in your portfolio, but at TSI Network we recommend our three-part Successful Investor strategy for the bulk of your portfolio:
1- Invest mainly in well-established, mostly dividend-paying companies;
2- Spread your money out across most if not all of the five main economic sectors (Manufacturing & Industry; Resources & Commodities; Consumer; Finance; and Utilities);
3- Downplay or avoid stocks in the broker/media limelight.
Don’t buy a single penny stock until you read this FREE Special Report, TSX Penny Stocks: Hot Canadian Penny Stocks and How to Invest in Penny Stocks in Canada.
There are still lots of risks to be aware of, even with supposedly promising penny stocks
When you see a list of top penny stock picks online or elsewhere, you may be inclined to invest in one or more of them.
The company has used a share offering to raise the funds it needs to restart a gold mine once operated by an industry giant.
K92 MINING (symbol KNT on the TSX Venture Exchange; www.k92mining.com) has as its principal project the Kainantu gold mine located in the… Read More
The telecommunications cabling company has seen profit double and its share price climb on strong revenue.
DISTINCT INFRASTRUCTURE GROUP (symbol DUG on the TSX Venture Exchange; www.diginc.ca) provides design, engineering, construction and maintenance services to the telecommunications, infrastructure and utilities industries. It operates in Ontario, Alberta… Read More
The most active penny stocks may be a quick way to lose your money
Some investors think the best way to profit with the most active penny stocks is to buy them when they are just barely starting out on a growth phase they hope will… Read More
Pat McKeough recently replied to an Inner Circle Member seeking his recommendation on this junior mining stock. This gold explorer has the cash to continue drilling on its James Bay District sites in Quebec, including the property it shares with industry leader Goldcorp.
Q: Hello… Read More
The best penny stocks can be found, but you should approach them with a healthy dose of skepticism.
It’s essential to avoid letting an investment opinion turn into a fixed idea about the future value of an investment. Instead, keep an open mind. Nobody can consistently… Read More
The tethered-drone maker continues to operate at a loss, although its revenue rose nearly 40% in the quarter.
DRONE AVIATION HOLDING CORP. (symbol DRNE on the U.S. over-the-counter bulletin board; www.droneaviationcorp.com) aims to develop and sell tethered drones to government and commercial customers in the U.S…. Read More
An acquisition and better sales for existing devices have increased revenue for the leading GPS provider.
BSM TECHNOLOGIES INC. (symbol GPS on Toronto; www.bsmwireless.com) makes equipment and software that helps owners of truck, train and other fleets monitor their vehicles using global positioning systems (GPS).
Customers typically… Read More
This biopharmaceutical company has partnered with an industry leader to develop and test cancer treatments. But the shares BioLineRx issued for the deal dilutes investor interests.
BIOLINERX (ADR) (symbol BLRX on Nasdaq; www.biolinerx.com) is a clinical-stage biopharmaceutical company that aims to identify, license and develop promising… Read More
Hot Canadian penny stocks may seem appealing, but there may be significant issues behind the investment
Hot Canadian penny stocks do sometimes pay off, but there are many pitfalls to avoid.
When you buy penny stocks you could have a big payday if you make the… Read More
Be careful with hot penny stocks, which are often risky investments or overhyped marketing ploys
Only a minority of penny stocks ever go on to significant success. And while some hot penny stocks can be a worthwhile addition to the aggressive portion of a diversified… Read More
A stronger balance sheet has prepared this supplier to the oil-and-gas industry for a rebound in the market.
MCCOY GLOBAL (Toronto symbol MCB; www.mccoyglobal.com; No dividends paid) sells power tongs and other hydraulic gear for oil and gas drilling rigs. (Power tongs are large wrench-like tools… Read More
This junior Canadian energy producer aims to double its exploration and development activity this year while it continues to benefit from hedging contracts that let it sell its oil and gas at above-market prices.
DELPHI ENERGY (Toronto symbol DEE; www.delphienergy.ca; no dividend paid) explores for, develops… Read More
It’s imperative to follow our guidelines to pick the best TSX penny stocks
In penny stocks or games of chance, the odds are against you. So, time works against you. The longer or more often you play, the likelier you are to lose.
Not all penny… Read More
If you’re going to buy penny stocks in gold, read this first
Gold is different from other commodities due to its scarcity, its special physical characteristics like freedom from tarnishing and malleability (the ability of a metal to be hammered into thin sheets), its unique suitability… Read More
These penny stock definitions will give you insights into the risks and rewards of penny stocks
Some investors look to penny stocks as a quick way to boost their investment gains. To understand penny stocks better, we’ve compiled a short list of important penny stock definitions… Read More
There are many risks with penny stock investments, and we aim to shed light on those negatives in this article
Penny stock investments do sometimes pay off, but there are many pitfalls to avoid. You should be aware that many penny stocks are little more than… Read More
The maker of waste-gas incinerators plans to increase its revenue by diversifying its expertise and customers outside of the oil industry.
QUESTOR TECHNOLOGY (symbol QST on the TSX Venture Exchange; www.questortech.com), makes waste-gas incinerators for the oil and gas industry.
The company’s incinerator technology aims to help… Read More
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