If you want to find really cheap stocks, good penny stocks for 2011, you will need some penny stock tips.
Why These Stocks Make Large Moves They have small market values and a little buying can really move the stock.
Penny stock companies often have exciting businesses, so a given deal will have more effect on a small company's stock than a big company stock.
Also, investors in these stocks investors get carried away.
Penny stock day traders ignore value and look for action.
Where to Find Penny Stocks These stocks are generally found in the Pink Sheets market or on the OTCBB.
The OTCBB recently has been purchased by Rodman & Renshaw.
The OTCBB includes stocks not listed elsewhere that file reports with the Securities and Exchange Commission.
The OTCBB has not other rules for admission.
Pink Sheet stocks are those not listed elsewhere.
No SEC filings need be made in the Pink Sheets.
There are no listing requirements.
OTCMarkets.
com quotes these stocks.
On that site, click "Pink OTC," and you will find the list of the Pink Sheet penny stocks.
Many of these stocks are not listed in any database you can search, unlike listed stocks.
While this means a time-consuming by hand search through the entire list, you will be rewarded now and then with an overlooked gem that can give you huge profits.
In fact, this is how most of my big hits were found, by brute force, boring (but not boring for me), time-consuming research.
For me, the only good a stock tip or a spam email bearing overheated recommendation of a stock is only good to find short sales.
The same is true of most penny stock websites that tout various stocks.
These are paid recommendations for the most part and therefore biased if not downright terrible.
Stock chat forums will be of limited use.
Much of the chat on these sites is posted by paid shills, long or short.
Because they post anonymously, they are not afraid to use lies and other forms of misinformation.
The moderators of at least one chat site can be biased as well.
The one-sided dialogue has driven legitimate conversation away.
Rely largely on the source information given in the Pink Sheets and SEC filings.
However, be aware that even this information can be misleading or incomplete.
You can also call the company.
On the Pink Sheets and SEC Edgar database, you may find annual and quarterly financial reports.
From these you may be able to calculate the usual ratios that are the most important to any analyst - book value, price/earnings, revenue to market value, working capital per share, current ratio, and the like.
You should find a basic description of the business and stock structure.
Bear in mind that you are not looking for stocks that are good buys, you are looking for stocks that are screaming buys.
Do not settle for anything less.
If there is a 50-50 chance the stock will go up, avoid it.
You want the sure thing.
You want to be in the position where if the stock goes down you rejoice because in effect you can buy more dollars for fifty cents.
If you buy high-priced stocks on the hopes that some bigger fool will take them higher, you are hurt when they go down.
Only buy cheap.
You are not looking for future possibilities, as these may never materialize.
You are looking for hard dollar values, assets and earnings, that exist today.
Only buy those stocks that are cheap based on the values you find today.
Having found those you will have reduced as much as possible the huge risk that exists in these stocks, you can then afford to look for the future hopes and dreams.
Let others buy the future possibilities and hope, you buy the current value and then you can hope for the future.