Find Penny Stocks

Wouldn’t it be great to adapt a philosophy to find penny stocks that have the potential for large financial returns in a short glance - three minutes that is.

Remember D'Antoni's Phoenix Suns scoring in seven seconds or less? Well it will be impossible to do it in seconds, but it can be probable to pick the best penny stocks in just a couple of minutes.

Let's admit it. We are all hard pressed on occasion and we don't have all the time in the world to read company reports and stock performances. We want all the time availability that we can have.

You probably have second thoughts, after all, it’s your money, and nobody else can take better care of your wealth than you can. Nevertheless, you have to remember, you can make a fortune in the stock market by purchasing even the worst performing stock if you do it at the right time. On the same principle, you can lose your investments by buying even the best performing stock if you purchase it at the wrong time (ever heard of Bre-X, World Com, and Enron).

With some knowledge, practice, and determination, you can find penny stocks that can give you optimum results in no time. Gather 15 to 20 penny stocks ($5 or less). Then screen them by eliminating those that do not qualify in this short checklist.

1. Discard penny stocks in Market Watch 10 worst industries

Same industry stocks usually move together. The first step should be to look at the report of Market Watch's best and worst performing industries in the past three weeks. This can give you an idea on the penny stocks to look at.

2. Avoid penny stock companies with no financial

Finding real sales should give you real companies. Therefore, you can easily spot companies that do not file financial audited reports with the SEC (even if small companies are not required). Either way if you have heard of stories that tell a stock is a hot pick, then it would be easy to know if the company generated real products that transformed into real sales. This criterion alone can help you find penny stocks that have an outstanding potential.

3. Check the real market value of the stock

It would be safe to say not all low price stocks come from tiny companies. If the market value (share price multiplied by the outstanding shares) of the company is more than $10 million, the chances are it’s a legitimate company. One such stock is the computer maker Gateway, which had market capitalization of more than $200 million though traded only below $5.

4. Require a 15% minimum three year average sales and earnings

Another good place to look at in finding the best penny stocks is to trace the past performance of 15% annual growth in the past three years. Experienced investors always learn from history and it’s always good to learn from the pros. Also, check for earnings for the current fiscal year if possible.

You may have come up with a survivors list of company stocks. By all means, do additional minutes of research before an actual buy. Still, by following the short checklist above, you should be able to find penny stocks that could very well be a gold mine from the rest.