What are Penny Stocks? Which are the Best Penny Stocks in India? Penny Stocks investing is a good or bad strategy? Before getting the answer of these questions let us go through one real life example – My friend has purchased penny stock in 2009. It was one of the best penny stocks in late 2008, however, he regret his decision today. He lost lot of money in this penny stock. From this example, we can say that penny stock is risky investment option. As per me, penny stock is like rich-poor stock. It can make you rich or it can make you poor. So, let’s try to get more information about a penny stock.
What is Penny Stocks?
- Penny stocks are stocks that are available at the price of a penny.
- It is a very Low stock cost in range of Rs.1 to Rs.10.
- The Market capitalization of company is less than 100 Cr.
- These stocks are highly speculative stocks of small companies.
- Penny stocks are typically growing company with limited cash and resources
- Penny stocks are a high-risk investment with low trading volume and less attention from the investor.
Also Read :- Penny Stocks – Good or Bad for Investment
How to Identify Best Penny Stocks?
It is very difficult to identify the best penny stocks. You can follow the method given below to find out best penny stock for investment.
- The company should be in business for several years.
- The product and services of these stocks must be real and visible.
- Promoter holding in this stock should be reasonable 30-40% minimum.
- The Stock should be less volatile.
- The Company should have potential in terms of business and earning profits.
- The Company should be competent in the respective sector.
Best Penny Stocks in India
Based on criteria mentioned above and other factors, I have tried to find out best penny stocks in India for 2015-16 and here is the list of the same.
Kumar Wire Cloth – Kumar Wire Cloth has given a magnificent return of 3143% in last one year. Kumar Wire Cloth has shown high sales value, however, profit margins are very low.
Cambridge Technology – Cambridge Technology is small IT company stock. This stock has given a return of 1866% in last one year. Fundamental of this company is not so good, however, it turns out be best penny stock for 2015.
Virat Crane – Virat Crane is in the business of dairy products. In last one year, this penny stock has given a return of 539%. Company’s highest income till date is 1.8 Cr.
White Diamond – White Diamond deals in apparel accessories. The White diamond is able to give 275% return in last one year. Fundamental of this stock is very weak, however, it is one of the best penny stock of 2015.
RT Exports – RT Exports deal in agriculture products. In last year, this stock has given return on 164%.
Penny Stock Investment is good or bad?
As discussed earlier penny stocks are like rich poor stock it can make you rich or can make you poor. It is good or bad for investment that you can decide based on pros and cons of these stock.
- If the identification of penny stock is done rightly it can give you huge return from 100% to 3000%.
- These stocks are cheap so you can buy these stocks in bulk.
- Some Stocks are stuck up as penny stock due to temporary period and it can bounce back and give skyrocketing returns.
- Very high risk as we don’t know that stock will grow or fall.
- Penny stock may get de-listed and you will not able to sell it.
- Trading volume of the penny stock is very low, so it is difficult to exit from these stocks.
Should you buy Penny Stocks?
Investing in penny stock is like gambling. You are investing money in the company with no fundamental in the hope of earning a big return. Penny stock is high risk, high reward game if you are conservative investor it is a big no for a penny stock.
Another side is “No Risk No Gain” you have to risk money to gain more money – “Kuch paane ke liye kuch khona padta hai”.
If you have a lot of surplus money you can go ahead and invest in the penny stocks. The risk is yours, you may lose entire money. The decision of investing penny stock is entirely up to you.
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