Cheap Penny Stocks

Cheap Penny Stocks

I was doing some searches the other day and I came across an interesting and odd search term:  cheap penny stocks.  That seemed sort of odd to me and struck me as funny.  Penny stocks by their very definition are cheap penny stocks.  Penny stocks are companies that are trading at less than $5 per share.

Many penny stocks trade even lower than this.  Believe it or not there are about 750 searches per month on the term cheap penny stocks.  I wonder what those that are searching for are really looking for.  Are they looking for a list of stocks trading under $1.  Or are they looking for penny stocks who are trading at less than their book value or at a discounted EPS?

As I have mentioned in past posts your main concern should be whether a particular penny stock meets your criteria for entering a trade.  You should not base a decision on price only and whether or not a penny stock is considered a cheap penny stock.

The other day I mentioned BRCD.  I have been watching it since I mentioned it to you.  I am waiting for it to trigger my entry point.  It is possible that it will happen tomorrow.  I would venture to say that if it traded at much above $2.75 then it will probably trigger that entry and I will purchase shares.  However, if it continues to fall I will continue to watch.  Merely because BRCD is cheaper today than it was a few days ago does not make it a great buy.  A cheap penny stock is often just that (a cheap penny stock) and not necessarily a good investment.  I am looking for good short term investment.  For that you need to have a system in place to indicate when you think a stock has value.

Don’t buy cheap penny stocks merely because they are cheap; buy them only because they meet your entry criteria.