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Penny Stock Research

Posted on April 24, 2020 by Charles Varma

Penny stocks lack an organized market and so are mostly traded outside exchanges, unlike large and medium cap stocks. Further, very little information is publicly on related companies' financial performance and their management. For this reason information vacuum, very cheap stocks mostly languish in obscurity, without drawing much attention from investors. Because of this, trading in very cheap stocks can be listless quite often.

However, these stocks sometimes grow to be big money-spinners because of their buyers after their growth potential is discovered by investors and prices start soaring saturated in line making use of their fundamentals. Since these stocks are fairly undervalued, price increases have become sharp after investors start lapping them up. Identifying growth potential of a cent stock prior to the markets awaken to it isn't difficult, though it needs effort.

Anyone likely to invest in very cheap stocks can collate market intelligence on very cheap stocks by alternatively monitoring pink sheets and over-the-counter bulletin board (OTCBB) reports, which are published on a regular basis. It was previously that companies listed on the pink sheets and OTCBB weren't necessary to disclose information on financial performance along with other key areas of their business. However, subsequent rules framed by the National Association of Stock Dealers (NASD) have necessitated disclosure of key performance for listing on the pink sheets and OTCBB. Now, very cheap stocks listed on the OTCBB need to report to the federal government aswell.

There are some very cheap stocks which, although traded on the OTCBB, details aren't shared by the corresponding companies. Information on buy and buy quotes of such shares can, nevertheless, be found from NASDAQ. The reason being NASD rules require reporting quotes to NASDAQ.