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If youare thinking about buying penny stocks today, there is a lot to consider. With so much happening in the stock market, it is crucial to understand exactly how to take advantage of these extraordinary factors.
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How Do I Know What Stocks To Buy
If you’ve been investing in penny stocks in recent months, you’re probably used to the high levels of volatility we’ve seen. And that’s why it’s worth looking at what you missed during trading on May 18.
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On May 18th, US stocks saw another big drop in value. During the trading day, the S&P 500 fell by more than 4%, which is the worst trading day since June of 2020. In addition, we saw the NASDAQ Composite fall by 4.7%,
“I think what investors realized was that these seemingly safe haven stocks, the staples like Target, like Walmart, are not immune – that their costs are increasing, they can’t pass their higher costs on to their consumers.” The Chief Investment Officer at Cresset Capital, Jack Ablin
At the moment, the factors at play are causing a large bearish momentum in the stock market, and we will probably continue to see high rates of volatility in the future.
Currently, there is a lot of volatility in the stock market that investors can take advantage of. But there is also much that can be detrimental to one’s portfolio if investors are not careful.
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So, with another trading day after disappointing quarterly results from major retailers, investor should be extremely cautious. However, given the big losses we’ve seen, there are also plenty of penny stocks that can be considered value. With that in mind, let’s take a look at three that are currently on the rise.
During after-hours trading, shares of NILE stock managed to climb by around 2.8% after a slight drop during the day. And in the past five days, shares of NILE stock have climbed about 27%.
With great ties to the cryptocurrency industry, Bitnile has felt the effects of the great bearish sentiment with most major cryptos. This has led to a decline of more than 80% in the past six months. But, with this renewed bullish sentiment in its prices, do you think NILE stock is worth adding to your list of penny stocks to buy or not?
During after-hours trading, shares of BNGO stock managed to climb by around 2.5%. This is a solid gain after its intraday loss. And, with a five-day gain of more than 26%, it’s clear that BNGO stock is very volatile right now.
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Recently, we’ve seen great bullish sentiment with biotech penny stocks. And, BioNano Genomics’ most recent announcement came as it said it would present at the H.C. Wainwright Global Investment Conference on May 24. With this in mind, will BNGO stock be on your penny stock watch list today?
During trading on May 18, we saw shares of EOSE stock drop by about 25%, followed by an after-hours spike. This price move comes after a five-day climb of 2%, which is a decent bullish turnaround.
As an energy penny stock, EOSE has seen great positive momentum. In its Q1 2022 results, the company saw a sequential increase of 69% in its energy block volume. Additionally, it ended the quarter with $55 million. Given these exciting announcements, do you think EOSE stock will be on your watch list or not?
With so much going on with penny stocks right now, investors need to understand exactly what is going on in the stock market.
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Because penny stocks are so speculative, considering how to take advantage of current events remains the most crucial step to profiting with small caps. So, with all this in mind, which penny stocks are you watching right now? So you have finally decided to start investing. You already know that a low P/E ratio is generally better than a high P/E ratio, that a company with a lot of cash on its balance sheet is superior to one burdened with debt, and that analysts’ recommendations always should be taken with a grain of salt. And you know the cardinal rule of the smart investor: A portfolio should be diversified across multiple sectors.
That pretty much covers the basics, whether or not you’ve been through the more complicated concepts of technical analysis. You are ready to choose stocks.
But wait! With tens of thousands of stocks to choose from, how do you go about selecting a few worth buying? Despite what some experts suggest, it is simply not possible to comb through every balance sheet to identify companies that have a favorable net debt position and are improving their net margins.
The first step to choosing investments is determining the purpose of your portfolio. Everyone’s goal for investing is to make money, but investors may be focused on generating an income supplement in retirement, on preserving their wealth, or on capital appreciation.
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Income-oriented investors focus on buying (and holding) shares in companies that regularly pay good dividends. These tend to be solid but low-growth companies in sectors such as utilities. Other options include highly rated bonds, real estate investment trusts (REITs), and master limited partnerships.
Investors who focus on wealth preservation have a low tolerance for risk, either by nature or because of their circumstances. They prefer to invest in stable blue-chip corporations. They can zero in on consumer staples, the companies that do well in good times and bad. They don’t chase initial public offerings (IPOs).
Investors looking for capital appreciation look for the stocks of companies that are in their prime early growth years. They are willing to take a higher degree of risk for the chance of great benefits.
Each of these investor types may use a combination of the above strategies. In fact, that is one of the main motives for diversification. A conservative investor may devote a small portion of a portfolio to growth stocks. A more aggressive investor should mark up a percentage for solid blue-chip stocks to offset any losses.
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Deciding which category you fall under is the easy part. Figuring out which stocks to choose is complicated.
A stock screener, if you use one, is prone to error. Riding the coattails of institutional investors is an option, but you should know that they tend to rely on safe blue-chip stocks that may or may not provide the best returns.
It is essential to keep up with market news and opinions. Reading the financial news and keeping up with industry blogs by writers whose views interest you is a form of passive research. A news article or blog post can form the basis of an investment thesis.
The underlying argument may be common sense. For example, you may note that emerging market countries are producing new middle classes consisting of people who demand a greater variety of consumer goods. As a result, there will be an increase in demand for certain products and commodities.
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Taking the argument a step further, the investor can conclude that with an increase in demand for a product, some producers of that product prosper.
At the same time, it is important to be critical of your own assumptions and theories. You may love donuts and fast cars, but that doesn’t mean Southeast Asia’s nouveau riche are clamoring for them either.
Once you are comfortable and convinced of the general argument after carrying out this form of qualitative research, company press releases and investor presentation reports are a good place for further analysis.
The next stage in the stock selection process involves identifying companies. There are three simple ways to do it:
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These three methods are by no means the only ways to choose a company, but they do offer an easy starting point. There are also clear advantages and disadvantages associated with each strategy that investors should consider.
Seeking expert opinions through news sources is time-consuming, but it can yield results. It will deepen your understanding of the fundamentals of the industry. It can also alert you to interesting smaller companies that don’t appear on screeners or within ETF holdings.
Once you are convinced that the industry that interests you is a solid investment and you are familiar with the major players, it is time to turn your attention to investor presentations. They are less comprehensive than financial statements, but they provide an overview of how companies make their money and are easier to absorb than 10-Q and 10-K reports.
These reports will also have forward-looking information about the expected direction of the company and its industry. Browsing company websites and presentations will help you refine your search.
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The process involves more thorough scrutiny of a specific company to see if it can outperform its competitors in the industry.
At the end of your research process, you may be left with one investment prospect or a list of ten or more companies.
Or you may decide that this industry is not for you.
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