Power of Penny Stocks
When it comes to the stocks with prices lower than $1 we call them as penny stocks, but in India any stock in the price range below Rs 10 is considered as Penny Stock.it could be of Rs 5, Rs 1 or even Rs 0.50 and Rs 0.05 depending upon the Market Capital and the Number of Stocks divided.
In general Small or Micro business Companies issue Penny Stocks and people buy them with eager enthusiasm to quickly become Rich lets do some math.
1) You have Rs 5000 and you buy 50 shares of XYZ company at Rs 100/share and the price of the share rise by Rs 10 or by 10%, How much do you earn =50*10=500, Rs 500 maybe in a month or so.
2) You have Rs 5000 and you buy 50,000 shares of ABC at Rs 0.10 and within a month the price of each share increases only by 5 or 10 paisa, so how much return does it give, 50-100%.
and you double your money in just a few months so now, you know the Power of Penny Stocks as to why they are so attractive, there have been many companies in Indian Stock markets that were once Penny stock but are now Medium Cap or Large Cap companies, one of the best example i found was
Symphony(SYMPHONY) with a Price of Rs 0.65 in 2004 which in 2019 turned out to be
Rs 1151, that is a huge return, now again lets do some math
You plan to Invest Merely a Rs 65000 amount lumpsum and buy 1,00,000 now with Rs 1151 price per share and 1,00,000 shares in holding you now have 1151*100000= Rs 11,51,00,000
Yes a net Worth of Rs 11 Crore 51 lakh.
But is it so that Penny stocks are a sure-shot way to make easy money, Unfortunately the answer is a big NO.It was Symphony we know as a market leader in Electrical Appliances Sector, but like Symphony only there were many companies which are now nowhere who started as Penny Stocks,Not more than 1 in 10 penny stock companies can give such returns in fact most of such companies would actually make you lose your money,So How should you choose to Invest in a Penny Stocks
here are some Tips for You to find some good Penny Stocks:
1) Make sure that the Company is at-least 10 years old before getting Listed.
2)Good Business Model/Business plan.
2) Good Share holding Pattern with Promoter Holdings more than 40%, FII's and DII's holding atleast 5% and make sure this is the Least we can take, if the promoters reduce their Holding by even 0.1 % exit this Investment Immediately.
3)The Sector (eg: Electric vehicles,A.I..) of the company you are investing in has a huge potential in the future.
These are the Factors you have to consider specially for penny Stocks.
after this,
4)Check the balance Sheet of the company like you would of any other company.
5)P/E of the Company.
5)Use your Voting Rights in every A.G.M that the company organizes .
6)Main Focus of the Company should be to grow the Business and not onto Paying Dividends.
And Remember the amount of money you invest in your penny stocks should not exceed more than 10% of your portfolio, for a balanced return in long and medium turn.
In general Small or Micro business Companies issue Penny Stocks and people buy them with eager enthusiasm to quickly become Rich lets do some math.
1) You have Rs 5000 and you buy 50 shares of XYZ company at Rs 100/share and the price of the share rise by Rs 10 or by 10%, How much do you earn =50*10=500, Rs 500 maybe in a month or so.
2) You have Rs 5000 and you buy 50,000 shares of ABC at Rs 0.10 and within a month the price of each share increases only by 5 or 10 paisa, so how much return does it give, 50-100%.
and you double your money in just a few months so now, you know the Power of Penny Stocks as to why they are so attractive, there have been many companies in Indian Stock markets that were once Penny stock but are now Medium Cap or Large Cap companies, one of the best example i found was
Symphony(SYMPHONY) with a Price of Rs 0.65 in 2004 which in 2019 turned out to be
Rs 1151, that is a huge return, now again lets do some math
You plan to Invest Merely a Rs 65000 amount lumpsum and buy 1,00,000 now with Rs 1151 price per share and 1,00,000 shares in holding you now have 1151*100000= Rs 11,51,00,000
Yes a net Worth of Rs 11 Crore 51 lakh.
But is it so that Penny stocks are a sure-shot way to make easy money, Unfortunately the answer is a big NO.It was Symphony we know as a market leader in Electrical Appliances Sector, but like Symphony only there were many companies which are now nowhere who started as Penny Stocks,Not more than 1 in 10 penny stock companies can give such returns in fact most of such companies would actually make you lose your money,So How should you choose to Invest in a Penny Stocks
here are some Tips for You to find some good Penny Stocks:
1) Make sure that the Company is at-least 10 years old before getting Listed.
2)Good Business Model/Business plan.
2) Good Share holding Pattern with Promoter Holdings more than 40%, FII's and DII's holding atleast 5% and make sure this is the Least we can take, if the promoters reduce their Holding by even 0.1 % exit this Investment Immediately.
3)The Sector (eg: Electric vehicles,A.I..) of the company you are investing in has a huge potential in the future.
These are the Factors you have to consider specially for penny Stocks.
after this,
4)Check the balance Sheet of the company like you would of any other company.
5)P/E of the Company.
5)Use your Voting Rights in every A.G.M that the company organizes .
6)Main Focus of the Company should be to grow the Business and not onto Paying Dividends.
And Remember the amount of money you invest in your penny stocks should not exceed more than 10% of your portfolio, for a balanced return in long and medium turn.
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