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Penny Stocks – How To Find The Next Big Penny Stock


The Dynamic Wealth Report
July 10, 2009

Here's How To Find The Next Blockbuster Stock
by Robert Morris, Editor

Now that we’re right smack dab in the middle of the release of our new, sub-$1 penny stock trading service, we’ve been getting a lot of questions.  But one seems to keep showing up over and over.

“How do I find such great, little stocks?”

For obvious reasons, it seems to be a very popular question.

Now, let me say this first.  A lot of hucksters on the internet make outrageous claims about trading penny stocks.  Don’t believe them. There‘s really no special formula that separates the winners from the losers 100% of the time.

Don’t listen to their claims of making BILLIONS using insider secrets.

I’ve been involved in the financial markets for years.  What I’ve learned may surprise you.

There is no magic formula or secret sauce.  The key to identifying great penny stocks is lots of research and lots of reading.  It’s hard work.

Don’t be surprised.  You don’t need a high priced computer, fancy software, or a PHD in mathematics.  What you do need is intense focus and a love of reading.

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Searching for a great stock is like searching for Prince Charming.  You’ll “kiss” a lot of frog companies before you find the prince.  I’ve put together a quick list of how I start my research into great penny stocks. It’s something you can start applying right now to your own research.

Simple Screens

I’ve had great success getting ideas from simple screens run on Zacks.  If you don’t want to pay for a subscription, try the free finance portals. Websites like MSN and Yahoo Finance have screening tools as well.  These screens are great at cutting down a list into bite size pieces.

And best of all, I can focus on a few key metrics (like revenue or earnings) to help refine my picks.

Follow the Leader

Sometimes the best stock ideas come from other investors.  It makes sense.  If you’re looking for great penny stocks, figure out what the great investors are buying.  It’s easy to see what top performing fund managers and billionaires are investing in.  Just hit the SEC website and search through a list of their holdings.  You never know what idea you’ll find.

Read, Read, Read

If you’re always looking, you’re bound to find something.  I’m constantly devouring financial websites, newspapers and magazines.  I don’t limit my reading to financial publications.  Some great ideas can sprout from industry rags and off beat news sources.

Don’t forget the lists!  Sometimes you’ll see great ideas on the “New High” or “New Low” list.  Check out the “Most Actives” as well…

The Lynch Method

The last idea I’m going to leave you with was “invented” by a great fund manager, Peter Lynch.  He doesn’t manage money anymore, but in his day he was the best.  He was always looking around for great investment ideas.  Often they were right in front of his face.

Lynch was famous for going to a mall or grocery store and exiting with a bunch of new investment ideas.  He’d find great products that people were snapping up left and right.  He’d research the companies making those products, and often invest in their stock.

He found some huge winners using this simple strategy… a strategy anyone can follow.

You now have four easy ways to identify great penny stocks and uncover the next big winner.  Once you’ve got a list, then the real research begins.

Editor's Note:  Robert left out one other way to identify great penny stocks… let him do the work for you!  We just launched his new service that focuses solely on high-potential, sub-$1 penny stocks.  We’re limiting the initial memberships to just 1,000.  So, if you’re interested, I wouldn’t hesitate too long to check it out.  Click here to learn more…


Notable Rating Changes 

• Petrobras Brasileiro (PBR) was upgraded by UBS this week.  Despite falling oil prices, the bank gave the stock a price target of $45.

Hansen Medical (HNSN) was downgraded to a “Hold” rating by Brean Murray and Lazard.  The stock's trading at 10% off its 52 week high… it looks like this downgrade was a little late.

• Global Hunter Securities rolled out research coverage on Ormat (ORA). Looks like a solid idea to me.  Ormat is a leader in large scale geothermal energy.


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Issue Date:
 Friday, July 10, 2009


Notable Highs and Lows

•  Del Monte (DLM) hit a new 52-week high of just over $9.  The food company is seeing new highs and the insiders are selling… like rats from a sinking ship?  Their market cap is now over $1.8 billion.

•  99 Cents Only (NDN) is trading at a new 52-week high of just over $13. Discount retail seems to be strong this season… something that might last for a while.  Their market cap is just under $900 million.

•  San Juan Basin (SJT) hit another new 52-week low of just over $12. The Natural Gas Trust has been hit by falling prices.  They have a market cap of just under $600 million.


Quote of the Day

"The market is smarter than I am so I bend."

                                -
Martin Zweig

 
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Top YTD Gainers

Company Gain
Heartware (HTWR) 6,129%
Diedrich Coffee (DDRX) 5,063%
Scientific Energy (SCGY) 2,400%
ION Media Networks (IION) 2,233%
Vanda Pharma (VNDA) 2,072%
*Year-to-Date, Mkt Cap > $100M


Worst YTD Losers


Company Loss
Lone Pine Holdings (LNPI)   89%
Sequenom (SQNM) 82%
Susquehana Banc. (SUSQ) 71%
Harleysville National (HNBC) 71%
UAL (UAUA) 71%
*Year-to-Date, Mkt Cap > $100M


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