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Penny Stock Due Diligence

Penny Stock Due DiligencePenny Stock Due Diligence

Members, Often enough you will hear me mention performing your own “due diligence” or “DD” before doing any type of investing no matter how big are small. Also many penny stock sites/newsletters like to tout that they have performed their upmost penny stock due diligence before profiling a company for their latest hot penny stock play. But what exactly is “due diligence” and how does it apply to penny stocks is it just a buzz phrase that gets tossed around ever so often? Or does it actually mean something?

What Does Due Diligence Mean Exactly?

Due diligence is the act of performing a reasonable investigation into the face and circumstances of a transaction to ensure a full and complete understanding of the transaction.

What Does Penny Stock Due Diligence Mean?

 

Performing penny stock due diligence is a best practice that should be performed by all investors regardless of their level of experience.

Penny Stock Due Diligence May Consist of the Following

  • Checking the Company’s financial records and SEC Filings.
  • Visiting the Company’s website learn about what they do and what market they are in who are their competitors? What are their short and long term goals? Who is part of their management team?
  • Study the company’s charts. Look for trends or any usual trading activity. Ask yourself is the current price per share a good entry point?
  • Check for any press releases old and new

Those are just a few actions investors should take when performing penny stock due diligence.

Always remember to never invest over your head and to always have an entry and exit strategy.

Happy Trading

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