All investors want to know which are the best places to invest, and penny share buyers are no different, so what should you look out for when planning where and what to buy?
Here's what to look for in your potential investments...
- Does the company you're looking at have considerable and rising sales?
- What are the latest profit figures, and what are the projections for sales within a given time frame?
- Has the company been established for at least a year?
- Are the directors or CEOs of the company experienced in their field of trading?
- Does the company have a London Stock Exchange listing, or is it list on AIM?
- Is the company's net asset-backing higher than the share price that's being offered?
- Is it possible to trade in the company's shares through a London Stock Exchange member company?
- Is there a considerable free-float in the company's shares? If not, the shares may be held too tightly by a few minority investors.
- Can you be optimistic that the company has a future as it stands? Check there are no takeovers in the offing.
- If the company goes under, does it have sufficient physical assets to liquidate?
So once you've done all that checking, and if you've managed to come up with mostly positive answers to your questions, then you would be well advised to go ahead and buy.
That said though, often, even if a company doesn't tick all the boxes, it could be worth investing an amount you can afford to lose on the off-chance that the company comes out well...
Because of course if it does, and you bought cheap and early, you can amass a nice profit from your faith in the company!
