Investors feel safer when they are part of a crowd. My article on IVFH was a detailed fundamental analysis that saw beyond the penny stock tag, as always.
Realistic Advice For Successful Investing
I know of course that it's not easy to think different and go against the grain. Investors feel safer when they are part of a crowd. However, it's not wise to make the same mistake over and over again expecting different results, because this approach threatens both your portfolio and your life overall. That said, WLB's crash is the result of the debt overhang, as mentioned in detail in my linked article above.
As forecast, the company can't generate enough free cash flow to service its sky high debt in the coming years and bankruptcy is very likely by year end, in my opinion.
In other words, fundamentals prevailed. Actually, fundamentals prevail sooner or later. Fundamentals are at the helm driving the price and determine the stock performance at the end of the day. This is the bottom line, so I believe that investors need to put the penny stock tag aside.
Instead, they have to meticulously check under the hood. And if this lesson from WLB is not enough, let me remind you of additional bankruptcies associated with former non-penny stocks over the last twelve months:. If you spend a few minutes to check their 5-year charts, you will notice that they were not "infamous" penny stocks a few years ago.
Nevertheless, they filed for bankruptcy. And the root cause has always been the same. The debt overhang killed them. Their creditors pulled the plug when things started to look gloomy, and all these non-penny stocks went from heroes to zero. And things can get gloomy anytime due to a bunch of reasons i. But if you still believe that the key factor weighing on the investment risk is the price per share and not the company's leverage, see what Warren Buffett has said:.
When you combine ignorance and leverage, you get some pretty interesting results. The leverage could help a stock outperform and make your spouse think that you are clever, while your neighbors get envious. But history tells us that leverage all too often produces zeroes. IVFH was a penny stock in the second half of My article on IVFH was a detailed fundamental analysis that saw beyond the penny stock tag, as always. After checking the company's fundamentals, balance sheet and key metrics, I drew the conclusion that IVFH was a grossly undervalued stock.
That was my opinion. As such, IVFH was my recommendation for the subscribers to my Premium Research and all the value investors who were looking for cheap stocks with strong balance sheets in sectors with positive outlook. In other words, IVFH is not a penny stock anymore. IVFH was a fundamentally strong stock, which drove the price significantly higher, as forecast in my linked article above.
And of course, IVFH is not alone. Don't get me wrong. I'm not a defender of the penny stocks. I just believe that investors must not judge the companies from their price per share. Investors must not judge the companies from the cover. Instead, they must look under the hood and judge their picks based on their fundamentals. Investors must focus on the company's leverage. Investors must check criteria such as the company's cash flow report, key metrics, prospects, management and sector outlook, to name some.
Investors need to have a fundamental approach in order to spot the stocks that will enter or exit "the penny stock territory" and act accordingly, if they want to make high returns in the stock markets.
Therefore, I believe that investors must not be complacent dismissing the penny stocks with a scornful smile. Sure, the penny stocks have on average higher volatility than the non-penny stocks. No question about it. But the aforementioned cases prove why the "penny stock" or "non-penny stock" tag doesn't mean absolutely anything at the end of the day when it comes to the investment risk.
That said, my team of high caliber analysts and I will continue to make detailed and exhaustive research on a bunch of companies from a variety of sectors gold, silver, energy, consumer goods, industrial, healthcare, etc. Yeah it is pretty funny when you are the only active shareholder in a penny stock in a given day.
The only good thing I can say about penny stocks is that trading them helps you build discipline. If you can handle the ups and downs of penny stocks, you can easily handle the day to day changes in the big board stocks. Wow, thank god for this article! However, if you go through a reputable broker with a strong research department, they can do the homework for you and find the real gems with growth potential.
I really respect your highly original blog and will tell all my friends about it. Investing in penny stocks is just flat out scary to me. You also are at risk of the stock getting de-listed or the company just declaring bankruptcy. Your email address will not be published. Here are the reasons to stay away from the Penny Stocks: Anyone have experience with Penny Stocks?
I learnt my lesson, sitting on a 10k loss. Thankyou for the article. Thanks for sharing your expertise on this subject. Katie, you need to do your own research. But, the rewards can be great! Leave a Reply Cancel reply Your email address will not be published. Realistic Advice For Successful Investing.