6 Critical Fundamentals To Pick Explosive Penny Stocks

In order to pick explosive penny stocks you must analyze key factors for each company you potentially consider investing in. There is no short cut. The best paid subscription (email alerts) apply this due diligence to every stock, but there is no reason you can't do the same.

These are the primary fundamental parameters in determining the health, quality, efficiency and profit potential of any company. You should rule out picks that don't fit with the listed criteria.

Increasing revenues - Positive consecutive quarterly growth in revenue is what to look for. Good companies should be gaining market share, or have operational strategies that are going as planned. Look for companies that may earn revenues from recurring billing and are adding subscribers.

Improving Earnings - consecutive quarterly earnings are what to look for. You only want companies that are making money, period. Only about 15 % of the penny stocks will fit in this category. Stay away from companies with negative earnings.

Competitive Advantage - Look for companies that have some sort of unfair market advantage. The competitive advantage should be not easily replicated and easily sustainable.

Low Debt Level - Look for companies with no debt or low debt. These companies will have options to expand operations, weather a downturn in their industry. Companies with lots of debt do not have the flexibility to take on more debt.

Insider Trades - Look for companies with that have insiders and company directors making consistent stock purchases. Stay away from companies where high level insiders, top execs, and directors are dumping high volumes creating panic and artificially driving prices down.

Buy Back plans - Buying back shares makes shares you hold more valuable, since there are fewer shares available. Buy backs indicate that the company believes their stock is undervalued. Look for year after year buy back plans of 5-10% of outstanding shares.

If any of these 6 primary fundamentals are out of whack, you should seriously consider bypassing that company and continue looking. A solid stock picking service can greatly reduce this choosing process.

The best stock picking services will have done their due diligence in screening out losers. What I would recommend if you're new to all this but are excited about making money with penny stocks is to subscribe to a penny stock picking service and set up a paper trade system ( not using your real money).

Monitor you paper trades diligently for a few weeks. You're in the game yet have not incurred any risk, plus it will be clear how much money you would have made or lost!