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When looking for great stocks to invest in you want to consider the opportunities that are available in penny stocks.  If investing in penny stocks you need to make sure that you understand how these type of investments work before you jump in. There is a lot of money to be made when you buy inexpensive stocks and the advantage is that you can own a lot of shares for a small amount of money.  You make money because the stock rises just a fraction and with having so many shares, your investment pays off.  It is always best to have as much good advice as possible when investing in the stock market.

How to: Trade Penny Stocks

There are many publications that can help you pick the best penny stocks that are available so that you can maximize the money that you make. Most penny stocks are regarded as stocks that have a value of less than five dollars so in many cases they are not just pennies in value. Once you get started and understand how the stock market works you can see that making a lot of money is very possible for you.  Even during a down time it is very likely that you can make money in penny stocks.  Make sure that you get as much advice as possible for you to begin so that your chances will greatly improve when you invest.

You Can: Get Rich Trading

Remember it is not hard making money in penny stocks to have the best results it is important that you have as much information as possible so that your investments are solid.  Take advantage of the many publications that are available to you that will give you advice and tips on which penny stocks to purchase that will maximize your profit.

The Right Way To Find Growth And Value Stocks

Looking for growth and value in your stock picks is a winning combination. Especially now, since growth rates have been subdued and valuations are getting increasingly higher. And while there are still plenty of them around, it’s getting harder to find stocks that fit squarely into both categories.

First off, Growth Investors focus on companies with great earnings growth, which makes sense since earnings drive prices. But nobody wants to overpay for good growth.

Value Investors focus on low valuation metrics, such as low P/Es for example. But many companies have low P/Es because they don’t have any real growth. They lack earnings power. People aren’t willing to pay up for these stocks because there’s nothing to pay up for.

But looking for both growth and value is a great combination and helps alleviate the pitfalls of having one but not the other. But I believe there is a right way and a wrong way to find both growth and value stocks.

What I mean is this:
Most will start off with either one or the other. For example, one might look for stocks with the biggest growth rates first, and then narrow down to those with the smallest P/E ratios.

But if the biggest growth rate stocks all had high P/E ratios (let’s say in excess of 20 or more), are you really finding the best of the value stocks? The answer is no.

There’s a similar situation if you screen for the lowest P/E ratios first, and then narrow that list to the ones with the biggest growth rates. If the lowest P/E stocks all had sub-par growth rates, you’d only be selecting the best of the sub-par growth stocks and not really getting both the growth and value you were looking for.

You can also plug in classical metrics like P/E under 20 and growth rates over 20. But you’ll have a ton of stocks filling up that list and you’ll be digging thru a ton of average stocks, not the best of each category.

So how does one find these stocks the right way? I do it by using a uniform ranking on both categories. And that’s the focus of this week’s screen. It focuses on companies with the highest growth rates AND the lowest P/E ratios ALL AT THE SAME TIME. Let me explain.

The screen starts off by looking at:
* Companies with one year Projected Growth Rates to be in the top 20 percentile of all companies.
(Using a Uniform Rank of 1-99 (99 being the best growth rates), I screened for stocks ranked 80 or better, meaning better than 80% of all the other companies out their in terms of growth rates.)
* Companies that also happened to have the lowest forward (F1) P/Es – lower than 80% of all other companies.
(Again, using a Uniform Rank of 1-99 (this time 99 having the lowest P/Es), I screened for stocks ranked 80 or better, meaning companies with P/Es lower that 80% of all the other companies out there.)
* They all have to have a Zacks #2 Rank or less.
(Meaning no ‘Sells’ or ‘Strong Sells’ allowed.)
* And this was all applied to stocks trading at or above $5, with average daily trading volumes of 100,000 shares or more.

So with this screen, we’re not starting with one and then looking for the other. The order of the above parameters is irrelevant. If I switched it around, I would get the same stocks. Essentially, I’m demanding that the companies have BOTH growth rates AND valuations in the 80th percentile, i.e., better than 80% of all the other stocks out there. And better on each category. This screen also comes pre-loaded with the Research Wizard and it’s called sow_growth and value. Each one of these stocks (and all of the stocks on the entire list), have market-beating growth rates with below market P/E values. A great combination.

Below are 4 stocks that made it thru this week’s screen:
DB – Analyst Report Deutsche Bank
NEU – Snapshot Report Newmarket Corp.
SBS – Analyst Report Companhia De Saneamento
SEPR – Analyst Report Sepracor, Inc.

Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

We all know that opportunity does not come knocking every day. The phrase ‘lightning never strike twice on the same place’ illustrates the point. Investors are successful because they can identify opportunity as well as the courage to act on it. This article is written to identify what constitutes a good turnaround stock investment. Here are several steps necessary in finding your next stock investment.

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Scour the 52 week-low list – This is a useful preliminary screening where you identify stocks that has fallen. While stocks that fall have their own specific problems, it is generally better to buy low rather than high.

Calculate Its Net Cash. The next step would be to gauge the strength of the company’s balance sheet. This is done by calculating the company’s net cash. Net cash is calculated by adding cash equivalents, short term investments and long-term investments in the asset column and subtract it with long-term debt. If possible, you need to find stocks that has a positive net cash valued at 10% of its market capitalization or more. All the companies in our stock portfolio has positive net cash.

Calculate Earning Per Share Going Forward. This step is critical in determining the fair value of the common stock. It is also the hardest part to master in stock investing. Generally, you predict earning per share by constructing your own pro-forma income statements where all its components are based on your prediction of the company. At the bottom of the income statement is the profit/loss figure in which you can convert to earning per share.

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Calculate Fair Value. When you obtain your earning per share figure, you can then calculate the fair value of the common stock. Fair Value differs for various investors depending on their investment objective. With current interest rate environment, I set the fair value when the company can give me a return on investment (ROI) of roughly 7.5% year after year. To give you an idea, an ROI of 1 % means that for every $ 100 you invest, you will get $ 1 back annually. For common stocks, this means that for every $ 13.4 of investment, common stock holders will get $ 1 in profit. As you may know, this translates into a fair Price Earning Ratio of 13.4.

Determine Your Entry Point. You have found the fair value of your stock. It is now the time to decide where and what price you want to buy your investment. Investors’ job is to make money. Therefore, we should not buy a stock at its fair value. We should sell at fair value or if heaven permits, at overvalued level. But, we should buy at below fair value. This depends again on your investment philosophy. If taking 10% return is fine with you, then you can buy a stock that is trading at 10% below fair value. I personally think that investors should buy a stock that is at least 30% below its fair value. This is because of the uncertainty in the earning per share figure of a common stock. As you may remember, we need to predict this earning per share at step # 3. We compensate our inability to forecast earning per share by buying our stocks 30% below fair value.

Other investors might have different ways of picking for their stock investment. But the basic idea is still the same. They want to buy lower than their expected sale price. In our case, our selling price is when a stock reaches its fair value. A lot of investors mistook fair value as the buying point. Hopefully, reading this will change your perception about that.

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