RE:Can this article apply to PNG ? These are my tips for investing in penny stocks. First, be very patient and don't give up. Do not confuse volatility in share price with a good/bad investment. This also applies to companies that have underperformed/overperformed in a given year. One example that comes to mind is Hammond Manufacturing. The share price was stagnant from 2015-2020 even though the company was profitable and very cheap. If you purchased in 2015 at $2 and held until today, you would be up 5.5 + times your investment or a cagr of 20.8%.
Watch out for companies that do a 180 on their investment strategy. I've learned that this is usually a red flag and a desperation on the company's attempt to compete with others. Competition can erode company profits and what once was a sure thing can be evaporated in a heart beat.
Stay away from companies that tell you what shareholders want to hear but without any proof that their business plan actually works. One company that comes to mind is Cielo Waste Management. I have warned investors that the company was insanely overvalued in 2021 but some chose to be deceived by the CEO. They were nothing more than a research company with no revenue to speak of. Eventually the share price tanked and investors that believed in the hype were left with heavy bags.
My strategy is to invest in profitable companies with a proven rinse and repeat business model. One of my favourite penny stocks that I purchased when it was originally listed on the Tsx Venture was Xpel. They were profitable with a proven strategy and continued expansion into new geographical areas. An investment in Xpel in 2010 and held until today would have outperformed Nvidia and Tesla or probably any company in North America. Xpel is a 2,500+ bagger stock since 2010.
Anyway, focus on profitable companies with a conservative balance sheet and credible management that deliver on their promises. Avoid deceitful CEO's that over promise and under deliver.