I'm sure you've heard the expression, ‘If something sounds too good to be true, it probably is.’ Well, as a penny stock investor, I say, ‘If something sounds too good to be true, it definitely is.’
Granted, there are times when unbelievable things are actually true. Other times, it would behoove us to serve up a healthy dose of uncertainty. For example, back in April we heard that North Korean dictator Kim Jong-Il is a global fashion icon.
We know this for certain because Pyongyang’s official website noted that Kim Jong-Il’s ill fitting trademark suit "is now in fashion worldwide." Or, as one unnamed (go figure) French fashion expert chirped, "Kim Jong-Il mode which is now spreading expeditiously worldwide is something unprecedented in the world's history."
It seems as though fashion is not the only thing Kim Jong-Il excels at. It appears as though the Great Leader has developed invisible phones; invisible phones that could very well lift North Korea to World Cup victory in South Africa.
Kim Jong-Su, the general secretary of the North Korean FA, has said the Dear Leader gave ‘in-depth guidance’ on how to develop the game in the country and the coach himself has claimed he received regular tactical advice during matches, apparently using mobile phones that are not visible to the naked eye.”
Having developed the invisibility technology, perhaps the four missing North Korean football players who (apparently) didn’t show up for the team’s opening match of the World Cup didn’t disappear. Maybe they were just ineffective in the teams 2-1 loss to Brazil? And perhaps the reception was poor for their 7-0 drubbing against Portugal
The point is, I think we should be a little skeptical about the technological advances of everyone’s favorite cognac swilling dictator.
I think we should also be skeptical of penny stock’s making the same sorts of claims. Yes, investing your money in penny stocks comes with a certain amount of risk. If you receive false promises of ‘no risks’ or even ‘low risks’, be wary.
For example, this week I received a ‘free’ hot email tip. Apparently, this little gem of a stock has been “the darling of the chat rooms several times already this year – and the buzz could be starting again, thanks to a recent news announcement.”
For starters, never trust investment chat rooms, especially when it comes to penny stocks.
Secondly, I learned that this penny stock is (not surprisingly) “trading near its 52-week low – and if it challenges its recent high – playing this stock could hand you an easy triple!”
Ah yes, the old easy two hundred percent gain. I think the only people that will make those gains are those pushing the stock.
Thirdly, I find it interesting that penny stock pushers release their hidden gems just as the markets open. Presumably so you don’t have time to research the stock and instead, buy on your gut reaction.
It would only take an investor less than one minute to discover that this penny stock company has virtually no daily volume, no known 52-week range, $2,900 in cash, significant debt, and no recent press releases to justify any increase in market cap. Those aren’t the kind of metrics any penny stock investor should knowingly be intrigued by.
The best thing you can do as an investor is to delve into researching your penny stock and if possible, call the company and ask lots of questions.
Here are a couple solid penny stocks you can look at and ponder at your leisure.
Death care provider Carriage Services, Inc. (NYSE: CSV, Stock Forum) is a profitable company with strong market penetration and great long-term growth potential. In early May, CSV announced that first quarter revenue, for the period ended March 31, 2010, climbed 2.3% year-over-year to $46.8 million. Net income for the quarter increased 17.8% to $2.8 million.
On June 16, CSV said it acquired Huntington Beach, California based funeral home business Heritage Memorial Services. The acquisition gives Carriage 140 funeral homes in 25 states.
One of Asia’s largest distributors’ of memory products, ACL Semiconductors, Inc. (OTV:BB: ACLO, Stock Forum) may be thinly traded, but strong back-to-back-to-back quarterly results should change that.
On June 14, ACLO reported record first quarter results for the period ended March 31, 2010. First quarter revenue jumped 58.4% year-over-year to $99.01 million. Net income was up 23% at $1.4 million or $0.05 per share.
Mr. Alan Yang, Chairman and CEO, commented, "These outstanding financial results reflect the success of our business model and the macro economic factors across Hong Kong and Southern China. Momentum in the electronic sector particularly for memory products continued into the second quarter as demand for consumer electronics remained robust."
Excellent penny stocks speak for themselves.