Wednesday, October 3, 2007

Penny Stock Tips

Keep an eye on the O/S count of the stock. The higher the O/S is, the less the stock is worth. Stocks with less then 1 billion shares O/S is best. Less then 500 million shares is even better. Avoid the stocks with billions and billions of shares. The company isn't worth anything and will most likely do a reverse split in the future.

A/S is authorized shares. Once the company maxes out the A/S, they usually do a reverse split or increase the A/S even higher. Be careful if the outstanding shares are getting close to the A/S.

Raising the A/S dilutes the stock even more because they will usually issue more shares and max it out,then the reverse split follows. This happens a lot with the pink sheet stocks.

Reverse splits are usually never a good sign. If you have 100,000 shares and they do a 1-100 reverse stock split, you only have 1,000 shares left. I have seen 1-5,000 reverse stock splits on the cheap stocks. Most of those are just scams. If you ever find out that they did a huge split in the past, DO NOT BUY THE STOCK. They usually just keep doing the reverse splits over and over. I AVOID THEM.

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