Nowadays the market has different stocks of prices and types. Right now there is a stock trading around $100,000 for each share. Many stocks, however, have lower costs. Generally between $10 and $100. Even so, several are usually much less indeed. The lowest priced permit to buy numerous shares for only one cent.

There are in deed many differences between the high price stocks and the lower ones. Primarily, stocks which trade for a penny or under are usually very small and are often trades for purely speculative purposes. However, many of the more developed international companies today, did indeed start out in the same position..

Consequently this factor can make these types of stocks very appealing. Having the ability to buy multiple shares for a single penny, it is possible to accumulate a large holding in a penny stock. The benefits can be substantial for individuals or institutions whose positions result in large returns. For example, its clear to see how much $5,000 invested in a stock originally priced at half a penny becomes if the value of the stock increases to fifty dollars.

Nevertheless the inherent risk associated with these types of stock is if the stock fails. This would leave shareholders with no returns. This risk should be carefully considered prior to buying a penny stock.

There are numerous resources to research penny stocks however information on revenue or profits may not always be available therefore these types of traditional cannot be factored in to the analysis. For example, it is impossible to determine a price to earnings ratio (PE) for a stock with no earnings to date.

A company will also publish information on it self and these should be studied carefully, along with research on the industry and market in general. Search online for any commentary possible. Of course, its always beneficial to call the company to discuss their products or services.

Any official material from the SEC (Securities and Exchange Commission) should researched. Reading this material could bring to light any other risks or factors to influence your decision.