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"Industry Life-Cycle Analysis
Along with analyzing a company’s balance sheets, the prospective penny stock millionaire should look do an industry life-cycle analysis. (For more, read: Life-Cycle Analysis: The Industry Life-Cycle.) Some penny stock companies are in a sector still in its “pioneering phase." This initial phase is characterized by the presence of a large number of small-sized competitors in the space, novel products and concepts and low customer demand for the products. Because this period is marked by a slew of start-up firms (particularly in tech or biotech), all of which have high costs and little-to-no-sales to date, most of these companies will trade at very low prices owing to their speculative nature. Following this initial phase, however, is the “growth phase," in which many of these companies gain greater market attention and thus their sales and demand skyrocket.
The perfect example is the tech boom (and crunch) of the late 1990s. Many tech startups started life as penny stocks and then experienced astronomical gains in their market caps and valuations (seemingly overnight), as investors snatched up anything related to the then-novel concept of the Internet.
Read more: 4 Signs a Penny Stock Is Worth Millions | Investopedia https://www.investopedia.com/articles/active-...z5AaRMyjXR
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"Industry Life-Cycle Analysis
Along with analyzing a company’s balance sheets, the prospective penny stock millionaire should look do an industry life-cycle analysis. (For more, read: Life-Cycle Analysis: The Industry Life-Cycle.) Some penny stock companies are in a sector still in its “pioneering phase." This initial phase is characterized by the presence of a large number of small-sized competitors in the space, novel products and concepts and low customer demand for the products. Because this period is marked by a slew of start-up firms (particularly in tech or biotech), all of which have high costs and little-to-no-sales to date, most of these companies will trade at very low prices owing to their speculative nature. Following this initial phase, however, is the “growth phase," in which many of these companies gain greater market attention and thus their sales and demand skyrocket.
The perfect example is the tech boom (and crunch) of the late 1990s. Many tech startups started life as penny stocks and then experienced astronomical gains in their market caps and valuations (seemingly overnight), as investors snatched up anything related to the then-novel concept of the Internet.
Read more: 4 Signs a Penny Stock Is Worth Millions | Investopedia https://www.investopedia.com/articles/active-...z5AaRMyjXR
Follow us: Investopedia on Facebook"
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My comments are only my opinion and are not to be used for investment advice. Please conduct your own due diligence before choosing to buy or sell any investment.
