If you're any type of trader, you know the moves large-cap stocks have been making lately. This action has been translating to the OTC/Pink markets as well and now is the perfect time to consider these fast moving stocks!
Don't believe us? Just last May, a penny stock ran from under $1 to over $24! A $2,000 investment had the potential to turn into over $48,000 in less than one month! Where else can you find these types of returns beside a pocket of the market we've been monitoring for 5 years?
There are several things that make an alert worthy of our attention:
- Important developments hidden in press releases
- SEC filings signaling a big company development
- Swing patterns on liquid micro-caps
- Rumors of breaking news or mergers
What are penny stocks?
By definition, a penny stock is generally any company trading under $5 per share. There are many Nasdaq/NYSE stocks trading under this price. PennyStockRumors.net focuses on companies even tinier! There are literally thousands of undiscovered OTC/Pink stocks that could just become the next Apple, True Religion, or Crocs!
Understanding Share Structures
There are three main parts of a share structure: authorized shares, outstanding shares, and float.
Every stock has a certain amount of authorized shares. Investopedia.com has a very clear definition of authorized shares: "Authorized shares refer to the largest number of shares that a single corporation can issue. The number of authorized shares per company is assessed at the company's creation and can only be increased and decreased through a vote by the shareholders." Outstanding shares refer to the number of shares "that a company actually has issued. This number represents all the shares that can be bought and sold by the public as well as all the restricted shares that require special permission before being transacted" "Shares that can be freely bought and sold by public investors are called the float." The float ties in closely with the definition of authorized shares. The float is the most important part of a share strcuture. For the most part, the lower the float, the more volatility a stock usually has. There you have it ! Once you get into the habit of checking a company's share structure before you invest, you will soon learn the importance of a relatively low share count versus a relatively high share count.