The list of the most successful penny stocks that made it big ranks some of the biggest companies today that were selling their shares as penny stocks in the first phases of their business development. Today, penny stocks are known as one of the most volatile market options you can buy. The reason for this is the high number of fraud schemes that involve the stocks traded over-the-counter.
Fraudulent brokers often intentionally purchase a large batch of penny stocks and create an artificial hype, in order to sell their shares at a higher price. This scheme is called ‘pump and dump,’ and there’s also another (opposite) variant of this scam called ‘short and distort.’ In addition to these common frauds, some penny stocks have purposely entered the market so that they can be extensively sold. The companies that stand behind them don’t have any funds, business operation or plan and they completely rely on the market hype.
Still, some penny stocks are the shares of real and ambitious small and medium-sized businesses. These can be small companies that are just developing their business idea and don’t satisfy all the criteria required for the major exchange listings. On the penny stock market, you can also find companies that have experienced financial problems and possible liquidation, so they can’t be listed on the major exchange anymore.
There are no uniformed criteria that you can use for determining, which penny stock will make it big. If you want to invest money in the OTC market, you should conduct an elaborate research for every stock you plan to buy. Unlike major exchanges, over-the-counter ones don’t offer comprehensive information about the stock’s history and prospects. In most cases, you will need to find the information about each company online. Sometimes this can be tricky because many small companies don’t have their websites and you won’t be able to find them on the most popular business listings.
If you want to find out which penny stock is the most perspective one, you will need to conduct four different analysis. These include:
Checking the stock’s fundamentals – includes checking company’s financial statements and parameters like revenue, liability, profits, assets, net worth, and expenses;
Conducting a life cycle’s analysis – helps you to determine the development phase, company is in;
Industry check– is very important because some industries like biotech or resource filed are common ground for penny stock frauds;
Management check – gives you information about the company’s management and helps you to determine whether they will upgrade company’s business, or ruin it completely;
When buying penny stocks, you should only stick to the options for which you can successfully conduct all these analyses and find all the data you need.
There are many articles that list the most successful penny stocks that made it big, so we didn’t have problems with finding our sources. As our main sources, we have taken the two articles about penny stocks, we have found on Benzinga and Balance. We used these two articles to craft our list, and then we ranked our contestants by checking their current net worth. We found this data on Google, but if you want to make a more detailed analysis, you should find more data on broker and exchange website. While searching for this information, the Insider Monkey’s article that lists the Largest Stock Exchanges in the World can be very helpful.