Just because a company has a big potential, it does not mean it can be equated to profit gains. A good example to this is the current restaurant stocks of a pizza chain, Papa John’s (PZZA) that has a price-to-earnings (PE) ratio of 41.
Boise, ID -- (SBWIRE) -- 11/17/2015 -- The golden rule in investing to hot penny stocks according to Timothy Sykes is to 'never invest more than what investors can't afford to lose'. This is sometimes the number one reason for some newbie investors to experience bad beatings from the penny stocks they have invested with. Another reason is taking chances on the random stocks endorsements of celebrities with a sales pitch that is too good to be true: that if interested investors will not pay attention, they might end up getting scammed. And this is something that should be avoided in the first place if only investors will take the time to do their homework before diving in.
With the rise of penny stocks in the market due to the volatility of prices of the basic commodities, changes in major industries, recession in various countries or slow growth in major economies, a handful of hot penny stocks can be spotted in the stock market today. And according to many trading experts, it's a tempting investment that should not be taken lightly.
Although the penny stocks industry is a good training ground for individuals who want to venture in stock trading big time, it does not require going all-out with penny stocks. Note that with penny stocks it takes a lot of research and hard work to gain profitable – but less compared to the gains in stock trading that is more than a dollar.
So what should be expected from hot penny stocks realistically?
Just because a company has a big potential, it does not mean it can be equated to profit gains. A good example to this is the current restaurant stocks of a pizza chain, Papa John's (PZZA) that has a price-to-earnings (PE) ratio of 41. Bear in mind that having a high PE ratio means that the stock is pricey, yet many investors are still betting against the Papa John's stock; which is best known for its garlic butter dipping sauce.
The stock prices it trades is 27 times of its free cash flow that make it considered a 'premium' for a fast food company. And this is the price that investors are most likely pay to own companies that could produce innovative cancer drugs or life-changing technology. Yet, this is the price that investors are paying to own a pizza chain like Papa John's.
However, according to the Bloomberg Business reports, expect that expensive stocks will fall hardest on the next crash. With this insight, investors are advised to build up their large cash position so that they will be able to buy bargains right after the next crash. That is for the reason that this is not the right moment to become aggressive with their portfolio.
For the meantime, investors are advising to crisis-proof their wealth by consulting hot penny stock experts with regards to their penny stocks investment. To get the best and genuine penny stocks, visit http://www.affordablestock.com.
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Hello and welcome to Affordable Stock, your home for the best penny stock picks. We have been helping people just like you succeed in today's market since 1999. We specialize in penny stock picks that will make money for you in the shortest time possible. We only deal in hot penny stocks that are listed on the exchanges.
We don't deal in "Over The Counter Stocks, "Bulletin Board Stocks" or "Pink Sheet Stocks" which all tend to have more fraud and scam tendencies. We analyze thousands of penny stocks each day to find the ones that are oversold and ready to bounce back. Please check out our history to see for yourself just how good we really are.
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