Placer_foot

Good Day Gang....


Mr. Placer Foot here....


So, you want to know how to VALUE a penny stock do you?... Ok then class, we're about to begin:


Penny shares
The term " Penny Stocks" ( or Micro's )simply implies JUST THAT....stocks that trade under $1.00. Now, without getting too technical... from time-to-time certain stocks that once traded in pennies, can breakthrough that IRON CLAD ceiling of $1.00. From here ( $1.00 )....to "usually" the $5.00 level.... you are now dealing with SMALL CAPS ( Small Capitalization ). So... with a PLETHERA of penny stocks to choose from.....how does one PROPERLY place a value upon it's shares?.....I mean, the VERY reason they're trading under $1.00 tells us all something..... do you wanna know what that is? Oh....you do?.....GOOD!!! 'cause i'm telling you anyways. ....lol...

THEY HAVE NO EARNINGS!!!! NO INCOME!!!! (usually)

So, with that said.... how do "we" compare one to the next to determine whether or not "we're" getting ripped off? SIMPLE!!!!

MARKET CAP / MARKET CAP / MARKET CAP!!!! ( Market Capitalization )


Once you've set your sights on a JUICY penny play....you need to do 3 VERY simple things:

1) Find out the TOTAL ( very important ) number of shares issued and o/s ( outstanding )

2) Take the current price ( the price you see TODAY in the market )

3) Multiply the TOTAL # of shares o/s by the current price.

TADA!!!! You're done!!!! ( how friggin hard was that?!?! )

example:

ABC Company ( lets say they looking for GOLD...have a property or 2 )

6 million shares o/s

0.30 ( Current Price )

6,000,000 x 0.30 = $1,800,000


Now... the trick is to find another company that does the very same thing ( looking for GOLD ). Apply the same multiple to that company now. Compare the two.

So, with that said... let's compare ABC Company to:

DEF Company ( also looking for GOLD )

20 miilion shares o/s

0.55 ( Current Price )

20,000,000 x 0.55 = $11,000,000

UUUMMMM DUH.....Which one is a BETTER VALUE?!?!?!?

YOU'RE RIGHT!!! ABC Company gets my money!!!!!


You see people....


This idea behind the advocacy of penny shares is that low priced shares have more potential to rise, and therefore investors should do their stock-picking by selecting from among penny shares.

The idea is fundamentally flawed. Looking at price alone, without any indication of what value a share has is not meaningful. A share price can only be said to be too high or low relative to earnings per share, assets per share, or some such similar measure.

It is not possible to say what a share ought to be worth without properly valuing it. Once a real valuation technique has been used, the fact that it is a penny share is irrelevant.

The falsity of the idea that penny share are in some way special is evident if one considers that a company can decide whether its shares are penny shares are not by consolidating or splitting its shares.

What little value techniques based on the penny share idea have is attributable to the fact that penny shares tend to be those of small companies and those whose price has fallen from more conventional levels. The former are more likely than large companies to have good growth prospects. The latter are more likely to be recovery stocks

Investors are better off using the more precise technique of screening by market cap to find small companies, and looking at historical data to find recovery stocks.



...there you have it folks.... you see....when dealing with the "juniors"....it's not so much what you know, as opposed to WHO YOU KNOW.....and between you and me.....I KNOW a few "people" here in Vancouver that when their wallets accidentally drop on the floor... we're all told it's an EARTHQUAKE!!!!


For real!!!