penny stocks | what is a penny stock ?

I hear many beginning investors talking about penny stocks and what are the best penny stocks you can buy now in 2021 but most people do not understand the basic concepts of investing in stocks in India. When you buy a share (stock) of a company, you buy part of the business and if the business is doing well, the stock ends up working. So it doesn’t matter if you buy one company share or 1000 shares, ultimately the growth of business affairs.



Meaning of Penny Stock?

Shares with a market value lower than the face value are commonly referred to as penny stocks. The combined market value of such companies is less than Rs 100 crore or see their stock price selling under 1 rupee ₹2 or ₹5 rupees (typical stocks selling at penny prices – that looks undervalued and in cheap valuation). Although there is a possibility of huge profits from such shares, there is a high risk of sudden delisting and a large amount of money is lost, which is why investment experts advise everyone to stay away from it. Even so, owning one is still beyond the reach of the average person, and many invest in it in the hope of making an immediate profit. 

What are Multibagger penny stocks?

The stock which value in Cents or less than ₹2 or ₹5 rupees are hard to spot in the market and have low Market capitalization. It is not uncommon for these cents stocks to make a huge impact on the market when the company specializes in the backend. Traders can invest their money in stocks because they are less expensive and make a small investment, but while investing, it is necessary to understand the company’s how financial performance, financial analysis, and understanding how the company will perform in the future.
Multibagger Penny stocks are the same as stocks; the only difference is the increase in their price from the time of the investment. Suppose, as an investor, a person invests in stocks worth Rs. 5, and over time, the price increases to Rs. 10, then called two-bagger. Similarly, if the price reaches Rs. 15, then called three baggers, then continue. When the price reaches Rs. 10, is a 100% profit, and when it reaches Rs. 15, is a 200% profit and continues to increase. This is called Multibagger Penny Stocks.
Just like a penny stock, there are also types of stock in the stock market you should know.

Advantages of Penny Stocks.

The value of the penny shares is very low, so you can buy more shares for less money, and as a result of the share price increases then you get more profit.
The special thing about penny stock is that the value of shares grows in a very short time as it is not in the same or common stock.
A new investor can invest in stocks for a small amount and can make a good profit by investing in stocks.

Disadvantages of Penny Stocks.

Investing in penny stocks can never be considered safe. Just like you can get more profit in Penny stocks, in the same way, there can be more loss than that in the fall in the stock.
Low liquidity makes it harder for shareholders to withdraw money. When an investor wants to sell stocks, he may not be able to sell them immediately due to a shortage of existing buyers in the market.
The lack of a history of a company offering penny shares makes it difficult for an investor to make a purchase as those companies will have a bad record or no record at all.
Big investors invest in penny stocks, due to which the stock suddenly spike and suddenly sells the shares and book profits due to which ordinary investors get stuck.

The lack of information available about penny shares in the community makes it difficult to make informed decisions about investing.

There are a few people who declare themselves experts in such matters and ask for a lump sum payment to get information or information about the shares. Investors should be aware of these and do not fall into these traps.

Are penny Stocks a Good Investment?

Yes, you can buy penny shares up to 2 %  from your investment holding portfolio. So that even if your penny share goes into loss, then you will not suffer much loss.
Must Read   Disclaimer.
For more articles visit investing with Harshal Patil.
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