CeasarHorne205
Christmas and (insert your favorite vacation right here) come but when a year earnings season on the other hand, comes four times a year. And whilst earnings season may possibly be devoid of streamers, balloons and cake...the outcome can be just as festive for penny stock investors.
Although blue chip giants are bemoaning the commence of earnings season this week, those interested in penny stocks or modest-cap stocks have cause to cheer...or at the extremely least, be very optimistic.
Following nearly six years of robust performance, modest-cap stocks headed into 2005 with a lot of business analysts saying the honeymoon was more than. Modest-cap costs have been as well wealthy they mentioned...the Johnny-come-lately lemmings were as well several...and the bargains as well couple of.
Not surprisingly, penny stocks sailed by means of 2005, beating their bigger counterparts by an equally big margin. For the 12 months ended May possibly 1, 2006, the Russell 2000 index of small-cap stocks returned 31.5%, compared with 14.1% for the Standard & Poor's 500 index of massive-company stocks.
The longer view is even much more impressive. Since March 2000 (the official commence of this rally) the Russell 2000 index has posted an average annual return of 7.three%, vs. -.6% for the S&P 500.
Clearly the penny stock soothsayers are i) not worth listening to ii) not invited on my honeymoon.
Now, just since penny stocks have been performing effectively does not imply that earnings season is a foregone conclusion. In addition, you cannot evaluate the results of your favored penny stock pick with these of the blue chip juggernauts.
For example, earlier this week a single of the market's bellwether stocks missed its income forecast for the quarter. Analysts pounced noting that the company's share cost "tumbled" 4% on the news. An additional company's missed forecast sent its stock "plummeting" 4.7%.
Penny stocks never tumble or plummet 4%. In the world of penny stocks, a day-to-day drop or obtain of five% - 8% is commonplace. Now, ought to the penny stock on your radar screen climb 10%, 20%, or 50% on robust earnings...that could be described as significant.
Granted, the earnings results from large-cap stocks are a litmus test to how effectively our economy is carrying out...and is expected to do. Luckily, penny stocks never adhere to the identical guidelines as their leviathan counterparts. Penny stocks can defy logic and perform well in poor instances...or execute poorly when instances are excellent.
The point is, you can not read your penny stock company's fiscal benefits by means of the identical glasses as you would a triple digit goliath. Penny stocks march to their own tune and encounter every day climbs and drops that would churn the stomach of most Wall Street analysts.
Which is fine...most Wall Street fat cats are pleased with a 7% return on their safe, boring investment. Penny stock investors are not. source
