The Best Penny Stocks to Buy in India

Author : Bharti Joshi | Published On : 21 Sep 2021

Penny stocks are generally very high-risk, high-reward type of investment vehicles. But there are some strategies that can be used to minimize the risks involved in investing in penny stocks. Below, we will list down certain tips that you should keep in mind before investing in the best penny stocks that can improve your returns on investments.

What are penny stocks?

There are some very high-risk stocks that offer huge opportunities for investors with the right risk-management strategies.

Tips to buy best penny stocks

Select Penny Stocks with a price range within your budget.

It is essential to select penny stocks with a low market cap. The reason for choosing small stocks is that smaller companies usually generate more growth and have a greater chance of profits in the long run. So, investing in a stock with a very small market cap does make sense for you.

Choose Penny Stocks with a Positive Earnings History

When buying the best penny multibagger stocks in India, consider the track record of the earnings of companies. The companies that have good earnings should have grown their profits year-on-year in the past. A good earnings history also indicates that the company is likely to continue its momentum.

How can you make money with penny stocks?

The problem with penny stock investing strategies is that there is no guarantee that the strategy will outperform other investing strategies. In addition, the risks involved with the strategy also outweigh the possible benefits. But the good news is that there are strategies that you can use to minimize the risks involved in investing in penny stocks.

Diversify your portfolio

If you are planning to make money with penny stocks, you should definitely diversify your portfolio. You need to invest only a small proportion of wealth in penny stocks. Your portfolio should be well-diversified.

Invest in penny stocks only when the market is bullish

If you're looking to make money with penny stocks, you need to be sure about your strategy. If the stock market is bearish and approaching a cyclical bottom, then it may be better to stay away from penny stocks and avoid the massive downside that will occur when the market collapses. On the other hand, if the market is bullish and looks poised for growth, investing in penny stocks can work out well for even novice investors.

Consulting Research Analyst

One of the major risks associated with investing best penny stocks is dealing with less information. However, in order to reduce the risk, you should consult a Research Analyst, who will help you understand the company very well. Also, the professional will suggest the best possible way to make your money when it comes to penny stock investment.

Conclusion

Penny stocks can be volatile and it’s best to invest in them only when you are certain that you are ready to suffer losses at any point in time. As always, do proper researches before you invest any amount of money. Make sure that the company whose shares you intend to buy is listed on a credible stock exchange, and not just any stock exchange. Only high-risk investors should consider investing in penny stocks.