Hot penny stocks to watch

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Stock trading tips on hot stocks to buy now, stock market strategy, picking hot stocks, picking penny stocks, and how to buy cheap stocks. From “How to Find a Home Run Stock” and “How to Pick Hot Reverse Merger Penny Stocks” and also “How the Shorts Raid Your Stock, Destroy Your Company and What to Do About It” all by John Lux.

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Hot penny stocks to watch

  1. 1. Hottest Penny Stocks – Part IIHot Penny Stocks to Watch
  2. 2. DisclaimerStock speculation is very riskyDo not trade with more than you can afford tolose.Seek professional investment advice.This is not investment advice.No warranties, you are on your own.This is not suitable for all investors
  3. 3. Penny Stocks to WatchMy favorite type of penny stocks to watch are thepublic shells that can be used for reverse mergersA reverse merger is when a private operatingcompany is acquired by a shell (non-operating)public comapany.This is done so the private company can go publicfast.
  4. 4. Reverse Merger Price JumpsWith the merger, the shell may go from a smallmarket value to a large market value in a fewmonthsFor example, the shell may have a market value offrom $100,000 to $500,000The shell shareholders get to keep usually 5-20%of the new merged companyThe merged company may be worth millions
  5. 5. Hypothetical Jump in ValueDo the math, if the shell was worth $100,000The operating company is worth $10 millionThen the value of the merged company should bemore than $10 millionSo if the shell shareholders keep 5% of the totalnew, merged company, they have stock worth$500,000 or five times their original investment
  6. 6. Reverse Merger Example (chart courtesy of Stockcharts.com)
  7. 7. RMDMRMDM was a speculative, sub-penny stock thattook off after a reverse mergerHuge profits were made by the original holdersNote that it went right back down again For more such stocks see my YouTube video “Hottest Penny Stocks Part I”
  8. 8. RISKY!While large gains can be made by sophisticatedplayers in these stocks, they are very riskyMost OTC shells will not merge in a given yearThey have little or no public information andwhat is there may be incomplete, misleading oreven deliberately false.Merger stocks tend to rise and fall FAST!Never risk a lot of money in them
  9. 9. Where to find themReverse merger shells are found in the PinkSheets and on the OTC Bulletin BoardPink Sheet shells may not be providing publicinformationThere is no subsitute here for educated, tediousresearchExperience and knowledge can pay largedividends here – ignorance is expensive
  10. 10. Learn MoreSubscribe to my YouTube videosSubscribe to my blogwww. investing-performance.com
  11. 11. Read My Book on Amazon.com How to Pick Hot Reverse Merger Penny Stocks
  12. 12. John LuxTrader, investment banker, formerOTC Market Maker and attorneyLux.Investor@ gmail.com Copyright ©John Lux 2011

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