Different Types of Penny Shares

The Best Penny Shares to Buy

It is important to understand there are different types of Penny Shares, before you make any investment decision.

You need to know what are the best penny shares to buy, and why,and the purpose of this article is to help you make the right decision about the penny shares you might want to add to your portfolio.

Young or New Issue Penny Shares

What this means is that the Penny Shares you might want to buy are those of young Companies who have only been in business for a short time, or alternatively have only just become public. You need to understand that almost every Company was once a penny share to buy, before growth turned them into a relatively boring relatively stable large company with a track record.

Young or new issue penny shares to buy are of course risky, but of course the excitement is the potential which is almost limitless. 

Recovery Penny Shares to Buy

These are penny shares in companies that have fallen on hard times, for whatever reason. As they have fallen from their former highs so has their share price.

What we are looking at here are penny shares that have potential to grow, because of things like restructuring, which may be followed by growth.

You might come across a shell company, which is a company that exists but doesn't do any business or have any assets.  Most interesting of all is a Listed Shell Company which means it has shares which can be traded which gives it significant value. It may well be set up for new management, or even a cash injection for a new shareholder meaning they might be penny shares to buy.

Cyclical Penny Shares

 These are penny shares that rise and fall almost according to the season. In this case the season may well be due to the business sector they fall into, or whether or not the economy is growing or shrinking. Anything to do with the car industry might be a case in point, which does badly in a recession, but well when the economy is booming. Obviously these are penny stocks to buy when they are at their lowest point in the cycle. You will need to continually research share prices for thiese types of penny shares.

Defensive Shares

Oddly enough this type of penny share comes into its own during a recession, when the 'luxury' penny share value is depressed. You should look closely at necessity areas like food because consumers have to buy food regardless of the economic situation. It's not so much these penny shares decline, more their value increases.

Internet Penny Shares

These penny shares are quite different to bricks and mortar shares, because Internet Companies may appear to have no real assets at all, so their share value is likely to go up and down at speed according to the public perception of what they are doing, which might be quite wrong!!

Also look out for the penny shares of older companies who have decided to go down an internet route.

Finally

Biotechnical Companies with Penny Shares

These companies are in the forefront of technological innovation, and sometimes a small paragraph in a newspaper can alert you to a company engaged in such work. remembering less than 10% of their inventions ever get developed, but the successful launch, preceded by a penny share investment could be very lucrative.

Remember, before you jump in, the internet can be the source of great advice on Penny Shares.