Biotech Penny Stocks To Watch – Where Are The Undervalued Penny Stocks and How do I Find Them?

It is no secret that biotech penny stock investments can be very powerful. But you could be making a lot more profit by seeking out undervalued penny stocks. Each stock that is traded falls into one of three categories: undervalued, overvalued, or fairly valued. It is obviously best to avoid companies that are considered to be overvalued, and the best biotech penny stocks to watch for are the undervalued ones, because they are likely to rise in price when their value becomes acknowledged by other investors. So, the question that we are here today to answer, is ‘how do I find such biotech penny stocks?!’ Read on for some great tips, and keep in mind that they apply to any type of penny stocks, and not just those in the biotech field.

The simplest value indicator is that a company has positive earnings – i.e. the company is making money. Currently most penny stocks actually show negative earnings – i.e. they are losing money. For the ones that are making money, you should look up their PEG, which is the price to earnings growth. This number can easily be found on such sites as Google Finance or Yahoo Finance. Ideally, the number you are looking for is less than 1. This number is a sign that the penny stock price is undervalued versus its growing earnings prospects.

Another financial metric of biotech penny stocks to watch for is the PE ratio. Of course, you will need a company that has shown actual positive earnings to use this metric. The best way would be to compare the company’s PE ratio to the other companies’ PE ratios in the same industry. Yahoo Finance contains a rather useful section in this regard where it displays your company’s competitors PE’s in a snapshot.

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The information supplied in this article is not to be considered as medical advice and is for educational purposes only.