How to Turn Pennies into Millions Penny Stocks

I heard a beautiful story of Warren Buffett recently. One day Warren was in the elevator to his office in Omaha. Some people lift others as well. In the center of the room was a shiny penny. Everyone had the opportunity to pick, but nobody did. Finally, after a few seconds, Warren leans over and picks it up. He stared a moment and then dropped a penny in his pocket.

I do not know if the story is true or not, but it looks like something he would do. We all have dreams of making the ear of millions (or billions in the case of Warren). Some people have an ability to make money from virtually nothing.

Now before you ask questions about my sanity let me ask you a question. Have you ever traded "penny stocks"? Do you know what a penny stock is?

There are hundreds of definitions of penny stocks. Some investors think very literally. Only stocks that trade in penny shares are penny stocks. The U.S. government defines penny stocks are a bit 'freely. Here is a quote directly to the SEC's website:

The term "penny stock" generally refers to a low-cost (under $ 5), speculative securities of very small businesses. While penny stocks traded in over-the-counter as OTC official statement Board or Pink Sheets, may also trade on stock exchanges, including exchanges of foreign securities. Furthermore, penny stocks are securities of certain private companies with no active trading market.

Look, forget all the legalese and government mumbo-jumbo.

For me, a penny stock is a publicly traded company whose total market value (market capitalization) is very low. Large cap stocks are worth more than $ 50 billion. Mid-caps are worth $ 10 to $ 50 billion. SmallCap are valued at $ 1 to $ 10 billion. In addition, micro-cap stocks or penny stocks worth $ 50 million to $ 1 billion.

How are they classified the companies are worth less than $ 50 million. . . I call fun!

Seriously, if you are able to invest heavily in one of this penny stocks micro-cap, just as it begins to grow, you can earn serious money.

About a year ago, I did some research on the coal sector. If you do not know, coal is a major source of energy in the United States. Some even crowned it the "King Coal" and urged the United States in Saudi Arabia of coal.

To say that we have a lot of the substance is an understatement.

While I was doing some research, I came across a very interesting company, James River Coal (JRCC). The company was founded in 1988 and producing coal for sale to utilities and industrial customers. They are 6 mining complexes, 26 underground and surface mines and 10 preparation plants. Altogether, the company has more than 265 million tons of coal reserves proven and probable.

James River Coal has been a penny stock. The entire company was worth less than $ 125 000 000 dollars.

However, coal prices began to go on. Moreover, you know what went up, and down the prices? That is right, the price of the shares of all companies in the coal. Not only is James River Coal, but some of the great players too. Companies like Arch Coal (ACI) and Massey Energy (MEE) has seen their stock rose.

JRCC returned over 1,100% in less than a year!

Now, you notice the picture has recently dropped the price. In addition 'no doubt because many investors make huge profits off the table. However, the recent correction, the stock is still above 500%.

Now you see how invest in penny stocks can be as precious?

Do not forget, nothing like investing in penny stocks is not at risk. Make sure that the due diligence and speak to mediate all the risks and potential benefits of investing penny stocks.