By Michael Robinson, Radical Technology Editor
Don't waste your time scouring through the thousands of pennies found in the Over-The-Counter Bulletin Boards or Pink Sheets...
The best penny stocks can be found in plain sight... on the Dow Jones, NASDAQ or any other major exchange. These stocks are fully regulated...can be easily traded with a broker... and are very cheap. Under $5 a share.
I'm talking about "Fallen Angels."
A "Fallen Angel" is a high quality-company whose stock price has been beaten down due to market forces out of its control. They are typically off the radar screens of the big institutions. Yet these stocks have extremely strong fundamentals and offer hellacious upside.
Pick one up at the right time, and you could see your profits soar.
Editors Note: Prize nominated author Michael Robinson is one of the nation's top micro-cap stock experts. He's just released his top "Fallen Angel" biotech recommendation. [ppopup id="70011"]Click here.[/ppopup]
How To Find "Fallen Angels"
Many of the best Fallen Angels are biotech or technology companies mispriced by the market and on the verge of a breakthrough. The best thing to do is look for a catalyst. A catalyst can be any type of event, date, or unique situation that could create a spark that'll send your share price soaring.
Here are two of the best catalysts:
Ready For Market:
Many penny stock companies (especially health related biotech's or innovative technology companies) spend years researching and developing their products. This may include lengthy and rigorous testing. Pharmaceutical biotech products can spend years in trials and tests.
The catalyst occurs when the company is ready to go to market. Look for the end of trial dates... or actual roll-out dates. That means the company is ready to manufacture and sell its products and services. For biotech's, it also could mean a promising drug is nearing FDA approval.
Buyout Candidates:
Many small companies are prime buy-out candidates. Typically these companies have a market niche, a technology, a promising drug, product (even patents) that a larger competitor desires. When one company buys another, they agree on a price. Many times, that price is much higher than with the penny stock's company's price is currently trading. This gives those shareholders an instant gain.
My advice is to follow Merger & Acquisition (M&A) trends to see what sectors are hot.
For example, record-breaking M&A activity is occurring in the pharmaceutical biotech sector right now.
That's because big drug makers risk losing $170 billion in annual sales when patents expire on their most lucrative drugs. So they're embarking on a multi-billion-dollar shopping spree, buying up small players who can replenish their pipelines.
Imagine if you buy a sensational biotech for under a dollar and the company gets bought up by Big Pharma. It's practically guaranteed that you'll see sizeable gains.
You can find a slew of "Fallen Angels" in the markets right now.
Even though the S&P 500 has nearly doubled off its lows of March 9, 2009, it's still trading at only about 14.1 times earnings, well below its 15-year average of 20.2.
In fact, earlier this spring when markets hit 52-week highs, that was the "cheapest" stocks have been since 1989.
That means even the highest quality companies can be temporarily undervalued... including those way undervalued below $5 a share. It's the perfect time to find your first "Fallen Angel."
EDITOR'S NOTE: An upcoming trigger date could provide this undervalued "Fallen Angel" a big lift before the end of this year. Take a look at Michael Robinson's top recommendation. [ppopup id="70011"]Click here[/ppopup].
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