how to do equity analysis or valuation? To find the adjectives pricing of a out of the ordinary stock?
Question:I would like to know something like the Methods of analysis(technical and Fundamental)Answers:
Technical analysts analyzes the historical graphical pattern of stock prices. They also look at the graph flash drawn by stock moving averages over different periods. They are really interested if the current price splash breaks through up or down the moving average line. From this, they derive a stock outlook for the adjectives price of the stock.
Fundamental analysis is concerned with the historical financial dramatization of the company. A security analyst analyzing historical facts will in turn form a projection of the future observation of this company (revenues, earnings, and growth rates). The financial guarantee analyst will ultimately focus on 3 inputs to derive the value of a stock. These are proceeds per share (EPS), a discount rate and a growth rate. The discount rate is equal to the risk free rate of return (10 Yr Treasury) + Equity Risk Premium. The discount rate is also called the required rate of return(RRR). So, using fundamental analysis the valuation of a stock is derived following this formula: EPS/(RRR - Growth rate). Let's lug an example: a company has income per share of $10 and is associated with a RRR or discount rate of 13% and a growth rate of 6%. The valuation of this adjectives stock will be equal to $10/(13% - 6%) = $143. And, if the market pro of the stock does trade at this value investors would say-so the stock has a Price Earnings ratio or P/E ratio of 14. This is because $143/$10 = 14. And, to be precise just roughly speaking where the open market trades today.
Security analysts conducting fundamental analysis are very focused on valuation metrics such as the mentioned P/E ratio above.
I enjoy shared with you most of what you want to know about stock valuation through any technical analysis or fundamental analysis. The rationale is that either of them don't work. Analysts recommendation using either method are typically much worst than an investor simply buying an index fund and holding on to it.
I recommend an excellent book address this subject in detail: Burton G. Malkiel's "A Random Walk Down Wall Street." In chapter 6, he covers the flaws of hi-tech analysis. In chapter 7, he does the same for fundamental analysis.
If you obligation any clarification, contact me through "Answer" and I'll modity my response accordingly.
Other Answers:
I believe that nobody can really make clear to you the method to determine the price of a stock in the adjectives. However. I can propose something. you can read annual reports and try to track trends in shifting the equity, you can calculate ratio from year to year such as debt to equity or return on equity. You can also look at Price/Earnings ratio for the full industry, competitors and state of the economy as a unbroken. I hope I was a bit of backing.
Most technical analysis is crap.
As for fundamental analysis -- own you thought about taking some classes? I'd suggest taking the introductory nouns class, a class in corporate nouns, some accounting classes and then a class surrounded by securities analysis.
If you don't want to do that -- buy a good book on Securities Analysis. INVESTMENT VALUATION by Damodaran is a right place to start.
is clicknmakemoney a scam?
Question:Answers:
Agree with above answer. Avoid anything that promises prompt or easy money. If it be true, then everyone would do it, and the money would be gone.
A lot of businesses be paid their money by getting a lot of relatives to send some money within to get started. Once they start, they find that the money isn't in that.
Many scams are base on a pyramid scheme where on earth the early birds are sitting higher than the pyramid and do make money. The majority of the citizens get surrounded by too late and don't clear any money.
So just because some relatives made money doing something doesn't mean you'll bring in money doing the same entry.
Other Answers:
They are all scam...everyone wants to kind money from home...so people steal advantage of false hopes.
most potential. just look at the mark.....sounds like a SCAM to me.
Yes.
What is the best strategy for making money within a undergo souk?
Question:Answers:
selling CALLS or buying PUTS or use the Profunds or Rydex short funds
Other Answers:
Selling bears? I own no clue.
going short,as the stock drops u make money
There are abundant ways...most experts tell you to look for dividend paying companies. Dividends can backing to cushion the blow.
Bear markets are driven as much by reaction as economics. So, basic investing sense is to look for stocks near low price to earnings trading effective their lows but with other strong fundamentals.
There's lots of worthy reading on pay sites that provide some freebies such as motleyfool and thestreet...
By a bunch of stock the afternoon before it become a bull market. That is guaranteed to label you lots of money.
some would say that if we adjectives knew it be a bear open market, wouldn't the market be lower already? for every dealer, there's a buyer who thinks he's buying low and selling giant.
Assuming you're correct, then 'selling short' is well brought-up. (selling what you don't own today and buying later to produce up for it when prices are even lower). If you are really into gambling, you can consider purchasing put option and/or selling call option.
Selling short is one way but is hugely risky and there is no decrease to amount of money you can lose if the stock goes up. The best path is to buy stocks that run contrary to the market, close to gold or silver mines (VGZ is one). When the souk goes down, similar to today, these stocks rise and the risk is only what you compensated for the stock. Good luck.
Buy a short fund
BEARX is at 2 year high today, another short fund is GRZZX
don't stay for too long though, the open market can turn up very hastily and short funds lose value after
making money over what kind of time interval? tomorrow? ten years? 30 years? it's too open concluded of a question. it adjectives depends on your investment objectives and when you hope to reach them (other than "as soon as possible," which is what we adjectives want... you have to enjoy an actual game plan though or you'll merely twist within the wind).
short selling is a great strategy for 3-18 month trading (imo). you really don't want to stay short for too long becauase, as was said, you can take hurt very vigorously. many industries are currently hitting their subsequent business cycle, so while many will decline many will rise. the ones basically beginning their nose-dive (based on their last 3-6 months) is where on earth you want to sell short. enjoy an idea contained by mind where you want to buy posterior (based on the return you want) and hit the button no matter what. leading is always better than losing, i don't strictness if it's by 1 point or 15 points.
if you're looking more long term, beside less risk, mutual funds are the mode to go. industry experts net all of these decision for you and it is still possible to achieve per annum returns of 12%-18% depending on fund performance. not to mention, near over 20,000 MF currently on the market, not a one have ever gone belly-up.
Get a patent on carry burgers and talk to McDonalds.
Why do hill stocks historically own lower P/E multiples than stocks within other industries (such as retail)?
Question:Bank stocks have sophisticated operating margins than a lot of Company's within other industries, but they seem to trade at a lower P/E multiple. Example: the 5 year average P/E span for most banks have been 12-28. However, stocks within the retail sales industry (Pet Smart, Best Buy, etc.) enjoy had an average 24-44 P/E multiple over this same spell even though their margins are lower.Answers:
Hi Dave,
I saved an article a while put a bet on that addressed this same give somebody the third degree. Basically it has to do beside the required reserves that banks must enjoy because they take your deposits (and due to the quality of the business). The article is below but is missing the related tables that it reference. Email me at bimmayute1@yahoo.com and I'll send you the article (word doc).
Nicholas
nsmconsulting.web
By Vitaliy Katsenelson, CFA
02/10/2006
Investing in the stock open market is a never-ending research experience. That's what makes it so appealing and intellectually stimulating. And I inadvertently have one of those live-and-learn experiences just the other daytime.
In my piece on Lloyds TSB(NYSE: LYG), I wrote that banks usually trade at lower price-to-earnings ratio to the market because they are considered riskier investments as a result of their elevated use of debt. That line caught the eye of Foolish financial editor Joey Khattab, who asked writers Stephen Simpson and Nate Parmelee whether they agreed near my logic. Both disagreed. They argued that larger banks own lower P/Es generally because they are perceived to own a slower or more limited growth potential.
At first, I thought near might be a conspiracy of Fools at work against me! So I asked several investment professionals for their opinion. And to my amazement, they adjectives agreed with the Fools.
So I looked at some larger bank to see whether they had be slow growers in yesteryear, and I couldn't reach that conclusion. Many of these bank, in certainty, had achieve very respectable returns growth and paid above-average dividends within the process. I then looked at expectations for adjectives earnings growth, and they appeared not to be below average, any. With the exception of Fifth Third(Nasdaq: FITB), which Wall Street once loved to love and now loves to loathe, the rest of the pack was trading at a substantial discount to the marketplace and still are.
Institution 10-Year Avg. EPS Growth Rate Median 10-Year P/E Current Dividend Proj. EPS Growth
Citigroup18.6% 15.3 3.8% 10%
U.S.Bancorp(NYSE: USB)
17.5% 14.3 4.5% 10%
Fifth Third15.8% 22.7 4.1% 10%
Wells Fargo(NYSE: WFC)
12.8% 15.6 3.4% 11%
Bank of America(NYSE: BAC)
9.3% 13.4 4.5% 9%
Amsouth8.7% 12.8 3.7% 8%
Regions Financial(NYSE: RF)
4.6% 13.7 4.0% 8%
Wachovia(1.6%) 13.6 3.9% 10%
JPMorgan Chase(NYSE: JPM)
(2.7%) 15.0 3.6% 10%
The answer must be more complex than just the growth rates. I believe the answer to banks' lower P/Es lies surrounded by the following four factors.
1. Cyclicality
The bank business is closely tied to the health of the reduction. As the economy expands, constraint for loans increases and bad debt decline -- a combination that improves banks' profitability. In a contracting cutback, of course, the reverse take place.
Because investors pay up for predictability, they on the odd occasion pay a full bazaar multiple for the volatility that comes with cyclical companies. Cyclical heavy-industrial companies approaching Caterpillar and Ingersoll Rand, for example, usually trade below the market P/E freshly as a many bank do.
2. Financial leverage
We have not have a bank crisis surrounded by the U.S. for a while, so most investors have forgotten in recent times how risky banks can be. But as Warren Buffett have said, by the time you find out a bank have a problem, it will be too late. The equity at most bank stands at meager 6%-10% of total assets, so when a bank does breed a mistake, its high leverage amplifies the problem.
3. Interest rate volatility
Banks are subject to the risks that come next to changing interest rates. They prosper when the difference between long-term and short-term rates -- surrounded by other words, the interest rate spread -- is high. However, when that spread narrow, it becomes increasingly difficult for bank to make any money. Many bank have address the problem by boosting their fee businesses. For example, fees statement for a full 46% of U.S. Bancorp's income, thereby making the company less susceptible to swings contained by interest rates.
4. Complexity of financials
I could teach my 4-year-old son to analyze retailers' financials surrounded by about 20 minutes, if I could bring back him to sit and concentrate for that long. OK, maybe I'll hold to wait a couple of years. But the point is, retailers' financials are enormously easy to think through. A quick look at the income statement and a peep at the balance sheet (especially the subdivision that focuses on inventories) will very promptly tell you what happen during a retailer's quarter.
Banks and insurance companies, on the other hand, are exceedingly different animals. Where analyzing a retailer is like playing checkers, analyzing a guard is akin playing two-dimensional chess. (I'll save the 3-D chess analogy for insurance companies; their financials are even more complex than banks' are.) Investors obligation to look at financial statements and at dozens of other sources to assess a bank's true performance. And that's a problem, since investors tend to embrace simplicity and shy away from complexity.
To get things even worse, banks' financials are riddled with assumptions. Although adjectives companies have to breed some amount of assumptions in their financials, the complexity and size of those assumptions increase exponentially with bank. Consider, for example, that it's not uncommon for a high-growth mound to have its expected credit losses plain because of the immaturity of its portfolio (in other words, tentative loans have not matured yet). However, as growth decelerate and large portion of the loans mature, credit losses may skyrocket beyond the estimated provisions.
The quality of growth
The terrifically size of large bank often get in the agency of their ability to verbs producing high-percentage growth. Instead, the bulk of growth for large bank comes from acquisitions. An acquirer is competent to fold most of the acquired bank's operation into its existing infrastructure, which, in turn, results contained by huge cost savings and, logically, higher proceeds.
That sounds great on paper. However, acquisition come with risks, including integration challenge. Bank One (now part of JP Morgan Chase) academic about that problem firsthand when it acquire First USA. Soon after the acquisition, Bank One run into huge problems with the incompatibility of the combined companies' computer systems, and the stock tumbled as a result. Regions Financial have similar integration problems after making successful acquisitions for a long time. To sustain its growth, it eventually have to start marking larger and larger acquisition, and that's when the problems began.
In increase to the integration risks, bank executives' ego and their attendant desires to manage bigger and bigger (though not necessarily better) empire often gain in the process of common sense. Ultimately, the acquirer overpays for the acquire.
Still, despite all of the potential pitfalls, acquisition have be the main source of EPS growth for most considerable banks. In reality, I can't think of a full-size bank that become large by bearing of organic growth. Not one!
Foolish bottom column
Growth by acquisition is much riskier and usually more expensive than life growth is. Investors recognize that risk, and thus they put a great deal less helpfulness on large banks' growth. So, to a full-size degree, Joey, Stephen, and Nate be right: Slow organic growth is, surrounded by part, responsible for banks' below-market valuation. However, I believe that higher risk cause by cyclicality, high financial leverage, and the complexity of financials contributes to the lower P/E as in good health.
Fool contributor Vitaliy Katsenelson is a vice president and portfolio manager next to Investment Management Associates, and he teaches practical equity analysis and portfolio regulation at the University of Colorado at Denver's Graduate School of Business. He owns shares of Lloyds TSB, and his company has positions within U.S. Bancorp, Lloyds TSB, Wells Fargo, Citigroup, Bank of America, Amsouth, Regions, and JPMorgan. The Motley Fool has a disclosure policy.
Other Answers:
I'm probably wrong, but I thought you want a low P/E gist the Price to Earnings ratio is low. In other words, the price of a share is lower. ? lol
My dad is big into stocks and always looks for low P/E's
A stock P/E is correlated beside its future earn growth rate. Companies with large growth rate get lofty P/E. Profit margin is essential, but the key is the growth of the earn. Since future earn is unknown yet, a stock P/E is really correlated beside the market expectation of the company's adjectives growth rate. If the market expects the company to grow rapid (maybe right or maybe wrong), they will drive the stock price soaring, which will result a high P/E.
The knob for investing is to look for a company that you think will grow faster than the marketplace expectation. High P/E or low P/E does not really matter. For big P/E stock, if you think the open market expection is too low (even if the expectation is already high), you should buy it, as the stock will go superior. For example, G00GLE has overwhelmed people's expectation in times past few years and its stock has gone up profusely.
For low P/E stock, the market expect low growth rate. If the company is growing even slower than the open market expectation, then the stock will progress lower. For example, Lucent has low P/E but its stock is still going down, because the company is surrounded by even worse shape than people have expected.
what is index trading?
Question:Answers:
It is trading quite generous collections of stocks rather than individual stocks. One of the most celebrated indexes is the S&P 500, which is a collection of 500 popular stocks. The performance of the S&P 500 will be especially similar to the performance of the stock flea market as a whole. The intention for investing in indexes is that it reduce risk greatly. If you only enjoy one stock, your investment could fluctuate wildly. If you own a collection of 500 stocks, if one stock goes down profoundly, it doesn't make much of a difference because within are 499 more stocks.
Other Answers:
The idea is simple: A representative group of stocks (or bonds) is special from a specific market or sector to serve as a benchmark or index. By investing contained by a portfolio of the securities that compose the index, you seek to track the reading of the index.
Take Cereal:
There is Kellogs, General Mills, Quaker Oats. They can be considered the representative group of Cereal Companies and/or Stocks one could buy in the particle segment. As prices rise on Cereal, the perspective grain companies profits may also rise and as a group / index we can follow their growth or downfall. Trading on the index - we may be artificial by market fluctuations but indexes enjoy a lower risk as the index is normally comprised of several stocks from several companies approaching the dow jones.. An index is a basket of securities, whether they're stocks, bonds, etc.
Some general public invest in them as a opening to diversify, while others are looking for a quick profit by buying it and next selling it soon afterwords.
For example, the S&P500 invests in a picnic basket of top 500 companies. The Russell 2000 invests in a much broader range of stocks, 2000 to be exact.
Is at hand a program that will comfort me see adjectives the stocks that enjoy gain the most inwardly 20 mins?
Question:Does anyone know of a free program? Thanks in creditAnswers:
yes and it's free. tradingday.com
good hunting
Other Answers:
YES, AS PER THE ABOVE ANSWER.
BUT HOW DO YOU KNOW, HOW WOULD YOUR BROKER KNOW, WHAT THE NEXT 20 MINUTES HOLD, OR 20 DAYS OR 20 WEEKS...
International ridge information?
Question:I opened a edge account beside a foreign bank to trade stocks on that countrys exchange. The picture itself has an interest rate of 14.00% Anybody own any ideas as to how i can utilize this dignified rate of interest to make more money? ThanksAnswers:
14 percent...! wow
which wall and which country?
You can trade on gold...respectively time an asshole blow himself off...the price of gold ingots climbs up.....Last year the price of gold climb up by 30%
If you pinch a 2 year average you could have gain 70% funds gain
lordhardrocks@yahoo.com
I don't own correct credit. But I want to grasp a loan to unseal a small restaurant? How do I do to win a loan?
Question:Answers:
Design a business plan and present it to investors. Try to make them silent if you can consequently slowly buy them out. Good Luck!
Other Answers:
You don't
Associations may be a good avenue to explore as all right. These organizations will address lots of the thoughts, questions and concerns you'll inevitably hold as well as copious you haven't anticipated yet. See the source box for some relevant links.
There are plenty of free informational resources out within. Check the source box for links to articles.
Hope that helps! I yearning you much success & delight in adjectives your ventures!
Source(s):
Associations:
http://www.restaurant.org/ -- National Restaurant Association
http://www.restaurant.org/states/index.cfm -- Link to State Restaurant Associations
http://www.nraef.org/ -- National Restaurant Association Educational Foundation
Articles:
http://ezinearticles.com/?Writing-A-Restaurant-Business-Plan-To-Help-Your-Business-Grow&id=78872 – Writing a Restaurant Business Plan to Help Your Business Grow by Shaunta Pleasant
http://www.ezinearticles.com/?Menu-Driven-Business-Planning&id=5785 – Menu Driven Business Planning by Monte Zwang
http://www.ezinearticles.com/?The-Only-Way-Left-for-the-Little-Guy-to-get-Rich-in-the-Restaurant-Business&id=179421 – The Only Way Left for the Little Guy to Get Rich surrounded by the Restaurant Business by Jerry Minchey
http://ezinearticles.com/?Guide-to-Bad-Credit-Loans&id=36822 – Guide to Bad Credit Loans by John Mussi
http://ezinearticles.com/?When-and-Why-You-Need-a-Bad-Credit-Small-Business-Loan?&id=215470 – When and Why You Need a Bad Credit Small Business Loan? by Amanda Pane
http://ezinearticles.com/?Nourishing-Business-Plans---Bad-Credit-Unsecured-Business-Loan&id=210350 – Nourishing Business Plans – Bad Credit Unsecured Business Loans by Peter Taylor
Do you dream up Dell computers will be bought out by a foriegn computer company within the implicit adjectives?
Question:Answers:
It essentially is a foreign computer company already. Check out where adjectives the laptops are made and about 1/2 of the desktops.
Other Answers:
Dell have a market trilby of $60 billion. Adding in debt, its EV is probably close to $75 billion. So primarily someone has to own enough change and borrowing power to get together $75 billion. So, no I do not assume it is possible someone will buy out Dell.
What be your best long residence investment stock gain you own have?
Question:What was the best investment gain you have on a single stock buy buying and holding for over 2-3 years? (% wise, or lattice gain even)Why did you pick it in the first place, and why did it do so in good health?
Under what conditions would you sell it if at adjectives?
Thanx!
Answers:
At the moment, "Debt Free Direct" (DFD.L)... bought 2.32 Shares @ 215.52pence per share (inc. commission) on 21st April 2005 through HALIFAX SHAREBUILDER.
Now valued @ 501.5 pence per share / 132.70% in profit. Bought after a seeing tip from http://www.everyinvestor.co.uk
Aquarius Platinum (AQP.L) - bought 21st July 2005 @ 439.65 pence per share. Currently 87.31% within profit (despite dropping a bit today).
Bought as a hunch after looking at the EPS growth percentage + P/E figures here: http://fool.digitallook.com/?action=forecasts&ticker=aqp
Not planning to put on the market for a good time all the same, since both pay dividends and hang on to on growing.... especially the "Debt Free Direct" one, the way populace keep on running up credit card debts currently.. same goes for "DebtMatters" (DEBT.L) - 47.82% up since 22nd December 2005, and looks approaching it's gonna keep on going for a while all the same: http://fool.digitallook.com/?action=forecasts&ticker=debt (DEBT.L = another tip I got stale http://www.everyinvestor.co.uk...
Other Answers:
As regards the Indian stock market are concerned, I found investment in Mcdowell a worthy profitable investment. I got some handsome gain by investing within that scrip. It was a a dutiful FMCG Scrip to buy at the first instance, and being a strong promoter holding group ( The UB Group ), the price have risen in the recent times though it have now slided immediately.
Apple. I bought 10k at 8 dollars, held for about two years, and sold out at a moment or two over 75.
Why did YAHOO transmute the display of portfolios showing unneeded symbols and using lateral viewing space? BAD?
Question:Answers:
I think they must be employ some blind bugger with a guide dog to re-design the different sections of Yahoo lately.... first it be the profiles, then the Yahoo Groups..... very soon the damn portfolio's (which I only really started using anyway 'cos the vastly superior ones on Motley Fool get ditched).... and judging by the results of the makeovers, the guide dog's get worse eyesight the person it's mean't to be guiding.
Either that, or they've be doing the re-designs during "bring your child to work day", and been using the kids to do the redesigning contained by order to set free money.
I guess it's a bit like that elderly story about the Emperor's untried clothes.
Other Answers:
I like it
Hi looking for info,on vending appliance investments. Do u own to buy a route? gratefulness?
Question:I hear vending machines r a good investments, but u must buy aroute from some one first. Is this true?If so, how do I find a source for that info, &make sure it isn't ascam?Answers:
ok I'll form sure it isn't my as*cam. Sometimes I leave it on and it get so hot, it's so crazy, OMG! Vending machines r a good investments!
Seriously, You'll probably own to buy a route. I knew of one soul who offered me his business for $9,900 . But it seemed to me approaching he was trying to evade some excise and I didnt believe his route was worth partly of that.
Also, my opinion of the industry is that solitary a few are making real bread and the rest are small runs. I do dream up it'd be a stressless gig for the most constituent. But, you are very cap by the amount of goods you can get rid of based on your partnership of commercial places or wherever you put your machines. But it's duplicate kinda gig as a self serve motor wash or something thats merely trickiling in lolly... and people commonly underestimate the amount of maintainence and man hours involved with vending.
Find someone interested surrounded by having a electrical device in their biz and buy a used apparatus on ebay. Start there i would.
I'm boring even myself... sigh
What are some pious books on Financial/Market Speculation?
Question:I am specifically interested in books on Speculation and NOT Investment. ThanksAnswers:
The Battle for Investment Survival -- by Gerald Loeb
did any 1 of you guys tried stock picking services??
Question:Answers:
Unfortunately, stock picking services are becoming so prevalent that they exist on public TV, a la "Mad Money" on CNBC.
Honestly, as an investment professional, I have used Zacks, IBD, and different info providers through Bloomberg and have found that not a soul is necessarily better than the other. To be truly accurate requires a funky mixture of: accurate financial analysis, understanding of marketplace psychology, technical analysis and luck. Every stock picking service have a hook or philosophy that, if proven wrong, cannot be held liable, because the investment may not have be suitable for you (it says so contained by the fine print).
Addiitonally, the best money is usually made by those investors that have an benefit over others. It may be knowing the owners of a company or being privvy to information not in general available. Illegal or not, it exists.
Yes, it is nice to pick a winner and take home 20% in a month, but it can evaporate only just as quickly. Set yourself some elemental guidelines when picking and make sure that your holdings are diversified. Also, do not try to time the souk. A perfect example are adjectives those that thought Apple Computer (AAPL) would sustain the recent rebound around $72 surrounded by early May. Since next, it has dropped to $52.25.
The best, and simplest, guidance I can give is indistinguishable my grandfather had, slow and steady usually win the race. Diversification, dividend reinvestment and quarterly rebalancing will outperform over the long term (and probably free you some sleepless nights). For further proof, just check out an Ibbotsons Chart. If I am not mistaken, $1 dollar invested surrounded by the S&P500 has other outperformed all other asset classes. Today, we enjoy an advantage over our forefathers: an exchange traded fund connected to the S&P 500, the SPY. This should effectively resolve the diversification problem.
Other Answers:
no....bet their all going down right NOW....except for thoses that you ensnare on TV....they run up for a week 2-outta of 3 PICKS then fund down even below where you saw them at for that one beater ...its harder than you think when it comes to sellin or holdin, a honest FREE review is Moneycentral.com...their stock rater is pretty cool
Is here serious money to be made contained by penny stocks, and if so how?
Question:Also, is there any scam to watch out for? ThanksAnswers:
There can be serious money to be made if you research everything guardedly (remember, some of the biggest names on the stockmarket be penny stocks at one point).... however there can also be serious money LOST too.
Here's a typical example of how it COULD work if your lucky, using my Halifax Sharedealer trading details + the shares in my ISP as an example:
Pipex Communications (PXC.L) - I stuck lb5 on them within April 2005 when they were valued @ 7.75pence
With sharebuilder, that be lb3.48 worth of shares, and lb1.52 in commission & Stamp Duty. It bag me 44.897433 shares in them.
Now, conjure up you hold onto them shares for bloody ages, so they rise in expediency to say 50pence a share.
lb0.50 x 44.897433 = lb22.45 (or lb22.4487165 if you don't round that numeral up).
Then of course next to Penny stocks they don't usually pay out any dividend...... but envision how much you can earn with that plentiful shares picked up on the cheap once they've matured enough to wage a dividend to re-invest.
Let's say 10pence a share (just to be paid it easy to work out)
lb0.10 x 44.897433 shares = lb4.49 (practically a repayment of your initial investment).
But you've also gotta remember that as there's so many of them for your money... and you've put a just bit of money on them (and got bloody loads of shares within them as a result), if they go down surrounded by value on you, they can grant your portfolio's value a right devout kicking... so are as risky as trying to get a bj stale an Alligator with toothache.
Other Answers:
penny stocks is dangerious >>>you will most expected lose your money
A lot can be made in a penny stock, if the stock suddenly moves up a bundle. Penny stocks are so inexpensive for a drive though -- their company is usually struggling; so they are quite risky. Other drawbacks are that they are not marginable; and the spread between the bid and ask is normally so great that the fluctuation that you see is not the price rising, but someone executing a purchase as opposed to a public sale. When making a decision to buy, weigh out the benefits and drawbacks, and trademark your decision.