What is a Penny stock? Typically in the security or financial markets this is a stock, which trades for under $5.00 a share. At StocksUnderABuck.com we believe a truepenny stock is one that really trades for less than a dollar

What is a share of stock? When you buy a share of stock you are owning a piece of the company. In it's most simple form consider this. Company X decides it needs money to expand its business or pay off debt. Company X makes an initial public offering of 1 million shares at $5.00 per share. This raises 5 million dollars for the company. In exchange for this money the people that bought the shares now own the company. Each share is worth one vote. Whoever owns more than 50% of the shares in essence controls the company.

If company X makes money it can give this back to the investors by way of dividends. Such as for each share owned the company will give you $1.00 or the company can keep the money and use it invest in factories, property, people or equipment, to make the company grow. If company X makes more money than the shares become worth more money.

What makes stock go up or down? The good old rule of "supply and demand" The more buyers there are the higher the stock price will go. The more sellers the lower it goes.

Unlike large markets like the New York or American exchange, Penny stocks are traded on the pink sheet market. This is done by computer, which brings buyers and sellers together, unlike the NYSE or the American exchange there is no face to face buying and selling.

Why buy penny stocks? Though very risky penny stocks can be very rewarding. Consider this. You buy 100 shares of a stock at $25 per share. This would cost $2500. The stock goes to $50 per share. You sell the stock and receive $5,000. A 100% profit.

Buy a stock at . 25 cents a share. For the same $2500 you can buy 10,000 shares. If the stock goes to $1.00 per share you could sell it for $10,000. A 400% profit. Also the potential is there for the stock to go much higher. Much higher!

We often find that other companies buy out penny stocks. The price can go up many times over when this happens. Of course the flip side of this is the company could go out of business and you could loose all of your money invested in that company.

At Stocksunderabuck.com we search through penny stocks looking for the new future solid companies of America. We also look at companies, which have fallen on hard times. Often penny stocks are company's which at one time might have traded at $20 or $30 a share, but due to past mismanagement, lawsuits, or loss of market share, these companies incur losses year after year and soon these companies are nearly worthless. The great investing opportunities are finding companies that manage to reinvent themselves with new leaders of or new products. If they can start making money again they will no longer be penny stocks.

For maximum profit we believe in the philosophy of buying stocks when nobody wants them (pennies per share) and selling them when everybody wants them (Dollars per share)

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Penny stocks should be invested in with caution and thought. Research is the key to success. No guarantees are made as to the expected performance of any one stock