Hey Sammy, good luck to you in your investment life. FWIW here's a few generic thoughts to ponder, while you marvel at your good fortune first time up at the penny stock plate.
1. This company is a rare, rare example of a penny spec that looks to be about to make good - really, really good. Mate, you've just walked into the casino, plonked your small stake on roulette number 26 - and bugger me, it's come up. Good for you, but don't for your own sake even begin to think that this biz is easy, or this outcome is common.
2. You pay for the rare payoff in penny specs by the roll call of written off pitches of the dice. Sure, you will learn to pick the better pennies at start-up phase and reduce the odds...but every penny remains a gamble and you should always be prepared to lose it.
3. Ask yourself why you want to play the specs. If the answer is only 'to make that big payoff', you're probably here for the wrong reasons. Sammy: if it's not fun, too - the ups and downs, the adrenalin hit of a fast multi-bag run, the camaraderie of the longshot holder, win or lose - dude, go and sink your dough into the blues, or buy a house, or just park your spare cash in...well, cash.
4. Management is everything in a penny bunger. Management is everything in a penny bunger. Management is everything in a penny bunger. Find the good guys, and look hard at what they do, not what they say. Avoid hype, egos and delusional chest beaters. Watch for: skin in their own game. If directors aren't buying their own stock and/or trading salary for equity, sniff hard. Money talks. Watch what they do with theirs.
5. DYOR means...ask yourself questions. Hard questions - as if you're investing on behalf of a mafia boss and if you f**k it up, his thugs will chain you to a fridge and drop you in a mile of seawater. Then don't stop seeking answers to those questions until you reckon you could look him and his thugs in the eye, and maybe save your skin by at least explaining the rationale behind your reasoning. But remember too that management can answer every question perfectly, have every base covered, have a brilliant product and a watertight business model...and still tank. It's specs, that's the gamble. But mitigate as many of the risks as you can with boring research, and especially the 'what if' question game.
6. Revenue is king, even in a penny. Read everything you can get your hands on about how the product behind the stock will make money - mineral ore, computer chip, a new fire resistant chemical, a medical breakthrough...every single company lives or dies on customers paying money for the 'thing'. You don't have to crunch FA numbers like a madman, but you do have to be able to answer the basic question: how is the company behind this stock going to make money? How does this stock's industry work in general? Who are the leaders and why? What are the business plans that apply, that work? Why do failures occur in this sector? All this is background you simply have to know, to reduce your odds.
7. But them armed with this seek out disruption. Always disruption. The trick is finding the managements and the products that throw out the existing industry bathwater - for a better product, a better business model, a better customer market, for better crunched numbers - but not the baby that is the core revenue pulling 'thing' behind that disruption shift. And there are only two kinds of 'things' that, when you peel away all the layers of whatever business model is in play, put money in the 'income' column: people pay for a product, or they pay for a service. Make sure you know which it is that lies behind the stock you invest in, and how disruptive it is or is likely to become. That's the spec gamble pay-off multiplier; that's the only reason to risk the penny dreadfuls at all. If the potential disruption just isn't there...you're taking a pointlessly high risk with your money.
8. Finally - be humble. Be thankful of wins and respect the place of losses; don't ever sneer at other spec investors' misfortune, because it was you yesterday and will be you again tomorrow (if you're really a spec investor, not just a lucky tyre-kicker). And if and when a penny that you backed does hit a buck a share (or $10, or $100) - as we just did here, goodo, the usual nod to our superb management and warm wishes to all holding brethren - then take some time out to send good karma to the great mysterious goddess of the specs. Count your blessings, savor the moment, remember your past (and future) failures, and....enjoy. Enjoy it. There is nothing more viscerally thrilling (at least as far as the boring old world of money is concerned) than backing your judgement on a long range - or short term - outside shot...and being there when the world turns green.
Good luck Sammy - and all of us here on the frontier fringes of the marketplace. A good day today. A satisfying, good, rare day.
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