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Considering that price volatility is equivalent to risk, a commodity’s trading range is a great indicator of risk. Conservative investors will gravitate towards securities with smaller price fluctuations as compared to securities with larger price swings, preferring to invest in relatively stable sectors such as health care, utilities, and telecommunications and avoiding high-beta sectors like commodities, technology, and financials.
A 52-week high/low is the highest and lowest share price that a stock has traded at during the previous year. Investors and traders consider the 52-week high or low as a crucial factor in determining a given stock’s current value while also predicting future price movements. When a commodity trades within its 52-week price range (the range that exists between the 52-week low and the 52-week high), investors usually show more interest as the price nears either the high or the low.
One of the more popular strategies used by traders is to buy when the price eclipses its 52-week high or to sell when the price drops below its 52-week low. The rationale involved with this strategy says that if the price breaks out either above or below the 52-week range, there is momentum enough to continue the price fluctuation in a positive direction. Pharming Group NV (:PHGUF)’s high over the last year was $0.94 while its low was $0.22.
Beta measures the volatility of a security in comparison to the market as a whole. The tendency of a security’s returns is to respond to swings in the market. For example, a beta of 1 means that the security’s price will move in lockstep with the market. A beta of less than 1 indicates that the security will be less volatile relative to the market. A beta of greater than 1 tells us that the security’s price will be more volatile than the market. Beta is an expression of the tradeoff between maximizing return and minimizing risk. Pharming Group NV’s Beta number is 1.39.
Outstanding Shares refers to all stocks currently held by all shareholders, including blocks held by institutional and insider investors, of a given company. Outstanding shares are shown on a company’s balance sheet as “Capital Stock.” The number of shares outstanding is used to calculate key metrics such as a company’s earnings per share (EPS), cash flow per share (CFPS) and its market cap. The number of outstanding shares is not static, as it can fluctuate greatly over time. Pharming Group NV (:PHGUF)’s number of shares outstanding is 514.43m.
Individual investors consider penny stocks to be Wall Street’s Wild West, an untamed world of investing apart from all the media coverage and attention that comes with stocks that are traded on the major exchanges. While the ups and downs can be pretty impressive within the penny stock world, they’re not often heard about on the outside.
Though you don’t often see coverage of penny stocks every day on CNBC, it doesn’t mean that penny stocks are without drama or interest. Unfortunately, penny stocks have earned a reputation as a shady game filled with scams and corruption.
If penny stocks aren’t traded on normal exchanges, where can one buy them? Like any other stock you would buy, you can purchase shares of a penny stock through your normal stockbroker — regardless of whether or not it’s listed on a major exchange.
The cheap stocks listed on major markets like NYSE and NASDAQ aren’t typically considered “penny stocks” in the strictest sense, they can take on the characteristics of the benefits of penny stocks without as much risk. The reason is that these exchanges have strict listing requirements, and though these stocks might not allow for as much of an upside as “true” penny stocks can, they are usually more reliable.
True penny stocks can be found on the Over-the-Counter Bulletin Board OTCBB), which is a quotation. As opposed to Pink Sheets, which is just a quotation publisher, OTCBB does maintain listing requirements (though they’re less strict than those of an exchange). It’s for this reason that OTCBB has some added legitimacy.
Pink Sheets is a quotation system that provides information to investors on stocks that are registered with it. Pink Sheets isn’t registered with the SEC and doesn’t enforce listing requirements, making them riskier.
Though penny stocks are riskier than regular stocks, it’s their volatility that makes them attractive to investors. It’s not impossible for, say, a stock to jump from $0.05 to $5 in two weeks. Though companies that successfully jump from penny stock to power stock are rare, the ones that do can make their investors wealthy. The trick, of course, is finding the right stock.
Companies that can successfully make the jump from penny stock to power stock are rare, but when you find them they pay out in spades. Numbers vary quite a bit in the penny stock world, but investors have raked in gains over 1,000% in a couple weeks’ time. The real trick is finding the right stock.
The SEC considers a penny stock to be any stock under $5. Though there are sub $5 stocks trading on the big exchanges like NYSE and NASDAQ, most investors won’t think of these when describing a penny stock.
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