Tiny companies are a great way to make a fortune off of the stock market. Synutra International, Inc. (Nasdaq: SYUT) is a great example of this. This dairy-based, nutritional-products company has jumped from a little Bulletin Board operation to a billion dollar corporation. The company finally graduated from Over-the-Counter status to the Nasdaq Best Stock Market bringing with it 113% gains in less than two months.
This happens all the time and is how some of the best investors in the world became the richest investors in the world. Buying some shares for pennies on the dollar and selling at $10 or $20 is possibly the fastest way from being a hobby investor to a super investor.
This is all well and good, but do you really think that you have access to these lucrative companies? Not really.
The problem is most of them aren't even traded on a major exchange.
The average penny stock is found on one of two places: Pink Sheets, LLC or the Over-the-Counter Bulletin Board (OTCBB). Until recently, it has been nearly impossible to get good information about companies like these. Until a few months ago, the pink sheet stocks offered virtually unaccountable information. No required filings, inaccuracies rarely corrected, and even shell companies… Until now…
The pinks have released a new classification system that helps investors sort out the companies with little or no information, leaving you with only credible companies with enough info to make smart investment decisions.
The top level of classification is called PremierOX. This level ensures investors that the companies listed here sell for at least $1 per share, have at least 100 shareholders with a minimum of 100 shares each, as well as meet the requirements of all the major exchanges.
The second tier is called PrimeOX. This level requires virtually the same except there is no minimum share price and only 50 shareholders with a minimum of 100 shares to gain entry.
The third is for international companies. This level, International OTCQX, is currently being broken into two separate categories, Int'l Premier OTCQX and Int'l Prime OTCQX. The requirements here are basically to meet those of the company's national exchange (a UK company would have to meet the London Exchange's requirements). The second prerequisite is to have their filings available in English.
This new classification system makes all of us at Penny Sleuth ecstatic because it gives more incite into the relatively unexploited area of true "penny stocks." For a limited time we have put together a FREE Report that examines 3 stocks that are set to explode. To access this report sign up for The Penny Sleuth and you will receive expert commentary on Pink Sheet stocks and much more.
A Safer, Premium Way to Play the Pink Sheets
A major concern we've been hearing about investing in stocks listed on the Pink Sheets is accidentally stumbling onto an illegitimate company that could instantaneously drop 50%, 75% or even 100%. We'll help you avoid those sub-penny shell companies that do nothing more than issue press releases and more shares of worthless stock.
First, some background information is necessary. You see, the Pink Sheets is not an exchange like the Nasdaq or Amex. It's only a quotation service. The only requirement a company faces on the Pinks is that it must have at least one market maker quoting its stock. Financials do not need to be disclosed.
Even on the OTCBB, companies are required to keep current filings with the Securities and Exchange Commission. This lack of information can make investing in the Pink Sheets downright frightening.
But there is a very small group of stocks on the Pink Sheets you need to know about, especially if you have never traded on the Pinks before. It's a new premium listing service called OTCQX. The new listing service includes three different levels, each with specific requirements for the companies.
As I mentioned earlier, the top tier is called PremierQX. These are securities that trade for a minimum of $1 and meet all of the requirements to be listed on a national stock exchange. This means the companies are required to post quarterly and annual reports, as well as interim information that could affect share prices.
PrimeQX stocks, the second group, must also meet the requirements to be listed on a major exchange.
However, the stocks listed in this group do not have to trade for the $1 minimum.
International OTCQX stocks, the third category, must meet requirements of their foreign exchange and make their reports available in English.
All three groups require the companies to maintain ongoing operations, keeping away any shell companies that are constantly changing strategies. Together, these three lists make up the safest investments on the Pink Sheets. It's a great place to start looking if you've never invested in these types of companies before.
The OTCQX commenced trading on March 5 with only seven companies (you can view a complete list of OTCQX companies at www.otcqx.com). But more stocks are being added to the list every week as they meet the requirements. Of course, being added to the list is great exposure for some small, legit firms.
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