5 Tips for Investing in Penny Stocks

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3. Make a Profit

While it’s not unusual to see a start-up company run at a loss, it’s important to look at why they are losing money. Is it manageable? Will they have to seek further financing (resulting in dilution of your shares) or will they have to seek a joint partnership that favors the other company?
If your company knows how to make a profit, the company can use that money to grow its business, which increases shareholder value. You have to do some research to find these companies, but when you do, you lower the risk of a loss of your capital and increase the odds of a much higher return.