CANSLIM.net's Opinion...
On low priced stocks

Low priced stocks, also known as penny stocks or bulletin board issues have been the source of a great deal of debate. Stocks that are listed on the NASDAQ Bulletin Board offer exciting trading opportunities. These issues may not be suitable for all investors because they are generally considered to be higher risk investments. When investing in companies that are on the NASDAQ Bulletin Board you may be buying a stock you will need to hold for a longer period of time, as these securities often have less liquidity than the more heavily traded stocks on the NASDAQ Small-Cap or NASDAQ National Market System. When a stock is thinly traded, the spread between the bid and ask price is usually wider because brokerage firms that make a market in these issues are not competing against each other in a very active market. When a heavier than average amount of buying or selling takes place in such an issue, the stock may move quickly and substantially in price. The risk of big losses is accompanied by the potential for very big gains, and this is why NASDAQ Bulletin Board issues are very exciting!

Many Bulletin Board companies have very little substance to them, and they may have minimal assets and miniscule sales revenues, or none at all. The majority of shares are usually owned by the insiders (officers and directors of the companies) and the publicly owned interest may only be a small percentage of all shares outstanding. This is not necessarily a bad thing, as the company may have plans to sell additional shares in a secondary offering to raise working capital, or they may acquire the assets of other businesses in exchange for stock. Eventually, a well managed Bulletin Board issue may qualify for a listing on the NASDAQ Small-Cap or NASDAQ National Market System.

     A stock on the Bulletin Board might be anything from the crumbled remains of an unsuccessful venture, to the ground floor opportunity to get into the next Microsoft. Provided that the company has a talented and committed management team, along with a sound business plan and the financial means to see it through, a stock traded on the NASDAQ Bulletin Board can potentially offer fantastic long term growth for investors with a tolerance for higher risks.  TNDM