Fae

Christmas and (insert your favorite vacation here) come but when a year earnings season on the other hand, comes four instances a year. And whilst earnings season may be devoid of streamers, balloons and cake...the outcome can be just as festive for penny stock investors.

Whilst blue chip giants are bemoaning the start off of earnings season this week, those interested in penny stocks or small-cap stocks have reason to cheer...or at the quite least, be very optimistic.

Following practically six years of strong efficiency, small-cap stocks headed into 2005 with a lot of market analysts saying the honeymoon was more than. Little-cap prices have been as well rich they stated...the Johnny-come-lately lemmings have been as well numerous...and the bargains also couple of.

Not surprisingly, penny stocks sailed via 2005, beating their larger counterparts by an equally huge margin. For the 12 months ended May 1, 2006, the Russell 2000 index of tiny-cap stocks returned 31.5%, compared with 14.1% for the Regular & Poor's 500 index of huge-organization stocks.

The longer view is even more impressive. Because March 2000 (the official commence of this rally) the Russell 2000 index has posted an average annual return of 7.three%, vs. -.6% for the S&P 500.

Clearly the penny stock soothsayers are i) not worth listening to ii) not invited on my honeymoon.

Now, just simply because penny stocks have been performing well does not mean that earnings season is a foregone conclusion. In addition, you can not compare the results of your preferred penny stock pick with those of the blue chip juggernauts.

For example, earlier this week a single of the market's bellwether stocks missed its revenue forecast for the quarter. Analysts pounced noting that the company's share cost "tumbled" four% on the news. An additional company's missed forecast sent its stock "plummeting" 4.7%.

Penny stocks don't tumble or plummet 4%. In the globe of penny stocks, a everyday drop or achieve of 5% - 8% is commonplace. Now, need to the penny stock on your radar screen climb ten%, 20%, or 50% on powerful earnings...that could be described as considerable.

navision android

Granted, the earnings benefits from large-cap stocks are a litmus test to how well our economy is carrying out...and is expected to do. Fortunately, penny stocks don't stick to the exact same guidelines as their leviathan counterparts. Penny stocks can defy logic and carry out effectively in negative times...or perform poorly when times are good.

The point is, you can't study your penny stock company's fiscal benefits via the same glasses as you would a triple digit goliath. Penny stocks march to their personal tune and encounter every day climbs and drops that would churn the stomach of most Wall Street analysts.

Which is fine...most Wall Street fat cats are content with a 7% return on their safe, boring investment. Penny stock investors are not.