Small and newly created companies offer penny stocks. Although they tend to scare off many investors, penny stocks may give returns that are three or four times higher. However, there are penny stocks that have good balance sheets without any growth strategy. If you are considering on investing in these, research penny stocks thoroughly first.

• Get background information on the company by investigating patiently
• Check if the staff, like the managing executives and board members, have no negative business records
• Give the company a call and see how they will respond to your queries
• Ensure that the company is in a position of growth that is compatible with future trends and markets