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How to Choose the WinnersUnderstanding Penny Stocks

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Leeds Analysis

Here are full details of my long-hidden penny stock analysis techniques.

Recently these were not available to anyone, at any price. Now they are yours to browse, learn, and share with others.

The techniques in the following sections of Understanding Penny Stocks have been effectively used to generate thousands upon thousands of dollars in returns, and were instrumental in my uncovering many big-gainers, like DCSR which went from $0.46 to $10.00.

The Three Steps of Leeds Analysis

Step 1: Find Your Target

You can apply Leeds Analysis to a single stock to discover its quality, or to a group of stocks to find the best investment out of the bunch.

Step 2: Apply Fundamental Analysis

Fundamental analysis, as described in the upcoming sections, will reveal which are the best (and worst) companies, and the relative strength and potential of each.

Step 3: Apply Technical Analysis

Once you have uncovered the strongest companies, Technical Analysis will help you discover the best prices at which to buy and sell their shares.

Don't know of any stocks to apply Leeds Analysis to? It's easy to get a short-list by using a stock screener.

Leeds Analysis Simplified

It is much easier than it may first appear.

It is just like doing a house inspection. You look at every room, the pipes, the basement, the cupboards, the electrical system, and even the neighborhood and the neighbors! Do this for five or ten or twenty houses, and by the end you will know which are the best and the worst options.

If any house has even a single warning sign, such as a leaking roof, or an obnoxious neighbor, cross it off your list.

Doing the research is the hard part, and it is not even that hard. (Actually, I think it is quite fun). If you do this part properly, you won't even need to make a conscious decision on which penny stock is the best value for your money. You will automatically know. Usually, the answer becomes obvious when you are about two-thirds of the way through your Leeds Analysis.

Here is How Leeds Analysis Works

  • The prices of penny stocks are driven by certain criteria.
  • Leeds Analysis guides you through all criteria, one at a time.
  • By considering all factors, you will have a clear picture of the best penny stocks.

Things to Keep in Mind as You Proceed

  • This approach is a 'criteria based' system, meaning that each stock should be analyzed on each of the following parameters. This will be effective in eliminating poor investments, screening a long list down to the best prospects, or uncovering that one single stock which could change your life.
  • While you are reviewing this methodology, keep in mind that a great penny stock does not have to enjoy outstanding marks in ALL of the following criteria, but the more the better.
  • Also be aware that while it takes a handful of strong fundamentals to drive a stock higher, it often only takes one negative parameter to send it lower.
  • Finally, a penny stock that you find which boasts excellent marks in most or all categories listed below is not necessarily a good investment AT THE CURRENT PRICE. You should follow up your fundamental analysis with our proprietary technical analysis techniques, (which are detailed in Part Six to Part Ten of Leeds Analysis) to pinpoint the best buying and selling opportunities.
Leeds Analysis Cheatsheet
Fundamentals To uncover the health, quality, and potential of a companyFundamentals To uncover the health, quality, and potential of a company
Primary
  • Increasing Revenues
  • Improving Earnings
  • Competitive Advantages
  • Low Debt Levels
  • Insider Trades
  • Buy-Back Plans
  • Industry Conditions
  • Institutional Holdings
  • Political/Social Shifts
  • News and Press Releases
  • Alliances
  • Improving Financial Ratios
Secondary
  • Market Risk
  • Industry Risk
  • Legal Action / Law Suits
  • Competition
  • Management / Board Changes
  • Dips
  • Collapse
  • Temporary Spike
  • Permanent Spike
  • Support Levels
  • Resistance Levels
  • General Range
  • Current Trend
  • Trend Reversal
  • Topping Out
  • Bottoming Out
  • Consolidation

Now, let's find out what each of these parameters means, and how to find out about them. I begin explaining everything you need to know in Part One of Leeds Analysis.

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