Firstly you need to follow very strict and rigorous process of research for Penny stocks since this is a very a volatile segment of stocks and they have the least amount of coverage on them. Conduct due diligence and follow a set process of research which has proved to be successful.
Here are few of research parameters:
- Sales and Profits consistently growing with a CAGR of 25-30%
- Financially sound company with a cash rich balance sheet
- Growing market share in the respective industry
- Having a competitive edge like unique technology or patents over its competitors
- Hands on promoters running the company themselves and having their personal holding more than 60%
- High growth projections by the management in coming years with constructive plans to increase CapEx