What on earth is a "Red hot penny share"?
"Red hot" is an over used and exaggerated expression predominantly employed by US market tipsters, usually promoting a tip sheet or market news service. "Red hot penny stocks" - perhaps the most common example - is used by tipsters to indicate they have identified cheap stocks which they believe will very shortly increase dramatically in value. This is often accompanied by the notion that the market has missed something and there is a chance of beating the big market players. These sort of sales pitches identifying apparently undervalued stocks are often aimed at small investors with limited finances. The low cost of the shares and the promise of high returns can seem very attractive.
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US Investor Relations
In the US there is also a trend for some investor relations (IR) companies to use similar language. IR companies are paid to promote specific company stocks, their aim is to help sell shares and raise the value of stock. Sometimes it can be difficult to tell the difference between a tip and a promotion. Though IR adverts promoting stocks in the US have to carry a disclaimer.
Hot or not?
Is there value in red hot penny shares?
There are obviously risks with any investment, red hot or not, have theirs. Penny stocks in particular are infamous. Find out more about some of the pros and cons of penny shares.
