Getting inside penny stock companies has got to be one of the best ways to assess their potential.

No, we are not talking about insider trading but actually visiting the company and having a look around.

Sound extreme? Well, not really and why not? There is no such thing as a company not allowing visitors especially potential investors so, if you can, pay them a visit. Talk to people on the ground, look for evidence of growth or decline, etc.

The best sources of penny stock information is reading and keeping up to date with developments.

Read the magazines and trade journals that cover the industry you are researching and pay particular attention to the advertisments in those magazines and journals.

In this way you can measure the demand for a product or service.

Creditors a good source of information when identifying good penny stocks. They, after all, are owed money by the company.

They must therefore, have extended credit to the penny stock company for the sales of products or services.

By contacting creditors you can find out how much money the company owes and time left to pay it back. Have they ever defaulted, etc?

You can get some good penny stock advice by looking outside the company.

Trade organisations are a good source of information on penny stock companies.

Companies join trade organisations to get the collective benefits associated with them. Often supply discounts or collective insurance, etc.

Membership to such organisations usually means a company has had to comply with some kind of entry criteria and therefore if the penny stock company you are researching is a member it must have complied and not be in breach of any of the principals.

You need to understand your penny stock companies’ competition when you are considering investing.

Make a list of your penny stock company’s competitors are and get in touch with them. Find out the general state of the market and how they think they are fairing.

Is the market big enough for multiple competitors or is it a winner takes all? Ask them about the company you are considering investing in and whether they are familiar with it.

Talking to customers is a sure fire way of understanding individual penny stocks.

Users of a companies products and services is probably the best source of information on a penny stock you can get.

You can pose as a potential customer and ask the company for references. Any company knows that a new customer is likely to want references and it would certainly be a red flag if non were forthcoming.

One of the best ways of understanding penny stocks is by talking to their suppliers.

Whist this information may be difficult to come by, it is possible to find out who a company’s suppliers are and do a little research on them. How long have they been in business, how successful are they, etc.

Any company supplying the penny stock company you are researching will almost certainly have done their own research on the company as to it’s credit worthiness, etc.

One of the ways of researching individual penny stocks is to look at how many employees it has.

It may sound obvious that a company with employees needs to be able to pay them regularly but it’s an important consideration when looking at small companies.

Certain start up companies may initially pay certain employees (usually the founders or other key players) in stock but this rarely applies to staff further down the line which all companies need to grow and prosper.