Penny Stocks, Big Profits

Identifying penny stocks with huge potential is a big plus for any investor. The problem is, in most cases, you can't identify the stocks that would soar in five to ten years.

A case in point: Hawells India

Five or six years ago, our electrician recommended Hawells switches, cables and other electrical fittings. I thought Hawells was a big company.

When I checked the stock prices of the company, it was around Rs.15 per share. Now, the stock is trading for Rs.450. I didn't buy the stock then. If I invested just Rs 1500, I would have Rs 45,000 today. That is, my investment would have grown by 3000% in less than ten years.

Needless to say, I didn't invest anything and I didn't get anything. However, now I know one thing. If you can find a company that sells good products, that company is worth buying. Sweeter is the deal if the company comes as penny stock (a term for shares being sold at dirt cheap prices).

I did look for a few penny stocks, but didn't feel comfortable about most of them. However, I decided to earmark five percentage of my investments for penny stock only. If I get just one stock that grows by 3000%, my whole portfolio would benefit.

Maybe, if I see some success, I'd increase it to 10% or even 20%. That is good business, right?

Top Indian Stocks for Long Term Investment

Identifying companies with long term potential and holding the stocks of such companies for several years is the real key to making profits from the stock market. Smart investors have done it all the time. As smart people say, if you have the patience of nine people, try to buy and hold the following stocks. I think the following stocks would bring big returns in the next one to three years. I think it is good not to sell the stocks even if the stock prices rise in the next one or two years. In other words, hold them for more than five years to see real returns.

(This is a blog. The opinion are purely personal. BUY THE STOCKS AT YOUR OWN RISK. ABSOLUTELY NO GUARANTEE!)

SAIL - Steel Authority of India Limited as a company is strong, has potential and makes profits. The company is beaten in the share market. The management is good. The business is not bad. SAIL is for investors looking for long term, safe stocks.

Similar stock – Hindalco

TATA Motors - Risky, because of this company's exposure to European market and competition from foreign automobile manufacturers looking for bigger market share in India. Apart from NANO, TATA motors is doing good, selling Indica Vistas, trucks and buses. I'd back this Indian icon. Mahindra and Mahindra is also a strong contender.

Other stocks from TATA family – TATA Global Beverages (among the biggest in the world), TATA Steel (another global winner), and TATA Chemicals.

State Bank of India - You can't ignore this large cap stock for long. The basics look good. Everything is hunky dory about this bank. Will hold for more than 10 years. I believe the stock prices would then cross Rs.10k mark, may even reach 15k.

Pantaloon Retail would show short term gains in 6-12 months. Not going to hold it for long term.

Keep in mind these are only my stock picks and these are the suggestions and reasons I gave my friend. I didn't pick any from Reliance family, telecommunications, and technology sectors because of my own reasons.