Buy Penny Stocks

Ah, penny stocks. Quite possibly the world’s most dangerous investments…yet so enticing.

And for good reason. Some of the world’s best stock pickers are, at times, penny stock investors. Pete Lynch, for example, has and still does enjoy the stock market’s super-cheap seats. The Royce Low –Priced Stock (RYLPX) fund crushes the market by betting on stocks trading for less than $10.00 a share.

So why not invest in penny stocks? I suppose the SEC has warned us about them. But what if we take the agency’s definition literally, and limit our choices to stocks trading for less than $5.00 a share?

And what if we further limit our choices to four and five star stocks whose market cap doesn’t exceed $2 billion?

There has to be some winners out there. Let’s have a look at our pick of hot penny stock of the week.

Webzen (OTC: WZENY.PK) is a stock that I ran across the other day. They are a Korean developer of online games. Its game Soul of the Ultimate Nation (SUN) is a three-dimensional MMORPG provided in Korea, Taiwan, China, Japan and the U.S. It also offers MU, another MMORPG provided in Korea, China, Japan, Taiwan, the Philippines, Vietnam, and the U.S.

Some notables I found doing my research of the company is that management is tenured and owns 12% of the outstanding shares and Wall Street does not closely follow the stock. Also, its shares, trading for less than nine times projected 2009 earnings, are cheap compared to regional industry peers NetEase (Nasdaq: NETS) and Sohu.com (Nasdaq:SOHU).

Webzen currently has 56 million registered users and is in an industry bigger than the movie industry. If you look at how much money Activision got a couple years ago with hooking up with Vivendi’s video games.

I think this is a great stock to buy, as many companies will be interested in their online gaming technology, and to tap into all of their registered users. Webzen is currently trading a $2.00.

Prices are correct at the time of this writing. Please note that nothing herein constitutes a recommendation to buy or sell. For more info, please refer to our disclaimer page.