Penny stocks are famous for generating extremely fast returns. On the other hand, they are equally infamous for falling just as quick. Thus, posing a high risk to your portfolio.
However, they can be good investments, provided they are fundamentally strong penny stocks and have good growth prospects.
One way to filter out strong companies is to look at their debt levels. Debt free stocks are considered safe because these companies are insulated against interest rate changes.
These companies usually are cash-rich and use retained earnings as their primary source of funding.
Though debt free penny stocks have become synonymous with safe investments, no debt on the books have little to do with the profitability and long-term growth of a company.
Hence, investors should be careful while analysing such companies.
Since you’re interested in debt free companies, have a look at these debt free penny stocks with good profitability.
Also check out Equitymaster’s powerful stock screener where you can start your search by filtering debt free companies along with your filtered criteria.
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