high return on investmentsYou are probably familiar with Over Counter (OTC) stocks.  But are you aware of the term “Pink Sheets” as it pertains to investing in the stock market? Well, once upon a time stocks that traded on the OTC were also known as Pink Sheet stocks:

Historically, the pink sheets receive their name from the color of paper on which quotes of share prices were published. Today, the trades are no longer paper but electronic quotes. However, the name still refers to OTC stocks as pink sheet listings.”

Tier One Pink Sheet companies can offer high returns on investments since many are legitimate companies that once traded on a major exchange, and are now ignored by most investors. Some of these companies choose to voluntarily migrate to the Pink Sheets to reduce expenses associated with listing fees, while others (often coined as Fallen Angels) may have been forced to de-list because they did not meet listing requirements precipitated by a scenario of weakened financials or other temporary negative circumstances.

Even though OTC stocks are though of as “dark”companies, many tend to be investor-friendly by issuing press releases, publishing financials and providing routine updates on business operations.

Generally, investors are told to avoid Pink Sheet stocks. However, during our decades of participating in the equity markets, Pink Sheet companies have offered the potential for high returns on investments. The Pink Sheet venue offers a great opportunity to identify companies that are selling well below their valuation, supported by their fundamentals.  It’s a truly inefficient market that gives non-professional investors an opportunity to take advantage of this valuation gap.

Tier One Pink Sheet Stocks Can Offer High Returns on Investments

In the end, investors can get high returns on investments by playing in a market that the majority of investors, including institutional investors, ignore.

You might be surprised that many companies that end up on our Tier 1 list are well known companies emerging from chapter 11 bankruptcy. These chapter 11 companies are classic Fallen Angels that often reemerge as stronger companies, ripe to grow earnings and present themselves as an opportunity to get high returns on investments.  Did you know that one of the largest cable company in the U.S., Charter Communications, Inc. (NASDAQ:CHTR), was once demoted to the Pink Sheets after filing for chapter 11 bankruptcy?  The company eventually exited chapter 11 in 2010 while it was trading on the OTC and eventually regained listing on the NASDAQ. Since emerging from chapter 11, the stock has produced mouth watering returns, risking from the around $25.00 to over $400!

Many Tier 1 Pinks also become acquisition targets. In fact, GeoInvesting has highlighted over 40 stocks for our premium members that ended up being acquired.

Of course, there are risks to trading in these stocks, including the existence of small floats and lack of liquidity.

As opposed to Tier 1 pink sheet stocks, pump and dump stocks are speculative companies whose stock prices are generally getting pumped that eventually fall apart.  Pump and Dump stocks often revolve around hyped stories, like cannabis and bock chain themes, that might attain a cult following.  See more on pump and dumps.