Let's get one thing straight right now:

When we talk penny stocks, we're talking about stocks trading on the NYSE, AMEX, NASDAQ, and TSX with prices between $0.10 and $5;

Stocks from up-and-coming companies and those with turnaround stories;

We're talking quality companies with real products and real sales...

Like Nitromed Inc., a biotech firm that was losing money not so long ago because of its mounting costs. But it didn't take long for Nitromed to turn its fortune around -- and hopefully many of its shareholders' fortunes too. For example, Nitromed Inc. traded on July 16, 2004 at $5.70, which was then its 52-week low. Six months later, the stock traded at $25.88, up a whopping 350%!

Magna Design Automation Inc., a manufacturer of electronic design automation (EDA) software, is another example. After years of steady performance, the stock plummeted in March 2003. But, by early 2004, its aggressive and focused "turnaround" strategies succeeded, and investors who caught on achieved profits of 300%.

Other gains from stocks under $5 are even more spectacular: Ampex Corp. up 4,345% in just under a year; M-Wave up 986% in four months; WR Grace & Co. up 655% in 11 months... 53 big gains in total during 2004.

Announcing the most complete and comprehensive advisory for stocks trading between $0.10 and $5: Penny Stock Reporter!

Each month, its editors research and dig deep to uncover today's penny stocks with explosive potential.

We look for quality companies that are coming out of a restructuring, or that represent a corporate turnaround. Oftentimes, these companies are well-known names, but they have seen their fortunes erode because of poor management.

But changes in management, coupled with established products and years of market presence, are often the factors that bring these companies back to life.

We avoid one-shot mining companies and promotions. We stick with quality companies; those that have lost investor interest due to their "temporary" problems. These problems become our opportunities.