Investor relations firms are firms hired by penny stock companies to publicize their business to the public and investor community.
They are restricted from being compensated with stock to discourage them from encouraging investors to buy.
However, the investor relations firm can talk to investors about the business of the company and the direction the company is going in.
An investor relations firm needs to make sure that any and all information that it provides to investors is already public information.
The information becomes public when it is released through a company press release.
The IR firm cannot give investment advice such as a recommendation to buy a stock, price performance or suitability for an investor's portfolio.
An IR firm is simply there to build relationships with the investment community and to be a means of communication for the company.
It is very important for a penny stock company to have an experienced and honest IR firm.
If the firm helps build a reputation of open communication between the company and its investors, it can help assure the investors to ride out a bumpy road when news isn't so good.
A quality firm can also help articulate the good news.
A penny stock can have the "greatest thing since sliced bread", but if no one knows about it, they will not buy the stock.
For the investment public, an IR firm can be used as a customer service department for a penny stock company.
As a shopper, you wouldn't buy a new flat screen television unless you got your questions answered, right? The same holds true for buying stocks.
Look for stocks that are represented by solid investor relations firms that have been in business for several years.
This is a good indicator that a company appreciates the value of communication with its shareholders.