What’s he talking about? Today, we take a look and invest right alongside his idea. And it should start to pay off with the arrival of the first swallows of spring in 2010. It’s also timely now — in this weak-kneed economy — because it has traditionally held up well even in when the economy is on the ropes. Even the Great Depression couldn’t put this thing down.

We start with simple truths. The world’s population has more than doubled since 1950 — from about 2.5 billion to 6.7 billion. By 2050, there will be more than 9 billion people on the planet. Almost all of this growth will come from undeveloped markets such as China and India. And they will all be doing one thing, for sure — eating.

Now, hang on. I know that is a banal insight by itself, but this story has layers like a tiramisu. The second layer is the mix of food eaten, which is important. These undeveloped economies are getting richer. Predictably, as people everywhere have done and continue to do when they have a little more money in their pockets, they change their diets. They spend more on food. The average Chinese spends 40 cents of every additional dollar earned on food. In India, it’s about 70 cents of every additional dollar. What do they buy?

Read the rest of the story at PennySleuth.com.

With that in mind, here are three tools to help you find the best small-cap and penny stocks for your portfolio:

No. 1:  Stock Screeners

A stock screen is one of the most effective ways to pick up on the best stock plays the market has to offer. Brokers and analysts on Wall Street use screens to cut through the noise and find some of the best investment opportunities available.

Stock screeners are applications that look through a list of every stock on the market, and find you the ones that meet your specific criteria. For example, when you ask for a stock with a price-to-earnings (P/E) ratio of less than 14, the screener searches the database and only returns the stocks whose P/E ratio is less than 14.

Once you get comfortable with some financial terminology, you can combine metrics to have your stock screen whittle down the broader market to just a few stocks that you think are worth checking out…

You don’t have to be a Wall Street hotshot to run a screen. There are tons of free stock screeners out there that anyone can use. You can find screeners online at financial sites like Google Finance or Morningstar, or you can download desktop screeners like the aptly named Stock Screener Lite.

No. 2: The SEC Database

The Securities and Exchange Commission is the first resource you should tap when you’re ready to research a specific stock. Almost all public companies — large and small alike — are required to file quarterly and annual reports, financials, insider trading information, and more with the SEC.

All of this information is available to anyone with an internet connection. Just go to http://www.sec.gov and click “search for company filings” under the Filings & Forms section. From there, you will navigate to a user-friendly database. It’s completely searchable by company name and/or ticker symbol.

No. 3: What’s everyone else saying?

So you’ve run a screen. Then you have picked out what you believe to be the best stocks to research. You’ve checked with the SEC database — and printed out the companies’ most recent 10-Qs. Now, it’s time to find out what everyone else is saying.

Search the web to see what analysts and other investors think of the stock. Don’t just read message board posts written by cheerleaders who only want to boost the share price. Gather a variety of opinions and forecasts.

One great way to do this is through the social networking site Twitter. Traders and investors alike use Twitter to communicate market information to anyone who wants to follow them. On the Penny Sleuth Twitter feed, we post daily stock updates on big movers and other helpful market information you won’t find in our daily columns.

You can sign up for a free account and follow us here.

Source:  Three Tools for Picking Penny Stocks