SPNG is a hard stock for me to get a read on.  It is a darling of the sub-penny crowd and averages 39 MILLION shares traded daily.  On Monday, volume spiked to 82 Million shares for no discernible reason.  But, “four-digit stocks” can do that.

What about SPNG makes it such a play?  Here is what we know:

• It appears to be a real company…based on published financials!
  • The company is profitable
  • It has positive net income and cash-in-bank
  • It has positive retained earnings (just turned positive in this fiscal year)
  • I would even say that it has a strong balance sheet….good cash, great ratios, no debt
  • Here is their website:  http://www.spongetechs.com/
    
• It is in a commodity business … It makes sponges!
  • But, it has real products that are being sold in real stores
  • It is doing a great deal of work to differentiate its products
    • Sponge Bob, Square Pants product line appears to be driving some nice sales increases
    • It is making noises about expanding to other specialty markets:  Health, Beauty and Medical
• They use stock like I use toilet paper
  • If you read their SEC filings, everyone (and their brother) is being compensated with stock.
  • Their market cap is only $13.5 Million
  • They have a whopping 723 million shares issued and outstanding
  • Float is 390 million shares (insiders hold 51% of stock…which is usually a good thing)

Oh, by the way …. you can tell I love bullet points.  I am not going to bore you with a long dissertation.  I am not a CFA, so I don’t have to adhere to the dull, dry and boring way that they do writeups on companies.

The stock has traded in a range from .01 to .06 over the last year.  It would be nice to buy at the current .0199 ask and have the stock rebound to the .06 range and above.  The question I have is how can that move occur.  Current management play the press release game well.  Every they do is accompanied by a press release.  So maybe NEWS will do it.  Management is driving the company to profitability and strong sales growth.  So maybe FUNDAMENTALS will do it.

However it occurs….I think that SPNG will be a darling of the penny stock crowd.  Already the volume spikes are proving that.

IMO … the best way for SPNG to graduate from the sub-penny world is for someone to throw a bomb in the middle of its capital structure … reverse splits, stop using stock as toilet paper, stop diluting your current shareholders every single frigging day!

Be careful with SPNG, but don’t be afraid to play it.

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