Stocks

LMCO Could Electrify Your Winnings Again!

Good Morning!

Remember my April alert on LMCO? It delivered a first day gain of 63%.  And what followed was even better: a 7-day run that drove the price up to $2.25 … for a total gain of over 160%.

Well, LMCO has since pulled back to around $1.40 … a 37% drop … that could now hand us a HUGE opportunity to profit from the dip. continue

When I came across this company and its name, I couldn’t help thinking about one of my favorite movies of the last 5 years:  I Am Legend with Will Smith. If you haven’t seen it, rent it!  It is not a happy, feel-good movie.  In fact it is quite harrowing, but very well done.  Will Smith is awesome.  Here is a link to the official site:  I Am Legend.

Back to Penny stocks!

Legend International Corporation (LGDI) came up on my radar screen because of its chart.   When I dug in, I found another natural resource play with no revenues but with “great prospects”.   LGDI’s gig is phosphate and their fields are all in Australia.

Here is a succinct review of what they do:

Legend International Holdings, Inc (OTCBB: LGDI) is a mining and agriculture resource development company. The Company is principally focused on developing its world class phosphate deposits in the
Georgina Basin of Queensland, Australia. Legend controls a significant strategic portion (5.2 million acres) of the Georgina and McArthur River Basins in Australia’s Queensland and Northern Territory, hich are highly prospective for phosphate.”

Here is the chart:

The stock is sitting on a significant support level and while the Stochastics and RSI are not compelling, the MACD looks like it is about to cross.  Still below the zero line, the MACD is giving a weak bullish signal. Volume has really picked up, too.

The other reasons that I like this penny  stock are anecdotal. The company seems to be sitting on some very prolific and valuable mining claims.  You can tour their website and see for yourself.  They have kept their PR firm busy with all sorts of flattering PR’s…permits for this project and that project mainly.  Lost in the shuffle has been the news that the company is extraordinarily well capitalized.  No long term debt, cash of almost $80 Million…these guys are set up for success.

Legend has big plans.

They are confident bordering on cocky. Here is a little blurb from their site:

“Legend plans to produce an average of 5 million tonnes per year of phosphate rock concentrate of 30%+ P2O5 by 2012, thus becoming one of the world’s leading producers of phosphate rock.“

I am rooting for them.  I like their bravado.  It is said that “it ain’t bragging if you can back it up”.  Let’s see if they can back it up.

It seems that I am writing and blogging about SPNG about once a month.  This is my third blog on SPNG since May and we also did an in-depth research report on SPNG a few months back.  (Read #1 blog, #2 blog and research report here).

SPNG continues to be the darling of the chat rooms and the number ONE penny stock. Other small cap and penny stocks have come and gone (BEHL, HEB, BIEL, ATNO, etc…), but SPNG perseveres.  When I first wrote about SPNG back in April, I was impressed by the strides that they made turning a sponge into a cash flow machine!  I am still impressed!  SPNG has given its investors a feast of good news over the past few months.

The stock has made an impressive run-up over the last week running from 14 cents a week ago to close yesterday at $0.2130.  The chart still continues to be SPNG’s friend, but there are signs of cracks in SPNG.  Is the stock becoming overheated?  Is it going to fall like it did before when it fell from 28 cents? I think you can bet on it. Short sellers should be ready if the cracks get any larger.

Here is the chart:

Notice that the RSI and Stochastics are above upper limits and that indicates that the stock is overbought.  Notice also that the previous high ran in an overbought range for several weeks before falling.  Notice also that volume has picked up, too.  Further analysis that I did shows me that the Accum/Distribution has turned neutral and the stock 13-day MA has flattened too.  The MACD is still strongly bullish, but it has lost a little momentum.  SPNG may still run for a few more days showing some strength. (Note:  SPNG was down only slightly in after-hours trading)

That means to me that the penny stock is ready for a correction. One wild card (and something that I am surprised that the IR people put out)  was their latest press release.  They made a big deal about a report concerning short positions in SPNG.  Read it here. The report points out the 99% of short sellers in SPNG are “underwater” and the assumption they want everyone to have is that SPNG is not going down (and those short sellers are screwed). Their average cost is 16.3 cents which is not that far out of the money.  Are these short sellers going to get squeezed and start to buy in order to close out their positions?  If so, that could unleash a flood of buying that would further extend the stock.  I am not sure that is going to happen.

The piece of information that has been missing from SPNG’s press releases lately has been info on the recapitalization they announced some months back.  According to my sources, SPNG will accomplish that before the end of the year by qualifying for the NASDAQ or American exchanges. They could do it by merging with an existing company, doing their own reverse stock split…any number of ways.  With all of the eyeballs on SPNG, I am guessing that it will have a positive impact on the share price.

Now, however, I think that SPNG is setting itself up for a correction…just how big remains to be seen.

If it continues to advance then ride the momentum (trend is your friend!), but keep a tight stop on it. It is  still a worthy small cap stock and company.  Yes!  Is the market and traders making a big deal about a company that makes SPONGES?  Yes!  Does SPNG want to leave the penny stock world behind?  Yes, most definitely Yes!

I think they will be around long enough for us all to make lots of money on SPNG.  I know I have already…and plan to again.

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DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

I monitor our chat room on a regular basis and see many penny stocks being talked about.  Some are great companies that are making a stop in penny land before they ascend to Nasdaq or better, some will be penny stocks forever and some are downright toxic.  The challenge for any penny investor is to determine which category their stock is in.  If you are a nimble trader, you can make money with any type of stock.

A stock that seems to be getting a great deal of attention on the web is EXPO HOLDINGS, INC. (EXPH). The general consensus is that it will go up…..however, there doesn’t seem to be too much confidence behind that consensus.  I think this should be a radar stock for tomorrow based upon the buzz and also the company itself.

EXPH’s focus is to become a holding company, to acquire and develop companies that sell products in the retail sector. One division, D & D Displays, is a manufacturer of display fixtures for retailers like Lowe’s and custom cabinetry for retail sales.  The second (from the EXPH website) is 1st Choice Closets.  I am not sure how this company fits in with their latest press release about a new website (easytoinstall.com) and a new line of products that will be unveiled next month.  In the absence of any concrete evidence, all I can say is that is appears that company management is making some good moves.  Whether they will pan out remains to be seen.

Here is the chart:

The chart appears to contradict itself in several ways. The MACD, while above the zero line, is below the signal line and showing bearishness.  However, the angle is decreasing as you can see from the histogram and if it turns could change to a bullish indicator quickly.  The Stochastics are indicating that EXPH is oversold and that might help the stock to rebound in the short term.  EXPH is trading above both its 50 and 200-day MA.  The small cap  stock is trading at the lower range of the Bollinger bands and could turn either way very quickly.

Bottom line: This stock may have a run in it.  Be careful if it gaps up at open.   This is not a good penny stock stock to chase.  I have read comparisons of EXPH to SPNG and that is laughable.  This is a not a financially strong company with a lousy capital structure like SPNG.  EXPH has only minimal revenues and no strong brand  and has to prove a lot before they can be considered a SPNG-like stock.

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DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Today’s penny stock screen gave me the name of a company that I believe has some real potential.  It is a high-risk, high-reward small cap stock play that may take a few days or weeks to realize its potential.

Enough intro…  The stock is Adamis Pharmaceutical Corporation (ADMP) and it is a penny stock that is beaten down from a chart standpoint.  There are going concern issues, concerns about the ability to fund the development and clinical trials for their suite of anti-viral drugs. and not a lot of good news on the boards.

To the Chart!

The chart looks both good and bad.  The MACD is bearish. but not overly so.  Stochastics indicate an oversold position, but to me the most telling statistic is volume.  Look at that volume!  That indicates to me that other larger players are in this stock.  If volume can remain strong and the IR people can put out some meaningful PR, this stock could fly.  The Bollinger Bands have narrowed and it is trading at the lower bands.

The wild card for this stock is contained in the June 23rd PR (read it here).  The company announced that it had begun shipping its first product:  pre-filled epinephrine syringes  (PFS) (Epinephrine Injection USP 1:1000.  According to the company, they will quickly capture a significant percentage of the $200 MM Epinephrine market with a product that is superior to what is already on the market.  I always take such pronouncements with a grain of salt, but I will be interested to see PR related to this product launch.   The company realizes that this product launch has to be successful for so many reasons:  current cash flow, good PR, showing investment community they are viable, etc…

Given what I had said about the precarious financial condition of the company, the obvious question is “what about the downside?”  While I did not get hard numbers or revenue guidance out of the company when I called them, it was clear that they believe they have turned the corner with their EPI product.    Without the release of any financial info or guidance, I  recommend that you keep a tight stop on it if numbers disappoint.

Definitely a good radar penny stock.

These are some penny  stocks that I believe might be worth putting on your penny stock radar list.  Some are old names that you see around the small cap  chat rooms and some are new ones that I have unearthed and feel are worth taking a look at.  I have searched for small cap stocks that have interesting charts and are looking like they could turn and deliver some nice gains for my readers:

NTRO

NTRO is one of those penny stocks that gets lots of play on the boards and is prone to being “pumped”. However, the MACD has turned bullish and is approaching the zero line.  It is neither overbought or oversold and is trading at its 200 MA line.   Support is in the .026 and .027 cent range and resistance is .039, .040 and .050.  The stock is an oil and gas play, development stage with no revenues and limited cash.  Short term play only!

PWEB

This is a stock that may take several days or weeks to “turn the corner”, but it is worth looking at. Pacific Webworks, Inc. (PWEB) bills itself as a “one-stop shop” for companies that are trying to get their businesses online.  According to their  July 29th press release, the company generated $9.2 MM in revenue last year and previously forecast $16-$18 MM for the current year. The company now believes that full-year revenue will be $23-$24 MM.

The  stock is trading down to the lower Bollinger band and is becoming oversold.  The MACD is still bearish, but I think my readers want to be there when it turns bullish. With a strong company, strong balance sheet, surging revenues it is only a matter of time before this stock gets hot again.  I recommend checking the news and chart for this penny  stock every day until it turns…and, I believe it will.

SCLX

A China play that has “rebound” written all over it.  The stock has been beaten down over the past few weeks and Stochastics indicate that it is oversold.  I know that history is no foreteller of the future, but look at what the stock did every other time (recently) when it hit oversold status.  POP!

The stock is at a key support level and while the MACD is bearish, the stock has kept up good volume and could turn quickly. The company is posting some huge numbers and growing like a weed.  Once the profit takers have sold out, the stock could rebound through resistance at .45, .47 and .50.  After that, there is not much resistance until its recent high of .59.

Have a great week.  Don’t forget to protect your profits when they come. Keep those emails coming!  I love your feedback and ideas.

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

Continuing my series of blogs on penny stocks that my readers and subscribers have sent me, today’s spotlight is shining on e.Digital Corporation (EDIG.OB). Can you dig it? Probably not!.  After going through a number of dogs that some readers submitted, I was pleased to actually be researching a real company that has revenues and bright prospects.

EDIG provides digital video/audio technology (DVAP) platform for use in the production of portable electronic products.  The company’s website claims that they are:

“….. a proven innovator of multiple audio and video technology platforms including its secure portable Video on Demand eVU™ mobile entertainment system. Through its eVU sales and services, e.Digital is one of the leading producers of dedicated portable In Flight Entertainment (IFE) to airlines around the world.”

What I like about EDIG is that they are  profitable, growing TEN cent stock. The company just issued a press release proudly announcing record revenues and a yearly profit for FY 2009 ending March 31, 2009.  The booked $11.1 MM in revenues, a 99% increase over the previous fiscal year.   Profits were an astounding $5.9 MM for the same period…and, the stock dropped like a rock.  I found out why….the profits were not “in the ordinary course of business”, but rather patent enforcement awards from companies that infringed upon their patents.  I do not know if that business model is sustainable.

What I don’t like about EDIG is their capital structure. They have an obscene number of shares outstanding and in float.  All of the good news that they are putting out barely moves the small cap stock.  In fact, once they issued their glowing PR about FY 2009 results, the stock dropped from 15 cents to 10 cents.  I really enjoyed the reading the board bashers pound this stock.  It seems that this penny stock is polarizing.  It has a history of being pumped.  In fact, it was a $25 stock almost a decade ago.  Management has gorged for years in the public trough (i.e. stock issues, paying everybody in stock,etc…)  and now very few trust the stock.

Just like I recommended with SPNG, they should drop a bomb in their capital structure.  A buyback of a hundred million shares would help.  It would only cost them $10 MM. The company actually has a decent balance sheet…some cash in the bank and no long-term debt.  It has a retained loss of almost $80 million which should provide a buffer against taxes for a few years.   But, their capital stucture stinks.

Having said that, let’s look at the chart:

The small cap  stock has been beat down of late and the indicators are a bit “muddy”.  Stochastics are indicating that the stock is oversold (maybe we’ll get a bounce), the MACD is slightly bullish (although it is below the zero line and approaching the signal line) and the stock is in distribution.  The stock has a 52 wk. range of .08 to .20.    Not very impressive for a profitable company.

eDigital - Can I Dig it?  I’m not sure. It is a typical penny stock and is extremely volatile and almost impossible to predict.   The signs seem to point to a rally and with a decent balance sheet, the company should be around for a while.  I didn’t pick up on the boards if they are a takeover candidate, but that might make sense.  An acquirer wouldn’t care about their bloated capital structure.  They would only care about EDIG’s patent and product portfolio.

Let me know your thoughts about EDIG.  I am going to watch it…I’ll let you know if  see a breakout.

Editors Note:   I recieved an email from a reader, Peter Taylor.  Mr. Taylor pointed out some things that I missed and I have made changes to my post above.

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

TWPG or Thomas Weisel Partners Group is an San Francisco-based  investment banking firm, offering investment banking, brokerage, equity research, and asset management services in the United States, Canada, and Europe.   The company has struggled with at least 5 quarters in a row of operating losses.  They also had a huge ($97MM) mark-to-market writedown in the 3rd Q of 2008.  As a result, their stock has been beaten down.

The reason for the title is that whenever I read about any company in the investment banking arena, I think of Michael Douglas as Gordon Gecko in Wall Street.  Having been a CPA and venture capitalist, I know their ilk very well.  I think that his portrayal was “spot on”, but I am not here to bash investment bankers.

However bad the news has been for TWPG, there is hope. The company has a strong cash and liquidity position and is well positioned to take advantage of its strengths when the capital markets come back (and they will).  What neither I nor TWPG has is a crystal ball to know when that it.  That is why I am going to talk about THE CHART!

What makes this company interesting is the chart. I think that this company might “pop” in the next few days or weeks.  It has taken several quarters of bad news and the general malaise in the capital markets to beat their stock down to the present level.  At $3.80, the stock’s next support level is $3.50.  Resistance is at $4.25, $4.50 and $4.75.  After that, I could see the stock surpassing its most recent high of $6.16.

Here is the chart:

The MACD indicates that the stock is in a bearish mode, but I feel that the oversold pressure will give this stock a bounce.   Earnings have been released already and TWPG, as a respected I.B., doesn’t play the press release game.  So, the movement in the stock is going to come from the chart. Watch the MACD for any improvement and if you see it cross, I would suggest keeping a real close eye on it.

Keep this one on your radar. TWPG is not going anywhere.  There are no going concern issues and the company is surviving in this economy.  It won’t take much for the stock to jump.

Good luck and good trading

DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. We are neither licensed nor qualified to provide investment advice. Neither InvestorSoup.com nor its affiliates have a beneficial interest in the mentioned company; nor have they received compensation of any kind for any of the companies listed in this communication. The information contained in our report is not an offer to buy or sell securities. We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

I must admit that I am sitting in a camp cafeteria at 11 pm Monday night blogging.  It isn’t just any camp.  It is Cub Scout Camp in Manchester, NH.  I am here with my oldest son, Nicholas, who is a Webelo.  We are having an awesome time and I will tell you that the Boy Scouts of America is an awesome institution.  After campfire, I was able to sneak away and blog.

I am not going to get too in depth.  It is late, I’m tired and I have a busy Scouting day tomorrow.

I found another stock that is due for a correction.  This is a short that you should be looking at.  LiveWire Mobile, Inc. (LVWR) clearly has a chart that says it is going to drop.  Here is the chart:

Bullet points (because you’re smart and I’m tired)

• Stochastics indicate a severely overbought position
• The stock is overheated…rising from .14 to .21 in the matter of a few days
• The stock is trading above both the 50 and 200 MA and along the top of the Bollinger Bands.  The pressure seems to be for a correction.
• The RSI indicates that the stock is approaching over over-accumulation
• HOWEVER, the MACD is still showing its bullish tendencies

I feel that this stock should be followed.  Never forget that penny stocks are subject to manipulation.  I recommend that you put tight stops on your trade.

Good night all!

Why am I talking about newspaper stocks when they are all just “dead men walking”?  Because I am a short-term trader and I am looking for both stocks to bounce in the near term.  Very few sectors have had as much bad news as the newspaper sector and any good news could make them soar.  Many pundits are talking about an economic recovery…why shouldn’t newspapers share in that as well?  I don’t have a crystal ball, but both companies bear watching.

Gannett Co., Inc. (GCI), the nation’s largest newspaper publisher and parent of USA Today, is a highly diversifed media company.  They have interests in newspapers; national, regional and local.  They have a strong online presence through sites like Careerbuilder.com which they own and they run over 20 television stations.   They, like other newspaper companies, have suffered with the decline of advertising revenues, but with drastic cost cutting and restructuring, they even managed to post a small profit in Q1 of 2009.

GCI’s chart doesn’t make anyone very confident, but it doesn’t scare me off, either.  The stochastics indicate that the stock is highly oversold.  The MACD is showing bearishness, but it is hanging around the zero line and could turn quickly.  Volume is holding steady, but any increases could help drive the stock.  The stock dropped through a big support level at $4 and the next support level is $3.    Resistance is at $4, $5 and $5.50.

Lee Enterprises, Inc. (LEE), is an old line company (founded in 1890) and has established itself as publisher of both newspaper and online content in many midsize markets across the US.  It publishes 49 daily newspapers, over 300 weekly and specialty publications in 23 states.  LEE is in a much more precarious financial condition than GCI with high debt and losses piling up.  LEE is, by far, the riskier of the two companies, but we are talking short term only.  If LEE ultimately files Chapter 11, I hope my readers are long gone by that time.

LEE’s chart looks very much like GCI’s (i.e. It is off significantly from its high and is looking bearish).  From the chart it looks like their is support at the 45 to 50 cent level with resistance at 80 to 85 cents.  Stochastics indicate it is oversold and the MACD is definitely bearish.  Like GCI, if they get good news or some buying hits the stock, it could rocket.

I would recommend putting both on your radar.  They may have farther to fall, but I believe that they may have some bounce left in them.