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I have a feeling Barfresh (OTC: BRFH) could end up being a repeat of last month's gigantic winner Luxeyard (OTC: LUXR). Coincidentally, I published my first editions on both companies at $.80- seems to be a popular starting point right now for big wins..
In the May 23rd edition entitled Barfresh: Deja Vu All Over Again, I likened the trading pattern in BRFH to the trading pattern in LUXR from the previous month. I suggested using the temporary pullback to the $1 range to accumulate, just as I had done with LUXR in April.
Based on yesterday's action in the stock, it would appear I'm going to be right to some extent yet to be determined. Hopefully, it comes out exactly the same way with the stock finding its way to $2.
Yesterday, there was early news the company's production line, co-located at an ice cream factory in Salt Lake City, was running and being tested this week. According to the release, it should be commissioned shortly- meaning open for business.
The company also disclosed it will then be able to pursue and hopefully ink some of the business its been working on with "parties who have expressed early interest in acquiring" their products.
The stock traded to a new all time yesterday, backed down, then closed at a new all time high closing level of $1.12 on new record volume- 1.173 million shares- more than double the volume of any previous day.
If you don't know about the company, and want to learn more, simply go to their corporate web site at http://barfresh.com/us/ and check out the 5 minute video. That will tell you everything you need to know.
Here's the chart showing yesterday's new all time high- new all time closing high- and new all time volume high.
Deja Vu All Over Again like LUXR? I hope so.
And, speaking of LUXR- things have taken a turn for the worse. If you're still interested in LUXR read on........
I had really high hopes for LUXR to be a long term winner. With any of these penny stocks, there's always two factors you have to look at- first is the fundamental side- that's what the company is doing and how they are launching and operating their business.
Then there's the technical side- the way the stock is trading. The supply/demand dynamics. The supply/demand dynamics on LUXR has been fantastic so far- but that's likely to change in the not too distant future.
Last Friday, while everyone was running off for their long weekends, LUXR disclosed it had raised $2.5 million in a new issuances of convertible securities that convert at $.50 per share. With the market at $1.25, this represents a pretty steep discount, but not uncommon in these kinds of deals.
However, the story doesn't stop there. The terms of the funding have all sorts of reset provisions and other components which makes them very toxic to the market. In fact, this financing is set up in such a way that the investors might actually have some incentive to knock the stock down later this year.
The company will need to deliver some fantastic developments to keep this stock afloat to the end of the year, but last week's financing certainly paints a grim picture on the technical side for the back half of 2012.
Hopefully, the stock price can survive this toxic deal based on demand for the shares as the company grows, but this financing is definately a technical black cloud.
A reminder: Catch me live on TV every Monday from 12 to 2PM eastern.