To OTC Journal Members: 
 

I'm Buying China Recycling Energy (OTC BB: CREG)

I'm hanging with my Big 3 China picks through this market correction, and being aggressive where I see opportunity. I have 3 more to add in the next few months. For those of you who have followed my ideas in the China space, you know I own all three of them- CEU, CREG, and NFEC. I have put my own capital into all three of these stocks. I have traded a little bit around the positions on surges, but at this time am more inclined to be a buyer rather than a seller.

I have started adding to my position in CREG today. So far today, I have purchased 4100 shares at an average cost of $3.77, and plan to add perhaps another 3,000 to 5,000 shares. This brings my total position back up to about 65,000 shares, some of which are restricted at present.

I'm taking advantage of this price pullback for several reasons. The first is technical. I believe the stock is ready to move back up over $4 on its way to $6. 

Here's another busy chart for you to review. It's a pattern I've seen repeated many times in market corrections. This BB stock has had a fair amount of institutional sponsorship. The market is in a corrective phase, and some hedge fund decided to liquidate its entire position in one day with no regard for price.

That's the big down bar you see back on Jan 22. Since that date, the stock has stabilized on far lighter volume, and has trended sideways as the volume has dried up. The seller is exhausted, and the supply is far more limited. 

The stock also pulled back to a perfect 61.8% retracement at about $3.35 and bounced. The 38.2% retracement is about $4, and a break above that level might have the stock surging again on towards $5. Therefore, I'm buying up to $4.

The third reason I've decided to jump into this one now relates to the recent update out of the one analyst who covers the stock. Garwood Securities has had a price target of $4.50 on this stock, and just raised it to $6. Click Here to read the update on their reseach.

I'm a huge believer in the long term future of the BOT model- Build, Operate, and Transfer. CREG collects recurring monthly revenues for 10 years plus, then transfers ownership of the system to the user.

They build and install their energy saving technologies into China's manufacturing plants. They collect a big fee at installation, but maintain ownership and collect residual revenues every month for years. Eventually, the system transfers over to the plant owner, but not for 10 to 15 years in most cases. As they install more systems, the "mailbox" money they collect just increases. I love it.

The analyst at Garwood sees CREG delivering $90 million in revs this year, up from $45 million in 2009. He has their fully diluted EPS at $.37, which I believe is low. 

Even if he's right, and the EPS comes in at $.37, I'm only paying about 10X 2010 EPS with a 100% growth rate. That's a steal in my view. I believe this stock will eventually trade at a much higher multiple as businesses with recurring revenues are simply worth more than project driven revenues. 

I have no problem accumulating this one at these levels for a double before the end of 2010. 
 

Biocurex (OTC BB: BOCX): Wasting No Time

BOCX is now armed with more cash than it's ever had in its history. The company completed a successful financing last month, and is now armed with about $6 million in cash. Even the over allotment of $400k was purchased, suggesting investors liked buying at $.07.

Their technology is all about this proprietary RECAF cancer screening test which as been licensed by both Abbot Labs (NYSE: ABT) and Inverness Med (NYSE: IMA). This is a highly sensitive cancer marker- it can detect cancer in a blood test long before the current tests. Early detection is the key to effective therapy when dealing with cancer.

For those who have been following the story of this penny stock, there's some news worth sharing. 

This morning pre open, BOCX made some noise for the first time in a while. The company announced the formation and launch of a new subsidiary- Oncopet Diagnostics. 

Would you believe this number? $45 billion. That Billion with a B. That's the amount spent on pets annually, and it grew from 2008 to 2009 in the midst of our nasty recession. Seems like I personally spent about half of it on our beloved labradoodle. $10.2 billion of that money is health care. There are 93.6 million cats and 77.5 million dogs found in US households today. 

Just like humans, companion animals can get cancer, and millions are spent every year on therapy. However, until now, no one has offered an inexpensive early detection cancer test. 

Oncopet Diagnostics, a wholly owned subsidiary of BOCX, will begin offering test in the near future both through direct sales and a rep network. This will allow BOCX to start generating some cash flow from its technology as it moves towards and FDA approval for the human version of the test.

There are a lot of penny stock investors following this situation. After all, licensing agreements with Abbott and Inverness are pretty stout 3rd party endorsements of the potential value of the technology.

I've been following this situation for a number of years now. My expectations- Now that BOCX has it $6 million, it will move forward towards an FDA Approval for their cancer test in concert with Inverness. Prostate Cancer will be a good target as the current PSA test is very poor. This is non invasive, so the process is nothing like getting a new drug approved.

Technically, upside movement in this stock could be challenging. After all, the company just issued 90 million free trading shares priced at $.07, with a $.105 warrant attached. The stock has traded over 1.5 million shares already today, and is a touch under $.07. Could have some significant upside, so we will have to see if the supply is restrained.

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