To OTC Journal Members: 
 

Do Not Buy This Stock- Unless

Do not buy this stock- unless you are a crazy speculator like me who doesn't mind taking an insane amount of risk. And, by insane, I mean you could lose all your money. You guys asked for crazy penny stocks, and this one would fit into that category.

My first idea- Grid Petroleum (GRPR) hasn't made us any real money yet, but is certainly attracting some attention and cranked up some real volume this week- It traded over 1 million shares on Tuesday, 770,000 yesterday, and 250,000 already today. If the volume continues, this stock is going to make us some money on my timetable- between here and the end of August I'm still looking for $1.25.

Today's idea comes from a long standing friend of mine in this business. He owns his own boutique institutional brokerage firm in the Pacific Northwest, and has an off shoot investor relations business. Many years ago he published the first reseearch report on iOmega (the stock that put Motley Fool on the map), and also did the first report I ever saw on Force Protection (NASDAQ: FRPT) before it made its run from $4 to $32.

This is a very crazy idea, but if the numbers turn out to be right, WOW. Full disclosure- I've accumulated 90,000 shares at levels from $.12 to $.21, and I'm looking for $.50 to $.75 over the course of the summer. I could buy it or sell it for my own account at any time depending on the way the stock behaves, and my own personal needs which might have nothing to do with the idea.

I don't know if you'll like it, but if you do I've stuck my neck out right along with you.
 

Bulova Technologies (OTC PK: BLVT)

Let me hit you with this one right off the bat- I'm breaking one of my own cardinal rules in presenting this ideal. I believe BLVT is going to report about $32 million in revenue for FY 2009, but there is no evidence in the SEC filings to support that number. In fact, this company has never filed an audited or unaudited financial statement with the SEC that reflects their current operations. This is a non reporting company, but I'm told will be up to date with all filings by August 15th- hence my interest in getting the story to you now. I have always advised avoiding these kinds of situations as you're flying blind with no instruments or radar. In this case I was willing to take the risk- I know two individuals who have visited the company and believe it's for real, and one of them has a nose for undiscovered situations.

The company is Bulova Technologies, and in case you're wondering yes- it's the same Bulova Technologies as the Bulova Watches. Bulova did a bunch of defense work dating back to WWII, and the two divisions were separated decades ago. Post WWII the Defense Department was looking for watch companies to produce military fuses with complex timing functionality which were similar to watches. Bulova stepped in, and has operated as a systems manufacturer since WWII.

Bulova Watches was founded in 1875. The Defense side was formed post WWII, and is a conglomeration of a number of companies today- one acquired from the old Dictaphone Corporation (you have to be as old as me to remember that one). Bulova Technologies- the successor to all this stuff and the subject of today's edition, is now a defense contractor doing (if you can believe the numbers) substantial business in initiators, simulators, and fuses for the United States Department of Defense.

Here's the biggie- are you ready for this? Bulova is getting close bringing its financial statments current. How much business do the actually do in this arena? The estimate I have read is the company will report $32 million in top line revs for the year ending Sept 30, 2009. 

The estimate for FY '10- $71 million in revenues, and $.14 in EPS.

According to my source, the company has a current back log of $69 million in revenues. 

Now, I don't know exactly what these things do, but I'll show you some pictures and provide some numbers:

This BoobyTrap Simulator - the company has a contract to produce $13 million worth of these things. I don't know exactly how they are used in the field, but if the company can sell $13 million worth and make some money, I expect to make some money from the stock.

The next item on the DOD's shopping list for this company is this JAU 22/b Initiator, which I assume is some sort of fuse. Again, I don't know exactly what it does, but there's a $2.7 million one year contract in place with the Navy for this particular product.

Last, but not least, is the M81 Igniter, which contributes to their $32 million in back log contracts witht he DOD. 

If any of this stuff has any basis in reality, you want to be in ahead of the company reporting its numbers in a formal way to the SEC.

However, I'm going to say this again and again- this is the Vegas of the stock market. I love Vegas, and I'll step up to the table when I spot a dealer that might be hot. On the other hand, I know all those fancy hotels on the strip didn't get built on the winnings of gamblers.

Therefore, I am mentally prepared to lose all my money in this one if the company ends up being not "All It Can or Could Be". 

In the meantime, those intrepid souls with a gamblers mentality of their own will be buying this stock very cheap. As you can see, about 20 months ago the stock spiked to $1.40. Since December of last year, it's been a flat line, choosing to trade between $.10 and $.20 on pretty light volume.

Of late, the stock has showed its first signs of life in months with a significant increase in volume and a brief spike over the $.20 level.

According to the company there are 90 million shares I&O fully diluted. At today's offer price of $.19, the market is currently valuing the company at $17 million. If the estimate for FY'10 of $71 million in revs and $.14 in EPS are accurate, I see upside here to $1 this year.

I'm told the company's first quarterly report reflecting actual operations will be filed with the SEC any day now. It will show the top and bottom line numbers for the March of '09 numbers, and will serve as a good starting point. We'll find out if this thing is for real in pretty short order, and it will be a good first step.

In the meantime, I caution you again- Don't Buy This Stock- unless you have a gambling mentality like myself, and can stomach the risk associated with investing in a non reporting company where you don't know the real numbers. In this case, I decided the risk was worth it. After all, if these numbers are for real, I'll probably make 5 to 10 times my money vs the potential of a total loss. 

I like it for me, but you have to decide if it's right for you. I plan a few follow ups on this one as the numbers come out and we learn what we've really got. The next step- I'll try to get permission to post the report I read on the site.

You asked for crazy penny stock ideas- This one is a doozy-let's see where it goes.

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