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Comments in the BLOG

The after affects of Hurricane Katrina are now starting to filter down to some microcap stocks in a very positive way. Long beleaguered American Water Star (AMEX: AMW) exploded off the screen today, up 44% on the highest volume in months bringing relief to exhausted shareholders. I have a new BLOG posting up with comments on today's news and action in the stock. According to 2 press releases issued this morning AMW is working round the clock to provide bottled water to the relief effort.

Aegis Assessments (OTC BB: AGSI) is also getting some traction from the relief effort. According to a press release, the company will be providing it's elegant Radio Bridge to first responders at the relief sites so that they can communicate with each other. The stock has rebounded 28% off Friday's closing price already, and CEO Rich Reincke will appear for an interview on a Louisiana radio station today to discuss needs for communication in disaster situations.

To use the BLOG, simply go to the home page at www.otcjournal.com - the BLOG will scroll down automatically on the right side of your screen. The most current journal entries appear in the middle of your screen. Check back frequently for updates particularly when stocks are moving to overbought or oversold levels or in volatile markets. Your questions and postings do not automatically appear, so don't bother posting the same question multiple times. I personally go through to moderate and respond to every question.
 

A Stock To Grab Now

I'm hoping the edition entitled "Event Driven Trading" was widely read. It was published back on August 27th. If you didn't read it, now would be a good time to do so.

In that edition I talked at length about positioning to be a seller on major events. We are seeing some prime examples of it today. In short- one of the keys to successful microcap investing is to accumulate stocks when they are quiet and no one wants them. When corporate achievements or external forces bring in surges in price and volume, you can be a seller when everyone wants the stock and it is moving up.

You need faith and patience- you need equal proportions of both.

Today AMW is flying up the charts along with AGSI. Both stocks took it on the chin over the summer months. Both have tested the faith of shareholders. You could have accumulated either through the month of August at depressed levels, and been a seller into today's event driven rallies.

This year we had the typical summer trading pattern. Most microcaps drifted down in listless trading. These low volume sell offs in the summer months spell easy money for those with the courage to step up when no one wants the stock. 

When a stock drifts down on low volume, small volume surges to the upside yield big percentage rebounds. Low volume summer sell offs provide ripe low hanging fruit. 

We always have the best profit opportunities in the October to December time frame, and this year is setting up no different.

My number one pick right now for easy money is Datascension (OTC BB: DSEN). I haven't written much commentary on this company, but I believe they have a big future and an outstanding platform for growth.

They are based in Southern California, but the majority of their work comes out of a state-of-the-art facility in Costa Rica. They have a very rich labor pool of highly educated employees.

I love the risk/reward ratio on this one. DSEN is enjoying over $10 million in annual revenues, has a strong balance sheet, and is cash flow positive from operations. Hence, the risk is minimal as opposed to other ideas that are hemorrhaging cash.

Furthermore, they are solidly positioned to help with marketing efforts to the burgeoning Latin American demographic- the fastest growing demographic group in the Western Hemisphere. The business reaches far beyond the borders of the US into both Central and South America. They are already doing work for a number of Fortune 500 companies.

In my view, this chart is one of the most compelling reasons to pick up this stock now. Note the low volume sell off beginning in late May. The stock simply drifts down due to lack of interest.

In mid July the company made one positive announcement, and a paltry 200,000 shares of volume yielded a 33% two day move. That time frame is circled on the chart.

This stock is absurdly oversold, and could rebound easily on minimum volume. The company has positive cash flow from operations, so they won't be diluting shareholders with massive excessive supplies of stock. The one financing they have in place has taken care of their cash needs, and will be only moderately dilutive over the next 5 years.

According to their last SEC filing, there are only 17.2 million shares issued and outstanding, yielding a market valuation of just over $5 million with over $10 million in annual sales.

This stock needs to be owned at current levels while it's quiet and no one wants it. Sometime this Fall, when the company lands some mega contract or someone recognizes their value as it relates to the Latin American consumer, the stock should trade up on high volume. It won't take much.

My advise: pick up DSEN today under $.40:   $.70 to $1 price target this year.

Remember: GEPT in June at $3- $7 in two days- AGSI and AMW today-100,000 and 200,000 shares respectively on Friday: over 1 million and 4 million respectively today with both up significantly.

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