To OTC Journal Members:
 

StockGroup Information Systems (OTC BB: SWEB) - Analyst Pegs Stock at $.60 Over Next 12 Months

StockGroup has been stuck in the mud for three months now, occasionally poking its nose up to challenge the $.30 barrier, while seeming to have unlimited support in the $.25 range.

On Monday I was optimistic the stock would break through the $.30 barrier as huge volume materialized out of nowhere. SWEB traded 665,000 shares, nearly eight times the average daily volume. The stock traded briefly above $.30, only to be repelled back into its normal range. This is the first time the stock has challenged this level since February.

Eventually, the stock will likely break this barrier and $.30 it will become support instead of resistance. The company is doing its part in the growth equation, helped along by its new marketing partner, the Associated Press.

Many thanks to one of our members who was able to locate the explanation for the dramatic volume surge. An analyst report out of Europe placed a price target on the stock of $.60 over the next twelve months. Apparently, this firm has a following, because this report is the only explanation I could find for the volume surge.
 

The EuropeAnalyst Places Twelve Month Price Target of $.60 On SWEB

I don't know who the EuropeAnalyst is, but he (she, or they) have written a well organized report on StockGroup, and we have a link to the report for those who wish to view it.

One quote out of the report caught my attention, and sums up the reason to own this stock:

"StockGroup is attractive because of the highly scalable business with high margins, proven products, rapidly growing client base, and a big reseller program that leverages sales potential. "

If you want to read the entire report, simply click here, and a PDF will open. If you are a shareholder or considering becoming one, this is a must read. If the author is right, the return on investment from today's closing price would be 118% over the next twelve months. This is substantially higher than the 44% the OTC Journal is up since re-introducing this company to members last September at $.19. However, if you were a nimble trader, you could have sold this stock at a double on the surge back in January.
 

Fits and Starts in the Penny Stock Arena

The market is continuing down the path of completing the bottoming process. April's performance in the indexes was much better than anticipated by most analysts and market technicians. Earnings have been coming in better than exceptions, albeit driven by cost cutting and higher productivity. In short, less people are working harder to make the same money.

The market spent the month of April celebrating the positive outcome of the war and resulting significant drop in oil prices. After all, economists estimate that for every $1 drop in the price of oil, world wide GDP grows by .2%.

The price performance of penny stocks has been a source of frustration. Breakouts are still greeted by sellers as we saw with two of the companies we cover this week. FMLY traded 1.6 million shares yesterday (16 times normal volume), failed to go through the $.18 barrier, and has since dropped back to a nearly perfect 50% retracement off the lows.

SWEB traded nearly 700,000 shares on Monday, and failed to break the $.30 barrier with any conviction. 

These patterns are part of an ongoing bottoming process that is happening in a micro version of the larger markets. The extended Bear Market which has led to lower volumes and much lower market valuations brings sellers who need liquidity out during the infrequent moments when these stocks trade well.

However, the companies with improving business models will eventually be rewarded with higher stock prices as the supplies are finite, and will eventually be eaten through, leading to long awaited break outs. In the interim, those with a trading mentality need to buy the dips and low volume opportunities in their favorite penny stocks. 

Those with the courage to participate in these low market valuations will make big money when the breakthroughs hold. Better times are ahead.

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