Email : info@otcjournal.com
URL : http://www.otcjournal.com
To
OTC Journal Members:
As investor preoccupation with the
War in Iraq begins to wane, good things for some of our ideas seems to
be happening. Great news today from one of the microcaps we follow, and
great news from our March
22nd Trading Alert, which was recommended primarily for yield
in a very dividend stingy environment.
Prior to covering both of those events,
here is a preview of an upcoming series we are working on.
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The
Pendulum Is Swinging in the Regulatory Environment |
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The securities regulators have had
their hands full dealing with a bad hangover from the raging bull market
in the latter half of the 90's. Greed and avarice in the billion dollar
board rooms of our most trusted institutions has led regulators down a
path designed to curb excesses to the upside in the markets based on fraudulent
financial disclosures.
After three years of the kind of
nasty Bear Market that only happens twice a century, the regulators have
started to flip the mattress. There seems to be a groundswell of activity
and investigation into excesses associated with the downside. Stocks can
be manipulated both up and down, and after three years of complete dominance
by the short sellers, the regulatory tide seems to be turning towards looking
at practices which could push stocks artificially down using a variety
of questionable tactics.
We are planning to publish a series
of editions on some grass roots movements to curb the practices of short
sellers. We hope to publish the first in the series next weekend. In the
interim, if you have any questions or comments concerning short selling,
please email them to info@otcjournal.com.
In addition, comments for the Members Forum on any subject are welcome.
Critical comments will be published as long as they are rated no worse
than PG.
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StockGroup Information Systems (OTC BB:
SWEB) - Financing Announcement Suggests Someone Believes
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Today, just after the market closed,
StockGroup
announced a $2 million CDN (about $1.4 million US) financing, the terms
of which suggests someone believes this stock is headed for higher levels.
Over the past six months StockGroup
has proven to be a nice penny stock win in the midst of a tough season.
We launched coverage in our September 6, 2002 edition at $.19 per share.
Today's closing price of $.28 per share delivers a 48% return on invested
capital. A quick glance at the chart demonstrates even better levels were
attained this past January when the company announced the Associated Press
had agreed to resell their products and services to its 15,000 strong customer
base.
The pricing associated with today's
announcement suggests First Associates, one of the largest brokerage
firms in Canada, believes the stock is headed higher. StockGroup
announced First Associates would act as the underwriter for a best
efforts equity financing at $.40 per share Canadian, which is roughly $.26
per share in US dollars. Investors will also receive one warrant with a
conversion price of $.80 for every two shares purchased. Click
here to read the press release.
The pricing of the financing is unusually
close to the existing market price. Most equity financings are priced at
a discount to the market of anywhere from 15% to 40%, depending on the
perceived risk. If not for the discount, investors wanting to own shares
could simply purchase them in the open market.
This financing will allow the company
strengthen its balance sheet. In addition, the need for capital suggests
the company could be shoring up its delivery capabilities to handle an
influx of business from the Associated Press relationship. Look for news
of new business from this relationship to put some legs back into this
stock. A few positive contract signing announcements might help the stock
push towards the old high of $.38. StockGroup already boasts over
200 active corporate clients, and the list includes such high profile names
as American Express, CitiGroup, NY Life, Dupont, and MSN Canada.
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Teco
Energy (NYSE: TE) Delivers the Goods- Market Likes Dividend Announcement |
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Teco Energy was featured as
a Trading Alert in our March
22nd edition, wherein we suggested the stock could prove to be a good
home for money seeking better dividend yields and potential capital appreciation.
The stock closed that day at $10.95. Today's closing price of $10.92 is
about a break even.
Today, just prior to the open, Teco
Energy announced the company would pay a $.76 cash dividend in 2003,
for a 7% yield based on today's closing price in 2003.
The stock was up 5.5% on 6 times
average volume today, suggesting the market liked the announcement. Teco
is a diversified energy company, and the primary utility in the Tampa Bay
area. The company has focused most of its attention on balance sheet improvements
over the past two years, and is trading just a point above the all time
low.
Energy delivery companies have been
pounded severely over the past year in the wake of the Enron scandal. Teco
could prove a stock which rebounds as confidence is restored in this sector.
In the interim, you can collect 7% on your money, while awaiting
better times.
When we originally published our
edition featuring Teco, the stock was yielding 13%. The market had
already priced in the lowered dividend. Today's announcement bore out our
prophecy. Here is an excerpt from our March 22nd edition:
The dividend is very attractive
in this low yield environment, and the stock is only $1.48 above its all
time low of $9.47. Investors can assume some negative news is already priced
into TECO with the yield at 13%. If the company were to get a lowered debt
rating or reduce its dividend, the stock might actually go up if the news
weren't too terrible. A good Stop Loss- $9.46- which would be a new low.
In short- worth the risk for the
yield and potential appreciation of the stock with your medium risk capital.
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Based on today's news, we believe
this observation still holds.
Charts Provided Courtesy
Of TradePortal.com |
