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OTC Journal Members:
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Wednesday's
Trading Alerts- Derailed By Thursday's Weak Open |
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Wednesday evening's trading alerts
on Qualcomm and Adobe were derailed by Thursday morning's
weak open. Both stocks opened below their very tight stop losses, and therefore
you should not have participated.
Traders are taking their cues from
MSNBC and CNN instead of CNBC, making the market very unpredictable. A
bunker busting bomb that gets Saddam could send the markets skyrocketing.
An extended and costly war could slowly send us back to retesting the October
lows.
One thing is certain- the business
climate is weak during this war phase. Preoccupation with the start of
the war kept corporate investment on the sidelines, and the climate has
only worsened since the war began.
1st Quarter earnings results will
be poor, and an economic recovery will be predicated on pent up demand
to get back to normal after the war ends. The FED's stimulative policies
have worked in the past, but the backdrop of very high oil prices and a
war time economy has derailed the any hope of a recovery.
In today's edition we have up-to-date
reviews of each of the six microcap or "penny' stocks we cover. Stock prices
have eroded this year in a tough market environment. However, from current
levels every one of these companies has exciting upside potential. Here
are the facts as we see them:
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Irvine
Sensors (NASDAQ: IRSN) |
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So far, this former high flying NASDAQ
tech stock has been a disappointment. Major new military contracts have
not materialized as we hoped they would.
This company has been publicly traded
for twenty years, and traded to a high of $360 (split adjusted) near the
end of the bull market. Based on December quarterly results, the company
is delivering the highest revenue stream in its history (about $20 million
annually), yet continues to trade near the lowest levels in its history.
Their super computing "chip stacking"
technology is a perfect fit for the new high tech military applications,
and their recent sales growth has been attributable to development programs
for the Department of Defense.
On the technical side, thanks to
the recent effective status of a registration statement, the stock sold
off for a day or two as fund managers under redemption pressure took advantage
of long overdue liquidity. Approximately 3 million shares were registered
with a cost basis ranging from $.85 to $2. Therefore, it is safe to assume
for the time being the floor on the stock is $.85. There is support for
the stock when it drifts down to the $1 area.
Management is highly confident major
new contracts are coming their way. We're hoping for new contract announcements
in April and May. With $20 million in annual sales and a market value of
only $10 million, there is a lot of upside in this stock from the $1 to
$1.25 when good news comes our away. The US defense budget is enormous
for new, high tech military applications, and development work with the
Department of Defense is underway.
Click
here to read our original profile.
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SHEP
Technologies, Inc (OTC BB: STLOF) |
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This stock is a must own for all
microcap investors. Although early in the game, this company has technology
which could end up as a key component in the propulsion systems of nearly
every motor vehicle manufactured world wide. If you want upside potential
in a microcap, you won't find any story more exciting. In a few years this
company could be a billion dollar royalty gusher.
The SHEP (stored hydraulic energy
propulsion) system captures energy used during braking and recycles
the energy back into the vehicle at the time it needs it most; when accelerating
from a dead stop. At this time, the engine is performing least efficiently,
burning the most fuel, and emitting the most pollutants. They have a joint
development agreement with OEM Ford and Tier 1 supplier Eaton
Corp.
After nearly two years of testing
and fine tuning, Ford has been able to capture a full 70% of the
energy wasted in braking in the Proof of Concept Navigator, an astounding
accomplishment by engineering standards.
Net result with the SHEP System
on the Proof of Concept Navigator:
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38% improvement in fuel economy.
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32% faster acceleration from a stop.
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51% less pollution.
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77% longer brake life.
This is a must purchase for the speculative
end of your portfolio. Put the stock in the "Forget About It" section and
take a look in a couple of years.
Language from a recent press release
gives us a hint of pending developments:
"As a result of its high-profile
industry relationships and co-development efforts, STI's marketing efforts
are being received with considerable interest from a number of key companies
in the global automotive industry including two major European automotive
original equipment manufacturers, a European transit authority and certain
companies engaged in the manufacture of taxis, garbage trucks and transit
vehicles."
The right news could send this one
rocketing up the charts. Click
Here to read our original profile.
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Family
Room Entertainment (OTC BB: FMLY) |
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Family Room is probably the
most oversold and undervalued of all the microcaps we cover. This independent
film producer launched ten movies over four years that went to cable before
breaking through with their first two major theatrical releases at the
end of 2002.
Investors bid the stock into the
$.40 range last year on the anticipation that NARC, their gritty
cop movie would be a major commercial success. Critics and hollywood heavy
weights were gushing about this movie prior to nationwide release, and
there was considerable Academy Award buzz for star Ray Liotta.
Neither the public nor the Academy
showed up for NARC, and investor disappointment has hammered the
stock down $.10, a ridiculous $2 million valuation. Had NARC been
chosen by the academy instead of The Pianist, the stock would probably
be $1 today.
Despite the poor performance of the
stock, Family Room has already moved on to new and potentially profitable
projects. A second Steven Segal movie is in production. A direct marketing
campaign on cable networks for sales of Red Skelton show videos is about
to begin. Thriller "Blind Horizon" starring Val Kilmer is in post production,
and there are several new projects in the works larger than any in the
past.
Family Room has access to
$150 million in funding for projects. This company has attained a new level
as compared to two years ago.
In our original presentation we likened
their business model to a biotech company without the enormous costs. One
blockbuster entertainment project could generate profits like an FDA approval
of a new drug. However, unlike a biotech company, Family Room is
not a huge cash gobbler. On individual projects they use outside
investor money, and keep a percentage of the producer profits. Therefore,
shareholders have biotech like upside, without the downside risk.
Family Room is a definite
buy at $.10 for the microcap end of your portfolio as it is dramatically
oversold. The company is doing no exotic financing, so excess supplies
of stock are unlikely. Good news could move this stock up with a great
deal of ease.
Click
Here to read our original profile.
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StockGroup
Information Technologies (OTC BB: SWEB) |
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StockGroup is a financial
media and technology company. It is a leading provider of private labeled
financial content and software solutions to media, corporate, and financial
services companies.
When you visit a web site for SEC
filings, stock quotes, charts, or technical analysis, the data you could
get could be coming from StockGroup. Their customers include American
Express, CitiGroup, NY Life, Dupont, and many others.
Their financial content also powers
MSN
Canada, and Bill Gates said the following: "The Stockgroup
solution allows us to continue to be a leader by providing our users with
the latest up to date financial news, while providing the most cost effective
solution."
This microcap is probably the least
risky and has the most predictable business model of those we cover. The
monthly revenue stream from their 200 plus corporate clients makes cash
flow consistent.
January's spike in the stock was
the result of the announcement of a joint marketing arrangement with the
Associated Press, who brings 15,000 potential customers to the table. 1%
penetration of Associated Press's customer base puts Stockgroup's numbers
through the roof.
Recent buy outs of Hoover's
and Multex would place the value of SWEB at about $.40 on
an apples to apples basis, 53% above Friday's closing price. News of contracts
from the Associated Press relationship should drive the stock higher. These
could start coming any day.
Click
here to read the original profile.
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XML
Global Technologies (OTC BB: XMLG) |
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This stock is now trading at a new
all time low thanks to what promises to be a very weak 1st quarter. Recent
revelations out of the company concerning layoffs have investors believing
XML
Global is at death's door.
Reductions in monthly overhead have
bought this company plenty of time to explore alternatives or wait for
a resurgence of demand. Therefore, the recent hammering of the stock might
be a bit over exaggerated.
XML Global raised about $1.5
million in financing since last August in several traunches, all priced
at $.20 per share.
Like a cat, this company seems to
have nine lives, and has used up about five of them. Management always
seems to pull a rabbit out of the hat when you least expect it.
After three consecutive quarters
of growth, it seems the March quarter will be down. That is very troubling.
However, at $.04 the stock is completely blown out and good news could
yield a quick double. An exciting and low cost gamble, but not for the
faint of heart.
Click
here for our archive section on XML.
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Calypte
Biomedical (OTC BB: CALY) |
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Calypte has been a roller
coaster ride since launching coverage last June. Originally kicked off
at $.14, the stock rocketed to $.44 within six weeks, but has slowly been
working its way south ever since. Calypte is one of the highest
volume stocks on the OTC bulletin board.
Calypte is the only company
in the world with an FDA Approved test kit which uses urine instead of
blood for HIV testing. The AIDS epidemic in third world countries represents
an enormous market for their product, as it is far safer, more stable,
and less expensive in the field.
There have been many positive fundamental
developments coming out of this company, including the commencement of
shipping major orders to their distributor in China.
Despite a string of positive corporate
developments, the stock has performed poorly. The company is a big cash
burner. Their enormous need for capital has forced the company to turn
to toxic financing which result in unlimited supplies of stock priced below
the prevailing market, no matter how low it goes.
Recently, Chairman Tony Cataldo
committed to an interview with the OTC Journal to discuss this and
other issues. Mr. Cataldo failed to fulfill his commitment, which can't
be viewed as a positive, but isn't necessarily a major negative.
There are several potential developments
to watch for we believe could right the ship. These include:
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The announcement of a partnership and/or
financing from a major name in the Biotech industry. This would allow them
to raise money by selling a piece of the technology, instead of a equity
financing toxic to shareholders.
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Overwhelmingly large new contracts,
especially in Africa where more than 25 million people need to be tested
for HIV.
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Significant progress in the FDA Approval
process for their rapid AIDS test kit, which is developed and perfected.
Barring any or all of these developments,
we would expect this stock to continue to grind lower under the heavy pressure
of toxic financing. The company recently increased the number of authorized
shares to 800 million, which would inevitably lead to a massive reverse
split at some point in the future and further erosion of shareholder value.
Thirty days after a reverse split could prove to be the best time to buy
this stock. It would probably be trading at a new all time low.
Click
Here to review our archive section on Calypte Biomedical.
Your comments on any
of these companies is welcome for the Members' Forum. Simply email
your comments to info@otcjournal.com.
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