So, other than the NASDAQ dominance, is there anything in common amongst these stocks? Well, you’ll find a lot of medical and technological stocks in this bunch.  Below are some brief descriptions of each company…

ICOP Digital, Inc (NASDAQ: ICOP) engineers, produces and markets mobile and stationary surveillance solutions for law enforcement. ICOP shares started the year at 16 cents and have quickly risen to $1 over the past few weeks.

Targanta Therapeutics Corp (NASDAQ: TARG) is a biopharmaceutical company focused on the development and commercialization of antibiotics for infections treated or acquired in hospitals and other institutional settings. The Medicines Company (NASDAQ: MDCO) recently announced that it would acquire 100% of Targanta’s outstanding shares. This news helped launch the stock from 61 cents to $2.50.

Zoom Technologies, Inc (NASDAQ: ZOOM) designs, produces, sells, and supports broadband and dial-up modems, voice over Internet protocol (VoIP) products and services, and Bluetooth wireless products.

Grill Concepts, Inc (NASDAQ: GRIL) develops, owns, operates, manages and licenses full-service upscale casual dining restaurants under the name Daily Grill and fine dining restaurants under the name The Grill on the Alley. With a market cap of only $6.8 million, GRIL shares have spiked from 24 cents to 77 cents over the past month.

North American Scientific, Inc (NASDAQ: NASM) designs, develops, produces and sells products for radiation therapy treatment, primarily in the treatment of prostate cancer. The recent jump in NASM shares has helped the company regain compliance with the NASDAQ Capital Market listing regulations.

California Coastal Communities (NASDAQ: CALC) is a residential land development and homebuilding company with properties owned or controlled primarily in Orange County, California, and also in four other Southern California counties. On Jan 2, the company sold 17 model homes for $25 million. The news helped push their stock from 56 cents to above $1.

Anadys Pharmaceuticals, Inc (NASDAQ: ANDS) is a biopharmaceutical company focused to develop medicines in the areas of hepatitis C and oncology. Due to some positive news on a recent drug study, shares of ANDS have risen from $1.81 to $5.

Quantum Group, Inc (AMEX: QGP) is engaged in providing consulting and sourcing services for HMOs that market Medicare Advantage managed healthcare plans, as well as to healthcare providers in the state of Florida. In mid-January, QGP announced a multi-year service agreement with IBM.

Nextwave Wireless, Inc (NASDAQ: WAVE) is a mobile broadband and multimedia technology company that develops, produces and markets mobile multimedia and wireless broadband products, including fourth generation (4G) wireless broadband semiconductors.

Aviza Technology, Inc (NASDAQ: AVZA) designs, manufactures, sells and supports semiconductor capital equipment and process technologies for the global semiconductor industry and related markets. In early January, Aviza raised their net income guidance, which helped launch the shares from 10 cents to 30.

Incidentally, the 10 stocks above aren’t just the top penny stocks of 2009; they’re also the top performing stocks on any of the major exchanges…

Let’s take a look, for comparison sake, at the top 10 stocks from the Dow so far in 2009…

As you can see, there’s quite a contrast in the top performers from each category. As you’d probably expect, the top blue chips have had more modest returns than the top penny stocks. Although the performances of IBM and Kraft have been impressive thus far in 2009, those companies don’t offer investors the same explosive growth potential that can be found with small cap stocks.

Even with the ongoing market mayhem, penny stock investors still have the opportunity to grab some big gains. It’s not an easy task, but careful research and patient buying can pay some huge dividends down the road.

Sincerely,
John Schuler

January 27, 2009

The Top Penny Stocks of 2009 (So Far) was originally featured in the Penny Sleuth.

A few hundred? Maybe fifty? Twenty?

Nope, only one mutual fund focused on U.S. stocks registered a gain in 2008… just one!

The tiny Forester Value Fund, with only $50 million in assets, recorded a 0.4% gain last year. And while that may not sound terribly impressive, it is when you consider the fact that the Dow and S&P 500 both lost more than 30% during that same period.

Tom Forester, manager of the fund, doesn’t see its small size as a negative. “I’ve been reminded,” Forester said in a recent Wall Street Journal article, “that when your assets aren’t enormous, you can get in and out of stocks in a day — or even an hour — that a larger fund might struggle to do in a month.”

Forester picked up shares of Bank of America (NSYE: BAC) back in July when they were near $18. He then sold those shares when they reached $30 in September. His timing couldn’t have been better.  Had he waited much longer, he would’ve been caught up the October collapse that decimated Bank of America’s shares (B of A stock now sits at $6).

Forester attributes the nimble nature of his fund as a big positive in this case, “If I’d had to pace my sale [of Bank of America shares] over a couple of days, even, I wouldn’t have captured that profit,” he said to the WSJ. Instead, Forester was able to sell his entire B of A position in one day.

After buying up shares of the natural-gas producer EOG Resources Inc. (NYSE: EOG), he did it again. Forester managed to sell most of his shares after the stock doubled, and before EOG started to fall once again.

So, what is Tom Forester buying now?

Well, Forester told CNNMoney that he’s recently been buying shares of Valero Energy (NYSE: VLO) and Andarko Petroleum (NYSE: APC).

“Nobody can really tell what’s going to happen exactly with price of oil,” Forester said. “But as oil got closer to $35, many of the stocks seemed more reasonable than they were when oil was closer to $150. Plus, for the longer term, companies are not finding as much oil as they used to, so prices could go back up. Commodities were oversold.”

Forester obviously feels that now is a great time to get into oil stocks. And since he outperformed the market by over 30% last year, perhaps he’s worth listening to.

Here are five small-cap oil stocks with a share price under $10 and a market cap under $400 million. They’re certainly worth checking out because oil stocks could see a big bounce if Forester’s hunch turns out to be right:

• Berry Petroleum (NYSE: BRY) – Independent oil and natural gas E&P with producing operations in California, Utah and Colorado.
• BMB Munai (AMEX: KAZ) – Independent oil and natural gas E&P with a heavy interest in Kazakhstan.
• Gulfport Energy (NASDAQ: GPOR) – A small E&P specializing in offshore drilling in the Gulf Coast.
• Pyramid Oil (AMEX: PDO) – Domestic E&P with interests in California, New York and Wyoming.
• Vaalco Energy (NYSE: EGY) – International oil E&P based in Houston with interests in the North Sea and across Africa.

Best Regards,
John Schuler

January 22, 2009

Top Mutual Fund Manager of 2008 is Buying Oil Stocks was originally featured in the Penny Sleuth.

Inflation is the silent predator that’s constantly stalking your retirement savings.  Normally, you have to outpace inflation to stay ahead of the game, and realize any significant returns. But, in some cases, inflation can be good for your investments.

Today we’ve found five penny stocks that could actually rise in value as the dollar falls.

With the Treasury printing money like its going out of style, and with the bailouts ongoing, the government is in danger of creating a huge inflationary bounce back in the wake of this economic crisis.

So, how can penny stock investors profit from the pending inflation?  Well, why don’t we take a look at what gold did yesterday:

The spot price of gold jumped from $840 to near $860 after the rate cut was announced yesterday.  The gold rally continue this morning, with gold rising to as much as $880.  In less than 24 hours, the spot price of gold increased by roughly 4.76%

Take a look at what our colleague Ed Bugos, editor of Gold & Options Trader , said recently about gold:

“The fundamentals are significantly bullish for gold. I’d like to say they are bearish for the dollar, but in truth, they are increasingly bearish for all paper currencies. Outside of the Bank of Japan, everyone is inflating madly.”

Higher inflation means higher gold prices. It only make sense that if there are more dollars in circulation, and each dollar is worth less, than it will take more dollars to buy an ounce of gold.

Since Dec. 5, when the price of gold fell below $760 per ounce, it has increased an astounding $120. That’s a 15.79% gain in a matter of only 12 days.

Now is a great time for penny stock investors to buy up stock in gold miners. Many of these gold stocks have been slammed over the past few months, and they can now be picked up at extremely cheap prices.

Our friend Dan Amoss, editor of Strategic Short Report , suggests that investors take a look at precious metal stocks as the inflationary storm approaches. “How can you profit from this unprecedented inflation,” Dan asked, “By owning precious metals and precious metals stocks.”

As the dollar becomes weaker, and gold prices continue to rise, gold miners could see a huge boost in their share price.  Below are five small cap miners with a share price below $10 and with a market cap under $1 billion:

• Apollo Gold Corporation (AGT: AMEX) is involved in the acquisition, exploration and development of gold deposits, with current projects in the United States, Canada, and Mexico
• Aurizon Mines Ltd (AZK: AMEX) is a Canadian gold producer focused on developing its site in northwestern Quebec.  Aurizon is also conducting the exploration of three additional gold projects in the Quebec region.
• Fronteer Development Group Inc. (FRG: AMEX) is another Canadian-based gold exploration company.  In addition to its Canadian projects, Fronteer also has sites in Nevada and Turkey.
• Ivanhoe Mines Limited (IVN: NYSE) is an international miner focused on the Asia Pacific region.  Ivanhoe is currently exploring multiple sites in China and Mongolia.
• Minco Gold Corporation (ADR) (MGH: AMEX) is involved in the acquisition and development of gold properties in China.  At this time, Minco has five gold projects throughout China.

So, check out these miners for yourself and see what you think.  Feel free to post your thoughts on these companies in the comments section, as well as any other gold miners you might come across.

Best Regards,

John Schuler
December 17, 2008

Gold Penny Stocks should bounce after Fed’s Rate Cut was originally featured in the Penny Sleuth.

Below is a chart of the top three penny stock performers during the past year. Two of the companies are in the business of gas and oil exploration, and the other is in the wireless telecom industry. Two of the stocks have a market cap of under $20 million, and all three have amassed some great returns this year:

While TSYS has held its value very well amidst the economic crisis, New Concept and Mexco both hit their 52-week high back in May, and have since given back much of their returns. If you’d bought Mexco last December, however, and sold when the stock hit $50 five months later, you could’ve claimed a 1,135% return!

Shares of New Concept could’ve been had for $1.50 last December. When the stock spiked to $12.75 earlier this year, investors had an opportunity to cash in on a 750% gain. Despite the hit these stocks have taken in the past six months, they are still giving last year’s buyers a nice return on investment at their current levels.

Now, for comparison sake, lets take a look at the top performing stocks from the Dow Jones over the past year:

As you can see, only two of the 30 stocks in the Dow have had a positive return over the past 12 months. Wal-Mart has been the Dow’s best performer by far. The third best, Johnson & Johnson, is currently sporting a -9.73% return over the past 12 months.

Now, you may be wondering what penny stocks, if any, have performed well since during the recent market turmoil. Well, you maybe surprised to learn that a few small caps have done quite well despite the market meltdown. The top penny performer over the past three months is in the outsourcing business, the runner-up is a provider of competition management services, and the third is a pharmaceutical company that focuses on prescription drugs for central nervous system (CNS) disorders:

All three of these stocks have posted some remarkable gains over a short amount of time, especially when placed in the context of the recent market collapse.

The Dow, by comparison, has two positive performers over the past three months, although their gains are much more modest:

Exxon and McDonald’s have done very well to post any gain over the past three months, particularly considering the Dow Jones Industrial Average is down 23% during that same time period. Despite outperforming their peers, Exxon and McDonalds can’t hold a candle to the returns of this quarter’s top penny stocks.

These comparisons very clearly illustrate the profit potential that these un-diluted penny stocks bring to the table. The blue chips rarely see such explosive growth over such a short period of time. And even in one of the biggest collapses the market has ever seen, you can still find some great penny stock buys. You’ve just got to know where to look.

Best Regards,
John Schuler

December 08, 2008

P.S.: To get a jump-start on the top penny performers of 2009, check out Penny Stock Fortunes. In their December issue, Greg and Jim have found four cheap stocks that would be considered bargains in any market.

The Year’s Top Penny Stock Performers was originally featured in the Penny Sleuth.

“When you look back over the last 10 recessionary environments, what tends to lead back on the upside is small-cap equities.”

— William Greiner, Chief Investment Officer of UMB Asset Management

“Like springtime crocuses, small-cap stocks flourish once the harsh cold of a bear market is over… Because small-caps are undervalued once the market turns around, they benefit disproportionately from an earnings recovery.”

— Larry Light, Wall Street Journal

As investors scour the market for stocks that will be the quickest to bounce back once the market recovers, they need look no further than the small-cap sector. Penny stock gains outpace the blue chips on average during a rising market. Take as an example, the brief rally that occurred earlier this week…

In the rally that started Friday afternoon and continued throughout Monday’s close, it was the small-cap stocks that led the charge. In no way am I saying that the market has finally found it’s bottom, but it’s a nice reminder that small-cap stocks have historically led the way out of bear markets.

As you can see in the chart below, from 2 P.M. last Friday through the market’s close on Monday, the Dow gained 10.72%. During that same timeframe, the Russell 2000 Index gained 14.57% and then S&P Small-Cap 600 gained 13.83%.

It only seems fair that the small-cap sector would see a bigger bounce since the penny stocks have taken a brutal beating during the past few months. Over the past three months, the Dow has lost around 26%, while the Russell 2000 and S&P Small-Cap 600 both fell a staggering 39%.

Heading into bear markets, penny stocks have historically fallen the harder and faster than the large-caps. As investors get skittish, they often flee to the perceived safety of the blue chips and let the penny stocks fall by the wayside.

The small-cap stocks, however, are also the quickest to rebound once the market reverses course. As the bear market comes to an end, the penny stocks get the biggest bounce as earnings recover and valuations return to more logical levels.

As the market sentiment becomes more bullish, investors are attracted by the profit potential of the more speculative penny stocks, and they often leave behind their diluted positions in large-cap stocks and low-risk bonds.

That being said, now is a great time for small-cap investors to load up on cheap penny stocks. There are severely undervalued stocks strewn about the small-cap sector and savvy investors can grab some great deals right now. Once the market finally begins to recover, these investors will see the quickest gains and the biggest profits.

Best regards,
John Schuler

November 26, 2008

Small-Caps Lead the Charge in Most Recent Rally was originally featured in the Penny Sleuth.

Circuit City now has six months to come into compliance with the NYSE. To do so, the company’s average stock price must exceed $1 for a 30 consecutive trading days before April. With Circuit City’s stock currently trading at around 26 cents, they unfortunately have a lot of ground to make up. So what happens to companies like Circuit City when they face such a predicament? Well they have a few options…

Reverse Splits and Share Buybacks

One route they can go is to do a reverse split of their stock. As you probably know, when normal stock splits take place, the shareholders get more shares at a lower price. For example, if you own one share of a company trading at $100, and they do a 2-1 split, you now own two shares worth $50 each.

Well, if a company performs a reverse split, it’s just the opposite. So, if you own 10 shares of Circuit City that are each worth 26 cents today, and they do a 1-10 reverse split, you now own 1 share worth $2.60. The problem with this strategy is that investors generally figure out what’s going on and the price will tend to sag back down after the reverse split takes place.

Another way to push a stock price back over the $1 is a share buyback. In a buyback, a company buys shares of its own stock back from investors. The result is fewer shares available on the stock market, which means that the remaining shares are worth more. For a cash-strapped company like Circuit City, however, forking out the money to buy back shares is a pretty tall order.

Where Do I Find Delisted Companies?

If the above methods don’t work, and if Circuit City’s stock price doesn’t recover own it’s own before April, they will be delisted and will most likely move to the Pink Sheets or the Over-the-Counter Bulletin Board (OTCBB). Washington Mutual serves as a recent example of delisting. On September 29, after filing bankruptcy, its share price dropped from $1.69 to three cents and it was booted from the NYSE and moved to the OTC under the symbol WAMUQ.

Finding companies that have been delisted, or that are about to be delisted, can be a tricky process. While the NASDAQ and NYSE don’t maintain public lists of companies who’ve received notice, the Internet makes it relatively easy to scour the media for delisting notifications.

But you might be wondering why you’d want to look for delisted companies anyway…

Delisting isn’t a death sentence in and of itself. Often in a down market, healthy small-cap companies can be delisted due to a depression of share prices or a decrease in their trading volume. After 9/11, for example, the NASDAQ announced a three-month moratorium on listing requirements since hundreds of companies had fallen below the $1 threshold as a result of the market crash.

There’s a pretty bad stigma with delisting, and few companies want to join the club of stocks that got booted from the big leagues. As a result, many firms fight hard to get their stocks back in line with the exchange’s requirements. It’s definitely not unheard of for a stock to do well after delisting is threatened.

What’s a Reverse Jumper?

In the penny stock world, one of the most lucrative plays to get in on is a “jumper.” As Penny Stock Fortunes editor Greg Guenthner puts it, a jumper is “an unknown micro-cap stock that’s destined for a transition to a major exchange after a period of steady — or explosive — growth in an overlooked segment of the market.”

But did you know that harder to find “reverse jumpers” can be just as profitable. Reverse jumpers play on the edge of getting delisted only to get their acts together and rake in serious profits for their investors.

Now, you don’t want to invest blindly in stocks being threatened with delisting — you’ll end up with a portfolio full of Circuit Citys or WaMus if you do that…

But if you can spot a penny stock with solid fundamentals being threatened with delisting, especially in this market, you might find out just how powerful a reverse jumper can be.

Regards,
Jonas Elmerraji & John Schuler

November 6, 2008

P.S.: The potential profits on these stocks when they jump from the Pink Sheets and OTCBB to the major exchanges in staggering.

The Down and Dirty on Delisting was originally featured in the Penny Sleuth.