Those gains came from companies you are probably already familiar with: Roche Holdings, Wal-Mart of Mexico, and Adidas. These three companies have a combined market cap of $177 billion, yet produced enormous penny stock-sized gains.

Beyond being large, international, and profitable, these three have something else in common: none of them trade on a major U.S. exchange.

Roche is Swiss, Adidas is German, and Wal-Mart of Mexico is a southern neighbor. So unless you live in Switzerland, Germany, or Mexico, you might be wondering how you can get in on opportunities like these.

Until a few years ago, we wouldn’t have had an answer for you. Luckily, the international investment landscape made at least one change for the better in recent years…

67 Companies That Are 3.4 Times Larger Than the Whole OTC Market

You may already be familiar with the Pink Sheets, now known as the Pink OTC Markets. The Pink OTC is just the information center of the over-the-counter market. It’s not actually an exchange like the New York Stock Exchange. Instead, it just gives individual investors access to OTC broker-dealers. Broker-dealers are the people that actually trade these securities.

One common criticism of OTC companies, especially those on the Pinks, is their lack of financial reporting.

To get listed on the NYSE, AMEX, or NASDAQ, you have to submit on-time, regular financial results to the Securities and Exchange Commission.

OTCBB-listed companies are required to report, but not as much as others.

Pinks, on-the-other hand, don’t have to report anything… ever. That’s why large institutional investors — like investment banks and mutual funds — aren’t usually allowed to touch these companies. Individuals like you, however, can trade Pinks using a simple online broker.

In 2007, the people at Pink Sheets brought us a new classification system to help us evaluate these often-misjudged securities: the OTCQX.

The OTCQX is a listing service with NYSE-like requirements. A few of these include minimum ownership requirements, trading volume, regular financial reporting, and ongoing business operations. These seem like a no-brainer, but millions of dollars are thrown at companies in the regular Pink Sheets that don’t meet any of these requirements.

This new OTCQX also opened another door… this one on the global stage.

Many foreign companies don’t seek listing their securities on the NYSE or AMEX because of these exchanges’ stringent filing requirements — not to mention the obscene fees they charge. With the OTCQX, these companies finally have another access point to U.S. investors.

Most OTCQX International-listed companies were previously traded on the Pink Sheets. In many cases, individual investors took it upon themselves to do this. Meaning the company didn’t have to draft a U.S. investor prospectus or sign a formal American Depositary Receipt bank agreement. U.S. investors and investment banks would literally travel to these companies’ home-country exchanges, buy shares, and trade them on the Pinks. With the OTCQX, and its massive success, these companies are now actively seeking this kind of trade volume.

Take a look at the traffic the OTCQX has spurred compared to its OTC counterparts:

More Than 3 Times More Dollar Volume Than Its Competitors Combined

As you can probably tell by now, the companies we discussed are all listed on the OTCQX International. But they are still on a relatively short list. According to the OTCQX website, there are only 53 in this category — out of only 67 total OTCQX-approved companies.

In coming months and years, these numbers will increase. As you can see, investors are already benefiting from this short list.

We have one OTCQX International company currently catching our attention. This $29 billion company is a global leader in its industry. It’s also growing at double-digit rates — 53% in the first half of this year!

If we decide to pull the trigger on it, we’ll do so to our Lifetime Income Report readers.

Sincerely,
Jim Nelson

August 25, 2009

Grab Secret Penny Stock Gains from the World’s Best Blue Chips was originally featured in the Penny Sleuth.

Today, we’ll take a look at an Australian biotech that trades on the International OTCQX. More on this company in a minute.

As for this new listing, the top tier is called PremierQX. These are securities that trade for a minimum of $1 and meet all of the requirements to be listed on a national stock exchange. This means the companies are required to post quarterly and annual reports, and also interim information that could affect share prices.

PrimeQX stocks must also meet the requirements to be listed on a major exchange. However, the stocks listed in this group do not have to trade for the $1 minimum. International OTCQX stocks must meet requirements of their foreign exchange and make their reports available in English.

There are only seven companies listed on the OTCQX right now: Computer Services, Inc. (OTCQX: CSVI), Meritage Hospitality Group, Inc. (OTCQX: MHGU), Moro Corporation (OTCQX: MRCR), Day Software Holding AG (OTCQX: DYIHY), Globex Mining Enterprises Inc. (OTCQX: GLBXF), Wal-Mart de Mexico S.A.B. (OTCQX: WMMVY) and Starpharma Holdings Ltd. (OTCQX: SPHRY).

Starpharma Holdings Limited is the company we will be looking at today. It trades in Australia under the symbol SPL, and its ADR is traded on the pinks as SPHRY.

Starpharma makes and develops its products using nanotechnology. Its main drug is called VivaGel, a gel-based microbicide designed to protect women from sexually transmitted diseases, including HIV.

The gel has made it through Phase 1 clinical trials, and the FDA has even granted the drug fast-track status — and fast-track designation is nothing to scoff at. The term was coined in the FDA Modernization Act of 1997 in an effort to speed up the approval process for some worthy causes. The designation is reserved for new drugs that could address unmet medical needs and treat serious or life-threatening conditions.

While a fast-track designation is not a guarantee that the drug will ever be approved, it is an indication that the product has a better chance at one day being actively marketed than the average new drug applicant.

A study at the Tufts Center for the Study of Drug Development says that the FDA’s fast track program results in a 62% approval rate after the first three years. Considering that the length of the total drug testing and approval process is conservatively estimated at 12 years, this is an immense difference.

On top of its fast track designation, this company has been awarded $20.3 million by the National Institute of Health to accelerate its development. While this all speaks very favorably for the future of this drug, it could still very well be many years before the product actually materializes.

Of a more immediate concern to shareholders is a recent acquisition. In October, Starpharma bought Dendritic Nanotechnologies, Inc. Dendritic’s specialty chemicals are much more closer to commercialization than Starpharma’s technology. The firm’s near-term success will most likely be based on its ability to get some of this acquired technology on the market.

Still, this is a company worth checking out. It’s easier to find information on companies like Starpharma listed on the Pink Sheets’ premier and prime exchanges. And more stocks should be added to these groups in the very near future.

Pink Sheets’ execs are currently processing applications filed by 20 more companies. The quotation service will probably announce additions to the OTCQX lists soon. We’ll keep you posted on any breakout winners from the list as the year progresses.

Best,
Gunner
April 9, 2007

P.S.: This just in… Coming this month, you can check out more promising small and micro-cap biotechs in the new Penny Stock Fortunes.

Small-Cap Pink Stocks was originally featured in the Penny Sleuth.