No, the green movement won’t just go away. Consumers continue to demand more earth-friendly products. A sense of urgency over climate change and OPEC’s stranglehold over our oil supply continues. We continue to seek alternatives. But alternative energy’s next wave needs to prove it can sustain once the hype dies down.

Take ethanol. At first glance, 2006 looked like a great year to be in the ethanol business. Shares of Pacific Ethanol were on fire, shattering the $20 mark by the end of March. By May, shares broke $40. Bill Gates’ millions helped jump-start the stock, and new government mandates all but ensured the success of the corn-to-fuel business.

As time would soon tell, the spring of 2006 proved to be a great time to sell your ethanol holdings. Pacific Ethanol’s light is not shining quite as brightly as it once was. The stock is more than 98% off its 2006 high, and Gates is steadily unwinding his stake in the company.

Pacific has been plagued with problems recently. The company’s most recent annual report is chock-full of problems, including violations of some debt covenants and other shenanigans involving the company’s line of credit (You can read a good synopsis here.)

But the bigger problem is that you can’t sell ethanol for more than it costs to make it. One would think that would kill this business off entirely. But thanks to inexplicable government support and backward-thinking energy legislation, ethanol production will most likely continue despite the tough lessons we’ve learned.

So the big question remains — can someone successfully develop an alternative energy source that will actually make money?

Do the Math: 20,000 > 28

When you look at the numbers, one particular alternative energy source makes a whole lot of sense: algae. One acre of corn gives you 28 gallons of oil in a year. An acre of algae can yield anywhere between 20,000-100,000 gallons of oil per year. No wonder the updated 2007 Energy Independence and Security Act supports extracting fuels from algae.

While the algae fuel field is not completely crowded, multiple players are developing, harvesting and extracting systems that could one day be industry-standard designs. In as little as three years, we could see a powerful new energy industry.

Chevron and Shell have started exploring the possibilities of algae. There are also a few small companies that are working on the technology. Below are three penny stocks in the algae fuel business. All of these stocks have a market cap under $2 million, a share price under 10 cents, and can be found on the Pink Sheets and Over-the-Counter Bulletin Board:

• GreenShift Corporation (OTC: GERS)
• Nanoforce Inc. (PINK: NNFC)
• PetroSun Inc. (PINK: PSUD)

With the coming transition to alternative fuels, early investors in algae oil stand to claim some huge gains if this technology takes off…

Best,
Greg Guenthner

January 20, 2009

Algae Oil Penny Stocks Set to Soar 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.

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.

It happens all the time on this thinly regulated exchange. The Pinks are crawling with pump-and-dump penny stocks and even sub-penny shell companies that do nothing more than issue periodic press releases and more shares of worthless stock. There are always new investors to scam, and new press releases with new business plans to push. Crooked companies flock to this exchange, all too eager to fleece unsuspecting investors of their hard-earned money.

And then there’s the scarcity of information available to investors on many of these companies. You see, the Pink Sheets is not an exchange like the NASDAQ or AMEX — it’s only a quotation service. The only requirement a company faces on the Pinks is that it must have at least one market maker quoting its stock. Financials do not need to be disclosed. Even on the OTCBB, companies are required to keep current filings with the Securities and Exchange Commission.

These hurdles can make the information gathering process for Pink Sheet investors very frustrating. But there is a very small group of stocks on the Pink Sheets that every small-cap investor should know about. If you’re looking to invest in Pink Sheet securities instead of making quick trades on momentum, this is the place you should look.

It’s a new premium listing service on the Pinks called OTCQX. The new listing service includes three different levels, each with specific requirements for the companies.

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.

All three groups require the companies to maintain ongoing operations (this helps keep those pesky shell companies out of the picture). Together, these three lists make up the safest investments on the Pinks. It’s a great place to start looking if you’ve never invested in these types of companies before.

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

And the list is practically brand new (it commenced trading on March 5). But more stocks should be added to these groups in the very near future. In fact, the people at Pink Sheets are currently processing applications filed by 20 more companies. The quotation service will probably announce additions to the OTCQX lists soon. This could be great exposure for some small, legit firms. And it could also be a great opportunity for savvy penny investors to score shares.

We’ll break down a few select OTCQX companies from the list next week

Best,
Gunner
April 2, 2007

P.S.: If you want to learn more about unique investment opportunities, then please join us at the 2007 Agora Wealth Symposium for “Rim of Fire: Globalization, Crisis & Opportunity.”

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