It was also the last day Overhill Farms, Inc. (OFI: AMEX) shares would close at $3.

The next day, the stock was up from $1.40 to $4.40 a share. By February 2, it was up another 45 cents, to $4.85. Last Monday, the stock landed just a few cents shy of $6, nearly doubling its price in less than two weeks.

Overhill Farms makes frozen food products for companies like Jenny Craig, American Airlines, Safeway and Pinnacle Foods Corporation. The company also specializes in weight loss foods, low-carbohydrate meals and soy and vegetarian products.

And this tiny, $86 million company is growing in a big way.

It was a company announcement on January 25 that got the ball rolling. Overhill’s stock shot up more than 30% that day after the company inked a new deal with a new food label that would be worth more than $40 million in sales its first year.

A few days later, Overhill Farms reported more than $1.5 million in net income for the first quarter — a company record. This is also a 156% jump from last year’s income of $607,000.

That’s impressive growth. And it’s exactly the kind of company we’re looking for with the CXS System in the new Penny Stock Fortunes.

A New Strategy

As some of you may already know, the new Penny Stock Fortunes is set to make its debut later this week. Our goal with this legendary newsletter is simple: To show you the biggest possible gains from some of the fastest growing companies on the market.

To do this, we’ve retooled the CXS system — our proprietary stock selection mechanism. The new CXS system concentrates on five key points of a growing, successful penny stock. Each of the five criteria is scored from 0-2. Add them up, and you get a CXS score from zero to a possible 10. Here are the five pillars of the system:

The first is Top Line Traction. Many great, undiscovered penny stocks probably won’t be making steady profits yet, but they should still be growing revenues. The best penny stocks in this bunch will grow their top line by 25%, 40% or even 50% in a single year.

Next is the Profit Fortress. This is the “unfair advantage” some well-run penny stocks have over their competition. Whether it’s a hefty market share or products and services that aren’t easily duplicated, a solid profit fortress can help lead a company to dominance and send its share price soaring.

Then there’s the Black Cloud Factor. The CXS system looks for good companies that have one or two problems weighing down share prices. This is where we’ll find good opportunities to capitalize on Wall Street’s uncertainty on what could be very promising companies. Once the sky clears, then these stocks should show readers hefty profits

Net up is the Profit Catapult. The CXS system is programmed to find companies that have a big, potentially positive event on the horizon, like a small drug company waiting for FDA approval.

Last, but certainly not least, is the Business Shock Factor. Business shock is simply how revolutionary a company’s product or service will be. The great businesses in this category will possess disruptive technologies, new medicines and important inventions that could potentially change the world as we know it.

Four CXS Selections

The new Penny Stock Fortunes is running strong right out of the gate and the recommendations are plentiful. In fact, all eight stocks we’ve covered are still within the recommended buying range. That’s four CXS selections and four bonus picks from our new special report.

It’s a diverse bunch, complete with a defense contractor, an energy company, a software provider, a biotechnology firm, and more…

As a Sleuth reader, you’ll be one of the first to have access to these explosive penny stock picks. Keep your eye on this space for details.

Best,
Gunner
February 12, 2007

Small-Cap Food Companies was originally featured in the Penny Sleuth.