Headlines by Andrew Kline
- The truth about Concorde America’s (CNDD) crazy moves.
- Attack of the short-sellers! What are they trying to do?
- Two new stock picks with great upside potential!
- Check out our past winners!
- “Market Cap” madness. What the heck is it? Or---bigger isn’t always better!
- 4 great trading strategies for Penny Stocks. You want them, we have them.
- Market View: Is the price of oil becoming a problem?
We begin this week by turning our attention to Concorde America, Inc. (CNDD). Many of you must be wondering what happened last week that could cause such an “up and down” move in the price of the stock.
On Thursday, a group of “short-sellers” attacked the common stock of Concorde America, Inc. (CNDD). For those of you who are not familiar with short selling, it occurs when individuals or groups get together to FORCE the price of a stock down in the hope that they can pick up those same shares at a cheaper price. In other words, they want to buy your shares cheap!
These short sellers used the opportunity presented by a press release put out by the President of the company, Hartley Lord. The press release that the company didn’t have the previously identified worker placement contracts, and that they have not publicly released estimates of future earnings potential.
We believe it is unfair of the company management to penalize honest investors, such as our subscribers, because of some internal power struggle within the company itself. The company is contradicting its own stated figures! We are advised, however, that the board of directors is currently taking steps to overcome their management problems, and put this company back on the right track. It is a sad situation that one company “bad apple” has chosen to “muddy the waters” of what we believe to be a company with great potential.
A situation like this truly saddens us here at US PennyStocks because we work very hard to bring you honest and accurate information. We know that you work hard for your money, and unfortunate mix-ups like this can put your investment at risk.
Stock market investing is a risky business. If it weren’t, there wouldn’t be such potential for reward. With that said, CNDD proceeded to fluctuate wildly between the close on Wednesday and the close of trading on Friday. Because of the company’s inaccurate press release, the stock dropped from Wednesday’s high of $8.90 to $2.51 on Thursday’s close. It then recovered to close at $5.00 on Friday.
We would like to clarify the process that went into our analysis and recommendations regarding this very promising company. The data that went into our stock price projections was obtained through personal interviews with company representatives, study of company provided business plans, contracts “in hand,” and projections of future contracts.
The methods of research and analysis that we use at US PennyStocks are of the highest standards. We are proud of our work, and stand by our figures. At no time did we pull information out of thin air.
Consider the FACTS:
- In personal interviews, Hartley Lord (President---Concorde America) stated that the company has signed contracts for 150,000 worker placements in 2004, and signed contracts for 50,000 placements in 2005. He further projected estimated contracts of 250,000 new worker placements in 2005, and 300,000 new placements in 2006.
- The contracts are not with any governments this was a mistake made in the first press release from Paul Spreadbury, he also made a mistake in saying he was Paul Spreadbury “of” Concorde America when he is not a representative of the company. The truth we were told from the company when writing our reports was that the current contracts are brokered to agricultural concerns in the private sector. Future contracts will also be placed within the private sector.
Based on the company supplied structure and payment schedule for “in hand” contracts and estimated future contracts, along with company supplied cost estimates, our stock price projections are correct.
We strongly believe that this is a solid company with great potential for growth. Hopefully, by the time you read this newsletter, all internal problems for CNDD will have been worked out, and it can turn its attention back towards the goal of adding investor value.
Market Moves |
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Major Indexes | 31-Dec-03 | 30-Jul | 6-Aug | 13-Aug | % Chg week | % Chg YTD |
DJIA | 10,454 | 10,140 | 9,815 | 9,825 | 0.1% | -6.0% |
NASDAQ | 2,003 | 1,887 | 1,777 | 1,757 | -1.1% | -12.3% |
S&P 500 | 1,112 | 1,102 | 1,064 | 1,065 | 0.1% | -4.2% |
Wilshire 5000 | 10,800 | 10,702 | 10,308 | 10,305 | -0.03% | -4.6% |
Russell 2000 | 557 | 551 | 520 | 517 | -0.4% | -7.1% |
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Recommendations
Note: the following picks and strategies are completely unbiased. We are not paid to recommend any stocks or strategy. Please be advised that investing in stocks is inherently risky, and investors should use great care before undertaking any market investments.
2nd Note: Please consider signing up for our very best service----the “Advanced Notice Player” membership! The recommendations we give you in the weekly newsletter are solid choices. The stock market, however, can change rapidly in the middle of the week.
If you sign up to receive our “Advanced Notice Tips” and “Daily Views,”you will get the information when it happens, not when it’s over. With more information, you will save money and you will make money. That’s not a plug, that’s a fact!!
Corvis Corporation (CORV: NASDAQ)
Corvis Corporation (CORV). The Group's principal activities are to design, manufacture, and market optical and electrical communications systems. The products help to accelerate carrier revenue opportunities and lower the overall cost of network ownership for carriers, which enables transmission, switching, and management of communications traffic in the optical domain. The Group's products are used in creation of optical backbone networks that support transmission over long distances and eliminate electrical transmission and switching equipment. The products of the Group include Optical Network Gateway, Optical Amplifier, and Optical Switch. The customers of the Group include Broadwing Communications, Inc., Williams Communications, Inc., and Qwest Communications Corporation.
The company’s consolidated subsidiary, Broadwing Communications, LLC has a new Voice over Internet Protocol (VoIP) initiative, which will soon move into the trial phase with a number of Fortune 500 companies around the country. VoIP is believed to be the low-cost future of the telephone communications industry. The company is on target to begin a national rollout of its VoIP services later this year.
The company has $452 million in cash and equivalents on hand. This equates to $0.93 per share just in liquid assets. CORV closed last Friday at $0.89 per share. We believe that you should Buy CORV at $0.83 per share.
When to sell: We recommend selling your investment in CORV at a price of $1.09 per share, for a profit of 31%.
Altair Nanotechnologies, Inc. (ALTI: NASDAQ)
Although an emerging field, nanotechnology is already having a unique impact on several industry sectors. Altair Nanotechnologies (ALTI) has developed a unique, patented, scaleable technology platform and is positioning itself through product innovation to become a leading supplier of nano-material technology and nano-materials worldwide.
ALTI manufactures a variety of crystalline and non-crystalline nano-materials of unique structure, performance, quality, and cost. Company products are used in many sectors including pharmaceuticals, thermal spray ceramic coatings, water treatment, titanium metals, solar energy, and advanced electrical energy storage devices. The company has installed semi-works capability with a capacity to produce hundreds of tons of nano-materials.
Altair Nanotechnologies (ALTI) has hit our target investment price of $0.97 per share. We strongly believe that this stock is in an oversold position. We recommend that our subscribers Buy ALTI at $0.97 per share. We are looking for a bounce to the $1.40 per share level on any significant company news, or a rally of the NASDAQ Composite Index. We believe that ALTI has a great future in the Nanotechnology sector, and an investment in this stock will be well rewarded in the near-term.
When to sell: We recommend selling your investment in ALTI at a price of $1.38 per share, for a profit of 42%.
Past Recommendations
In the past, if you had been an “Advanced Notice Player,” you would have had access to some of our great tips, BEFORE anyone else got them!!
The stock market keeps moving up and down and up again. There are many new opportunities to make money by investing in penny stocks. Our job is to find new opportunities for our members to invest in.
Join our family of members now, and enjoy the benefits of our great stock tips!
Great Tips from Past Editions Table is based on buying 1000 shares of each stock |
| Buy At | Current Price or Sold At | Profit | % Gain |
AHFI | 0.95 | 1.70 | $750 | 79% |
CNDD | 3.28 | 5.00 | $1,720 | 52% |
APNJ | 0.85 | 0.90 | $50 | 6% |
GVA | 18.26 | 21.87 | $3,610 | 20% |
MRKL | 0.42 | 0.50 | $80 | 19% |
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“Market Cap” Madness: What the Heck is It. Or “Bigger Isn’t Always Better”
Sometimes, investment terminology is tossed around without really being explained---large-cap, small-cap, mid-cap, micro-cap---what exactly do they mean? The investment analysts at US PennyStocks have decided to help you get down to basics regarding these different names.
Because large-cap stocks have periodically shown outstanding performance in the past, you may have heard that investing in them would be your best bet. But do large-cap stocks ALWAYS perform better than mid-cap and small-cap? We at US PennyStocks shout out a resounding “No Way”!!!
Market-cap quandary
To review, market capitalization (market cap) is a measure of the size and value of a company. To determine market cap, you simply multiply the number of the company's outstanding shares of stock by the market price of one share.
For example, let's say a company has 50,000,000 shares outstanding, and each share is currently selling for $5. The company's market cap would be 50,000,000 multiplied by $5, which equals $250 million.
And why is market capitalization important? Because history has shown us that the stocks of companies with different market caps behave differently in terms of return and risk.
What exactly are the different “caps”?
Micro-cap stocks (referred to as “penny stocks”) are generally considered to be those with market caps under $300 million. eMerge Interactive (EMRG), with a market cap of $52.3 million is a great example.
Small-cap stocks are companies that have a market cap between $300 million and $1.5 billion. Concord America (CNDD), with a market cap of $1.05 billion, is one example.
Generally "mid-cap" refers to stocks of companies having a market cap between $1.5 billion and $10 billion. One well-known example is Siebel Systems (SEBL), with a market cap of $3.56 billion.
Large-cap stocks are generally defined as a company having a market capitalization greater than $10 billion. An example of a large-cap company is Starbucks (SBUX), with a market cap of $17.2 billion.
Different market-cap, different performance
Although large-caps have outperformed small-caps during certain periods, historical information shows us that this has not usually been the case. A study by Ibbotson Associates shows us that in 94 percent of the 20-year periods from 1926 to 2001, the smallest stocks performed better than the larger ones. Ibbotson also concluded that in 60 percent of the 10-year periods from 1926 to 2001, the smallest stocks outperformed all other investments!
Risk vs. return
Why have penny stocks performed so well in the past? There are a couple of possible explanations.
- First, since many of these small companies are just starting out, they have a greater earnings growth potential than more established large-caps.
- Second, these younger companies tend not to be widely followed by securities analysts, so they may sell for less than their true value, until investors realize the potential of the undervalued companies.
As you may expect, along with the potential for additional returns comes additional risk. Small-cap and penny stock returns tend to be more volatile than the returns of large-cap stocks. Why is this the case? There are several reasons. Many small companies are in the early years of their business evolution. Moreover, while they gain maturity, they have limited reserves against hard times. In addition, if a smaller company loses a few key executives, or if the economy takes a turn for the worse, it only takes a few nervous investors to cause the stock to drop.
We at US PennyStocks view volatility as opportunity! If a stock barely moves over a 1-year period, why would you want to own that stock? Our research team is constantly looking for great stocks that are undervalued. It is because these stocks show so much potential for profit that we have chosen to highlight them on this website.
Trading Strategies For Penny Stocks
1) Generally, don’t invest the entire amount you are willing to commit on the first trade. It is rare if a penny stock does not trade below the recommended entry price. It is very difficult to perfectly predict the entry price. At times, small companies will stumble in the execution of their business plans, thus temporarily lowering the price of their stock. Additionally, external factors in the economy could affect the overall market, depressing prices in the short-run.
Unfavorable market conditions can provide an excellent opportunity to add to your positions. Conversely, if a company is doing better than expected, you can also add to your investment position at higher levels.
2) Always use limit orders. Market Makers---a type of exchange broker that makes all the trades---are in the business of making money on your trade. Penny stocks can often have a wide gap between the price you “bid” for a stock and the price a seller “asks” for the stock. If you place a “market” order for a penny stock, chances are you will get the worst price possible.
Currently, stocks on the Over the Counter Bulletin Board (OTC:BB) do not trade on electronic exchanges such as the NASDAQ. Many stocks we recommend are on the NASDAQ, which allows investors to bypass the market makers. However, the OTC stocks that we recommend aren’t traded on electronic exchanges.
Always place your order at a specific price! The broker has to fill it at that price, and not some arbitrary price that hurts your profit potential. As you will notice, all of our recommendations are at specific prices. Do your own research to confirm our thinking. If you don’t agree with our price, set one of your own, but make it specific!
3) Use unfavorable market conditions (down markets) to add to your positions. “Bear markets” can create excellent buying opportunities. We discussed this a bit in last week’s newsletter. (see “Basic Rules for Investing in Penny Stocks” Aug. 9th edition) Penny stocks will generally drift down in bad market periods, and can drop to ridiculously low levels.
During difficult market periods, stockbrokers generally direct their clients into the “Large Cap” stocks (over $10 billion company value). At these times, people pull money out of penny stocks, and they can become a real bargain!
At US PennyStocks.com, we often come across windows of opportunity that are only open for a short time. When we find these great opportunities, we will alert our “Advanced Notice” clients immediately, so that they can gain the extra rewards of getting in more quickly.
Please consider signing up as an “Advanced Notice Player.” You will make more money in one trade than the cost of the membership!
In addition to all the other great benefits, you will receive our tips 24 hours before anyone else does. People have often said that information is power. They were right. Market conditions change rapidly. Buying a stock 20 or 30 cents lower than other people will simply make you more money. We will be sending out “Advanced Notice Tips” at least once a month, and possibly each week.
4) Take some profits when the stock is hot. Since penny stocks tend to make most of their profits in quick moves up, it is often a good time to take some money off the table. One great strategy is to sell 50% of your position after the stock doubles in value. This allows you to recoup your initial investment and hold the remainder of your position for the long-term with no risk. However, don’t sell your entire position, as you never know how high a stock will go!
Market View
The stock market remains under pressure, as world events continue to push oil to record new highs. The price of a barrel of oil---“black gold”---climbed to $46.58 at the close on Friday. Wow! Earlier this month, we mention how difficult it would be for this market to rally in the face of high oil prices and geopolitical and macroeconomic events. (see “Market View” Aug. 2nd edition)
This market, on a technical basis, is either oversold or near a short-term bottom right now! The trouble is that “fundamentals” can sometimes override “technicals.” We will soon be giving you an analysis of these two concepts in our “Daily Views” offering. For now, fundamentals refer to world events and economic data, while technicals refer to the actual levels of the stock market.
With company earnings season drawing to a close, world events are taking center stage as the driver to market direction. With the possibility for terrorism at the Olympics and elsewhere, high oil prices, and the uncertainty of the Presidential election all in play, investors are not tending to jump on any long-term rallies at this time. We do foresee short rallies (market bounces) over the next month. These bounces should provide for profit making opportunities to emerge.
The markets barely stabilized last week as the NASDAQ cut its recent loss streak down to 1%. We believe that this is temporary, and the DJIA (Dow) still has about 300 points downward movement ahead. This could easily happen next week. On the other hand, in the absence of terrible news, the markets could try to hold and move up a bit before the final “blow-off” to the downside.
Email us at editor@USPennyStocks.com.
Disclaimer: The opinions and beliefs of these newsletters written by Tom Heysek and Andrew Kline are not the opinions and beliefs of the owners of this website.
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