It's back...the condensed list of penny stocks making the biggest splash in the huge pool of
otherwise-uninteresting penny stocks. Just as a reminder, this list isn't a 'most purchased' list (which we sometimes publish), nor is it a list of the arena's 'biggest movers' (which is irrelevant history). The 'loudest' penny stocks are the ones trading on huge (relative) volume
on top of creating the loudest buzz among penny stock speculators.
What's the purpose? These stocks are frequently the best stories/trades
yet to happen.
Anyway, last week's biggest-splash penny stocks were Keryx Biopharmaceuticals Inc. (KERX), Sirius XM Radio Inc. (SIRI), E*TRADE Financial Corporation (ETFC), Medis Technologies Ltd. (MDTL), and Genta Incorporated (GNTA.OB)
Let's look at each, in no particular order....
Keryx Biopharmaceuticals Inc. (KERX)Just so you know, the Keryx buzz last week was all bearish - the stock sank from $1.14 to $1.03, but had been as low as $0.86 before Friday's buy-in. It last traded at $0.95 today, so the sellers still seem to be in control.
So what gives? Here's the sad part... it's been nothing but good news from Keryx over the last couple of weeks, but the stock's been sinking anyway.
The company reported positive Phase II results from Zerenex on the 8th; the stock popped up to a high of $1.58, but has been headed lower ever since (buy the rumor, sell the news?).
We learned on the 17th (Wednesday) the penny stock had regained compliance to keep its NASDAQ listing, and the stock continued to sink.
My take? Don't fight the downtrend, especially when it defies the odds.
Sirius XM Radio Inc. (SIRI)This is still strictly a 'trading' stock - not the kind of thing you'd want to be holding for the long haul yet. Nevertheless...
We've never argued against the idea of satellite radio. It's just that the company's market cap and toxic financing made no sense in comparison to the revenues and (potential) earnings Sirius could generate. Securing another $350 million in debt financing is a step in the wrong direction.
The market seems to have fallen in love with SIRI again though, at least judging from the last four days (
and last four months, for that matter).
Don't worry about valuations - you could never justify them. Just trade the trend; there seems to be a lot of room to recover after last year's implosion.
E*TRADE Financial Corporation (ETFC)Yes, the online brokerage and banking giant is now a penny stock.
Like Keryx, it was nothing but selling last week for E*Trade. We saw the stock make two big bearish gaps on top of hitting new multi-week lows... and it's still pointed lower today.
Why? Mostly because of potential dilution. The company is planning on issuing $400 million worth of shares, and is looking to exchange $1 billion worth of debt -
held by Citadel Investment Group - for convertible notes with slightly more attractive terms (attractive to the
company, that is).
Though the news on the surface was a problem for ETFCs valuation, I actually view this recent dip as a long-term entry opportunity.
I've got a feeling the worst is already priced in. Besides, the annual losses have been shrinking incrementally, and a
return to profitability is expected to occur in 2011.
Medis Technologies Ltd. (MDTL)All over the map. MDTL opened at 23 cents on the 8th, then closed at 78 cents the same day in front of news that indicated $5 million worth of financing had been won for the fuel cell manufacturer.
It was nothing but downhill after that though... MDTL hit a low of 34 cents by the 18th (Thursday).
Today, we're seeing another 180 degree turnaround... MDTL is at $1.03, up 103% for the day.
What was the prompt this time? Recent testing of the company's equipment indicates their cells are twice as powerful as the military's currently-preferred fuel cell.
A reason to celebrate? Not quite yet.
This is the military...just because something is better (and presumably cheaper in the long run) doesn't mean the military is actually going to buy it. How many more fuel cells do they need? What are they going to do with the older ones they already have? How much red tape has to be cut for the military to make an acquisition, particularly when budgets are being cut?
I've got a feeling this surge is going to falter like the last one did, as there's no 'meat' behind the news.
Genta Incorporated (GNTA.OB)Geez, this penny stock will not go away. Not that's it's been a bad story (though not necessarily a bullish one), but the Genta saga has gotten a little old. The amazing part about last week's buzz, however, was that
there wasn't any real news to prompt it. On the other hand, movement - and volume - were minimal.
My guess is this...
all the stirring is from late comers and amateurs who missed the first ride up stemming the company's pre-ASCO announcement that Gensasene (melanoma treatment) and tesetaxel (an oral cancer taxane) would be reviewed at the conference.
In fact, as I look back, all the recent surges (since December) have been on the same recycled news. It's all
good news, but it's not really new.
Longer-term, the stock's still too much of a question mark to dig in too deep with.
Shorter-term - and despite no real reason for a rally - I like the way GNTA has been bouncing up and down between rising support and resistance lines. It just pushed off that support line, and the amateurs may indeed have a rally left to give. So the odds of a small rebound may be good here. (Just watch to make sure that support line doesn't break.)
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