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Small Cap Network Blog

8/14/2008

My Long-Awaited Thoughts on Stockhouse’s Q2 Call

Filed under: — SmallCapNetwork Editor @ 1:43 pm

OK, they probably weren’t long-awaited, but I mentioned they were on the way. So, here’s what I’ve got to say about Stockhouse’s (STKH) second quarter, and more importantly, my thoughts on what they had to say about their Q2.

If you heard the call from yesterday, and if you heard any of the other recent calls, you were probably wondering (as I was) if it was a re-run. The same stuff they were saying then was the same stuff they said in the two prior calls.

No big-deal…boilerplate banter is the norm. The problem is, it was the third call in a row where they’ve said ‘next quarter will be better, once these expenses are out of the way’. (I paraphrased.)

So what? Not only have the quarters not been getting better, they’ve been getting worse. Last quarter was the most expensive quarter ever for Stockhouse, and sales saw their second consecutive decline. Cost of revenue was higher too. So, my question is, what constitutes ‘better’?

Don’t hear me wrong; most small caps have to spend money now to make more money later. I can deal with that. I just wish they had told me that. Instead, we got pretty much the opposite.

The reason this blog is so late today was simply because I wanted to go back through some recent company statements to see if it was just me remembering things that weren’t true, or if they truly did fail to deliver.

Here are some quotes from the press release that came out with their Q3 (2007) numbers, on November 14th of last year. Bear in mind we just heard about Q2 (2008), so this was three quarters ago…

Stockgroup completed its major development goals for Stockhouse during the third quarter and launched the beta version of the site on October 2nd.

In the third quarter, Stockgroup continued to make substantial progress in changing its back-end architecture to a Microsoft(R) .net platform, but due to the late launch of Stockhouse, this goal will not be fully achieved by year-end. We expect completion of this goal during our first quarter ending March 2008.

Joe McWilliams joined as VP Monetization.

Editor’s Note: The beta didn’t turn into the ‘live’ site until the end of Q1, the architecture change was still going on during Q2, and McWilliams left a few weeks after he started. 

We got these nuggets with the Q4 numbers on April 1st….

Our transition to the new Stockhouse was completed on March 28, 2008.

The Company’s focus is:…Increase traffic to Stockhouse…During Q4, the Company averaged over 1 million unique visitors per month to its flagship media property Stockhouse.com, an increase of 42% over the same period in 2006.

The Company entered into an agreement with Yahoo! in which Stockgroup distributes editorial content from Stockhouse to Yahoo! Finance Canada.

Inventing and building a sophisticated analytics system to act as an editorial filter for user generated content also took longer than we expected, and delayed the completion of the new Stockhouse web site from 2007 to 2008.

“In 2008, Stockgroup will start to leverage the unique media platform that has been two years in the making. We are now positioned to execute on our detailed plans to accelerate both the number and engagement of Stockhouse users while adding new content distributors and licensing partners,”

Editor’s Note: The Yahoo! Finance Canada link is buried to the point of being unfindable unless you know exactly where to look, and traffic (and engagement) was way down in Q2…delay or not. Engagement was still down. The delays mentioned, however, were accurate,

On May 14th, when the company released Q1’s (2008) results, we heard… 

“Advertising was impacted in Q1 due to having Stockhouse in beta which caused confusion for advertisers and advertising delivery problems caused by delivering to two sites. We feel these issues are now behind us. Going into Q2, we have a growing Stockhouse with one of the most lucrative demographics and the best engagement statistics in our category for advertisers, a new VP of Advertising Sales, and a new ad trafficking role filled.”

The company also added Dana Stetson as Vice President of licensing/subscription sales.

Editor’s Note: Huh? Maybe it’s just me, but wouldn’t you have the ad service thing figured out before you got paying advertisers involved in it?  

On August 13th, we heard this about Q2… 

During Q2, the Company reports an average of 700,000 unique visitors and 7.6 minutes average time spent per user. At the beginning of the second quarter, the Company launched the new Stockhouse.com.

This quarter, Theresa McVean joined the Company as Vice President, Advertising Sales. Ms. McVean brings more than 10 years experience in online advertising sales.

“We are disappointed with our Q2 advertising results which were significantly impacted by a gap in staffing and stock market conditions,”

Editor’s Note: Engagement was down though the new site was supposed to improve it. What gap in staffing? They’ve hired at least three marketing and sales (or monetization) VPs in the last three quarters. If it’s non-managerial sales reps they were low on, why would you not replace them ASAP? They’re you’re lifeblood. All three new marketing/sales managers were in place before Q2 started. If you were on the call, they also said an ad server was put into use in Q2. Again, why would you not have that ready months ago?

My bottom line is the same now as it’s been for three quarters….enough talk, and enough excuses, and enough ‘new’ one time expenses. You’ve made the promise - now start delivering.

They’re looking for profitability in Q4. A year ago I may have had faith they could do it. Now I want them to prove it to me first. I just can’t help but be skeptical after all the shortfalls and unfilled promises we’ve seen.

Just my two cents.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

8/13/2008

Reminder: StockHouse’s (STKH) Earnings Call Today

Filed under: — SmallCapNetwork Editor @ 8:42 am

We mentioned it when first announced, but that was back in July. So, here’s a friendly reminder about StockHouse’s (STKH) second quarter 2008 numbers and conference call.

Unlike previous announcement, the company intends to release its second quarter 2008 financial results on Wednesday, August 13, 2008 (today) after the market closes. They usually do it about 3 PM EST the day of, so this time’s a little bit different. Not sure why.

The conference call and webcast will be also be held at about the same time the results are released…. Wednesday, August 13, 2008 at 4:10PM EDT / 1:10PM PDT.

To participate in the conference call, please call 1-866-400-3310 five to ten minutes prior to the start time. To listen to the live webcast, please go to www.stockgroup.com (the old site still works for the time being).

We’ll be on the call as well, and plan to detail some of the highlights afterwards. Still, our take is no substitute for being able to ask your own questions. If you get a chance, I suggest calling in.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

7/28/2008

Stockgroup/Stockhouse Sets Earnings Date

Filed under: — SmallCapNetwork Editor @ 6:36 am

I’m going to go ahead and do my best to spread the word about the former Stockgroup’s (and former ticker ‘SWEB’)  name change to Stockhouse (and new ticker ‘STKH’). So…

This morning, Stockhouse announced the date and time of their next earnings release. Be sure to keep your ears and eyes open on August 13th (Wednesday) around 4:00 PM EST. They’re going to release results shortly after the market closes. The conference call/webcast will begin at 4:10 PM EST (as always), and can be accessed via the company’s website.

The one thing that wasn’t exactly clear to me was whether or not they’ll have a separate press release for their earnings results prior to the call, or if the announcement will come only during the call. I’ve been following Stockgroup/Stockhouse for a year and a half though, and I’ve yet to see them not publicize the news prior to the call. If it looks different this time, I’ll let you know.

As usual, the company’s top management will be fielding live questions for those who dial in (sorry, the webcast can’t accommodate two-way communication) and listen over the phone. The number is 1-866-400-3310.

I’ve said it before and I’ll say it again…you can learn far more about a company with those questions and answers than you can from the somewhat-scripted presentation. And at this point - based on recent results and events - Stockhouse has a lot to explain.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

7/21/2008

Out With the Old & In With the New - StockGroup is Now Stockhouse

Filed under: — SmallCapNetwork Editor @ 7:33 am

It didn’t really bother me, mostly because I was intimately familiar with the company and its proprietary website from the onset. But, I can see how it might be a welcome change to investors. What I’m talking about is the logical - though unexpected by me - name change for the company formerly known as Stockgroup Information Systems Inc. They’ve changed their name to Stockhouse Inc….which is the same name as their primary website.

No biggie; the operation won’t change from an investor’s or a site user’s perspective. This just brings everything under one umbrella, so there won’t be any confusion about which site you need to go to to find information - it’ll all be at the same site.

Oh, there’s a ticker change too. Don’t use ‘SWEB’ anymore following the switch. The new ticker will be ’STKH’.

The official word is that the name change (and I assume website changes) will take place in third quarter.

On a side note, you may have noticed their site called Small Cap Center (smallcapcenter.com) has been diverting you to Stockhouse.com. That’s by design. The new stockhouse.com site can do everything smallcapcenter did, and more. Also, some of you have inquired to use about how you can get the smallcapcenter.com back. We don’t know - it’s not our site even though the names and focal points sure are aligned. We recommend you embrace the stockhouse.com site. It’s really cool once you learn how it all works.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

6/11/2008

Stockgroup’s StockStream Wireless Now Playing on Your BlackBerry

Filed under: — SmallCapNetwork Editor @ 6:36 am

Small cap company Stockgroup Information Systems (SWEB) has taken another step in the advancement of financial content’s mobility. If you have a BlackBerry smartphone, you can now get real-time quotes, portfolio updates, news and more thanks to StockGroup’s StockStream Mobile data subscription service.

The product and platform was actually unveiled by Research in Motion (RIMM) at the Securities Industry and Financial Markets Association 2008 Technology Management Conference and Exhibit in New York City. Their booth obviously featured their BlackBerry, and all the things it could do for anyone involved in capital markets (like feed you StockGroup’s content and data). That’s not a bad audience to have your service featured in front of.

The data is robust too. Reuters is the supplier, feeding information from 40 different markets. That at least begins to address how StockGroup is going to start leveraging their relationship with Reuters (which has been in place for more than a year).

Here’s the really cool part though - StockStream Mobile can be ‘white labeled’ just like the regular web platform can. What’s that mean? It means if the brokers or other financial institutions want to resell StockStream Mobile as their own service, StockGroup can do that pretty easily. The platform and delivery doesn’t change; just the name and branding (and maybe color scheme)…which is pretty easy stuff to program.

Of course, StockGroup will get a piece of the revenue.

No word was given on the potential revenue the wireless data platform could generate. I don’t think it will be billions - at least not yet. But, it’s a good product…one I think investor-oriented companies will like and want to resell. The demand for mobility is only going to grow in the future, and StockGroup has been entrenching itself into the arena for quite some time.

If you want to see more about StockStream mobile, the StockGroup website is the place to go.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

5/20/2008

Small Cap Stockgroup (SWEB) Dives Deeper Into Web 2.0 With Viigo

Filed under: — SmallCapNetwork Editor @ 6:28 am

Small cap company Stockgroup Information Systems (OTCBB: SWEB) announced today part of their content feed from stockhouse.com will now be available on wireless devices through Viigo.

What’s Viigo? It’s an application that currently runs on Windows Mobile smart-phones and a Blackberry. The software is akin to a web browser, in that it aggregates the content you want to see on your device.

Stockgroup could already send market data to smart phones via their platform if the user had a MarketStream subscription. This latest addition to their technology offerings will open up Stockgroup’s free ‘News and Views’ feed to anyone who has Viigo.

I don’t know what kind of immediate impact this will have for the company. I don’t think it’s an overnight game-changer, but as the world becomes less and less wired (i.e. more and more wireless), I can see this making a decent dent. I just wish there was a way for the company to turn the service into immediate revenue. I’m sure as time passes though, some Viggo users are apt to take the next step and subscribe to the (revenue bearing) wireless service.

That being said, their wireless business was one of the items that didn’t get discussed at great length in last week’s conference call. I kind of wish it had, as the company has been devoting a lot of time and resources to that side of the business. Maybe next time.

If you weren’t able to make the conference call, you can catch a replay of it on the Stockgroup website. You may also want to read through my thoughts on their last quarter, which I posted in the blog.

5/15/2008

Stockgroup (SWEB) Falls Short Again

Filed under: — SmallCapNetwork Editor @ 7:30 am

As promised yesterday, today I’m going to deliver my post-conference-call thoughts on small cap Stockgroup Information Systems (SWEB). The company posted their Q1 earnings yesterday afternoon, but I wanted to reserve judgment until I heard what they had to say.

In short, I think whoever’s buying the stock today is making a mistake. SWEB is up 10% as of the time this us being written, and I congratulate the company for that. I can’t congratulate them for another tepid quarter though, this one with a widened loss.

To set the tone here, it just seems like we keep hearing ‘next quarter’ over and over again. (”Next quarter we’ll increase traffic, next quarter we’ll improve revenue, next quarter will shrink the loss, and next quarter we’ll cut expenses.”) My problem is, we’ve been hearing it for about four quarters now.

I’m not naive enough to think success happens overnight, but these guys have gotten into the habit of not delivering, or being flat wrong about critical elements of their business. 

The one that comes to mind from yesterday is expenses. They reported last quarter that the new website’s R&D was essentially ‘paid for’. In Q1, they pushed expenses up from $2.4 million to $3.6 million.

I don’t know if that was some lingering R&D expenses, or new stuff (the general/admin line shot from $1.0 million to $1.9 million though). It doesn’t entirely matter. I just remember last quarter they were touting all the new site expenses had been paid; they didn’t mention they’d offset those savings with other expenses.

In the conference call yesterday, they said they’d be saving $900K after terminating contracts with two vendors. It wasn’t clear if that was for the next quarter or the entire year, but it won’t matter if they spend the savings on something else…as they did this time around.

My other hot button is an ever-growing staff that’s not getting the results we were told to expect. All those sales and marketing gurus they hired? They were on board for all of Q1. Yet, I didn’t see any significant bump in the top line. All I saw was more payroll expenses.

To salt the wound, Stockgroup just diluted the float again with a $3 million financing. The market cap is only $17 million, meaning $3 million more has a big impact on current shareholders.

For those of you who have faithfully attended the conference calls and followed this company’s progress for nearly a year and half, you’ll probably understand my hesitation to be impressed now…it’s always something. I can’t wait to hear the next excuse. And no, I’m not buying in yet, no matter how much the chart looks like it’s turning around.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

5/14/2008

Small Cap Stockgroup Reports Q1 Results

Filed under: — SmallCapNetwork Editor @ 12:01 pm

The results are in for Stockgroup Information System’s (SWEB) quarter. The small cap company saw revenue increase by $400K. They pulled in $3.5 million in sales during Q1 of this year versus $3.1 million in sales for the same quarter a year earlier.

The biggest chunk of the improvement came from content licensing revenues. The company sold $2.6 million worth of their content service, up about $500K from licensing and subscription revenues in Q1 of 2007. Ad revenue was not quite flat; they did $875K this time around versus $925 a year ago.

The net loss for the quarter ended up being $1.4 million versus the $550K loss from Q1, 2007. Costs for each category increased proportionally to the prior Q1, except for general and administrative. Several new hires between then and now pushed the general/admin expense line up to $1.9 million from the $1.0 million spent in the first quarter of last year.

All in all, their results were pretty much in line with the market’s expectations.

Now, to get the real scoop, the best thing to do is dial in to the conference call being hosted at 4:05 p.m. EST today. To participate in the conference call, please call 1-866-400-3310 five to ten minutes prior to the start time.

Or, if you’re more of a web-based investor, you can listen to the live webcast. Just go to www.stockgroup.com and look for the webcast link.

As always, we’ve found conference calls offer the much-needed perspective behind the numbers. The Stockgroup calls have traditionally been outstanding sources for ‘the story behind the story’. Whether it is again this time or now depends on the questions asked, which is why we encourage you to dial in and ask about the important stuff.

Most importantly, the call may help define the future for the company. Some of the things we’d like to see get fleshed out in the call…

  • What’s the plan for improving ad revenue now that all these sales/marketing people are in place?
  • Can we expect to see expenses stay this high going forward?
  • What’s the marketing plan to grow the website now that the final version is up and running?
  • Above all else, what kind of dollars is the company projecting in the near and long-term (for all lines of the income statement)?

I’ve got some thoughts on the numbers above, but before I pass judgment I want to get on the call and see what else is said. Check back tomorrow for my full opinion. In the meantime, I suggest getting on the call.

Oh, and here’s the official quarterly results from Stockgroup.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

5/8/2008

StockGroup (SWEB) Announces Earnings Date, Conference Call

Filed under: — SmallCapNetwork Editor @ 6:55 am

It seems like only yesterday we were examining bulletin board company Stockgroup Information System’s (SWEB) earnings, yet now it’s time for the next update. On May 14th, at 3:00 p.m. EST, StockGroup will be announcing their Q1 results. At 4:05 p.m. EST the same day they’ll be hosting a conference call to discuss those numbers. 

What we’re thinking about and looking for this quarter… sales and profits.

Last quarter, the bottom line took a hit because of one-time expenses associated with the new website. The top line struggled because advertisers didn’t want to commit to a website they didn’t know what was going to be and do. Well, according to the company’s chat from last time around, the website is done, and all the right staff are in place. (You may also recall the company has hired a small army of marketing and sales gurus over the last few months.) In short, this quarter will be the first full quarter StockGroup has had everything firing on all cylinders.

At some point in time, all those things need to start paying off. We need to see results - something we’ve been a little too lenient about since the middle of last year.

In other words, it’s do or die time. We’ll have an answer to our question next week. I highly recommend you get on the call as well, as there always seems to be something revealed there that didn’t show up in the press release accompanying the earnings announcement.

The conference call and webcast will be held on Wednesday, May 14, 2008 at 4:05PM EDT / 1:05PM PDT to discuss the third quarter results. To participate in the conference call, please call 1-866-400-3310 five to ten minutes prior to the start time. To listen to the live webcast, please go to www.stockgroup.com.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

5/5/2008

Small Cap Stockgroup (SWEB) Raises Funds

Filed under: — SmallCapNetwork Editor @ 6:07 am

I don’t know if they actually needed it, but it never hurts to have it. At the same time, the fact that they could get it at all right now says quite a bit about long-term, third-party opinions of their stock.

What I’m talking about is small cap company Stockgroup Information Systems (SWEB) and funding. They just raised $3 million worth of funding from PEAK6 Investments LP. You may know them better by the name of their website, optionsnews.com.

The terms of the deal are pretty straight forward…Stockgroup is issuing 3000 convertible preferred shares at $1000 each. The conversion rate is 2200 common shares for each preferred share (meaning a total of 6.6 million shares are on the table as part of the deal). The preferred shares have a six-month hold, but will convert to common within two years no matter what. The conversion price is 45 cents per share - a premium to the current price.

The deal also gives PEAK6 the right to use Stockgroup’s content feed - something they create anyway.

I honestly wasn’t aware they were seeking funding. They had $2.8 million in cash as of their last filing, and $5.5 million in current assets. And, the expense of new website and re-launch has already been incurred. So, from my point of view, they didn’t necessarily need it.

On the other hand
, the time to raise money is when you don’t need it. How’s that for a bitter irony? If they were in a crunch, they may have a hard time getting it.

My bigger picture take - to get anything at all right now speaks well of the company. Though Citigroup has raised several billion this year, it’s not like a lot of venture capitalists and institutions are jumping on private placements or IPOs in this environment.

Stockgroup, on the other hand, just raised a significant amount of money without upsetting current shareholder equity too much. The conversion rate is above the stock’s current price, the 7% dividend on the preferred is manageable, and the money is going to get parked on the balance sheet for a while.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

4/21/2008

Reality Sets in for Stock Market, Stockgroup (SWEB) Adds Talented Personnel

Filed under: — SmallCapNetwork Editor @ 6:26 am

I’m not entirely surprised, nor am I particularly worried, to see index futures in the red this morning. The equity market’s heroic rise last week may have put stock prices a little too far ahead of their actual values. Having had a weekend to think about it, investors are experiencing a little buyer’s remorse…and Bank of America (BAC) was the catalyst. It’s still too soon to call a short-term top though; let’s just use caution and common sense here.

The biggest threat I see are two wide gaps for the NASDAQ Composite’s chart. The market might be able to tolerate one, but two big ones? I foresee enough selling to fill them both. Unfortunately, if both gaps are filled, it will also be the result of a big enough pullback to inspire more selling.

Bottom line - I don’t see now as the time to be proactive. Let’s observe early this week, and respond. I’ve got a feeling the euphoria is going to wear off soon. If the dust settles and the emperor isn’t wearing any pants, I don’t want to be around to see it/

By the way, Stockgroup Information Systems (SWEB) has added some nice talent to its board of directors. Janet Scardino is now helping steer the financial media/community site into the future. Her experience is top-notch too - should be a true asset rather than just a high-profile name to tout. Check out some of her CV….

  • Currently the Chief Marketing Officer of The Knot Inc (KNOT)
  • Former Executive V.P. of Reuters Group PLC (TRI) (many parallels to Stockgroup)
  • Former Sr. V.P. of International Marketing for AOL
  • Former managing director of Disney Channel Italy
  • Former V.P. of International Marketing for MTV

Not a bad person to have on your side, huh? I think she brings something to the table that’s deliberately outside of the equity market world. Considering Stockgroup is ultimately targeting retail investors (even via their institutional offerings), Scardino’s experience could help hit that target.

Nothing else for this morning, though be sure to check the blog again later on today. There are a couple of themes I’m researching or gathering data for, and I should have these ready sometime within the next few hours.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

4/8/2008

StockGroup (SWEB), StockHouse Partner with Yahoo! Canada Finance Site

Filed under: — SmallCapNetwork Editor @ 6:12 am

It may have been a while in the coming, but sometimes things can be worth the wait. Stockgroup Information Systems (SWEB) announced today they’ve officially struck a deal with Yahoo! Canada to have their StockHouse content featured on the Yahoo! Canada Finance home page.

Basically, this puts Stockgroup’s primary web property - StockHouse - front and center with a big chunk of Canadian investors. In fact, Yahoo! Canada Finance is the biggest investment-oriented portal the country offers.

The benefit should be clear here….exposure, eye-balls, traffic, etc. StockHouse is going to be introduced to a bunch of new people - the secret recipe for growth. Once the new browsers make their way to the StockHouse site, its inherent ’stickiness’ will do the rest.

By the way, for those of you who already saw the StockHouse link on the Yahoo! Canada Finance page and thought that was ‘the deal’, you’re not alone…I thought that was it too. As it turns out, the original idea was much more than that; it just got put on hold. The small link you and I were looking at before was apparently nothing compared to what it’s supposed to be now.

The deal was perfectly timed too. The new StockHouse site has shed its ‘beta’ status and is now live. And none too soon either….I think the site’s tweaking dampened the sell-ability of it (not to mention diverting resources from the marketing effort). With the tinkering complete, the stock may start to get some deserved attention.

Speaking of the stock, take a look at the chart below. SWEB’s slide from a peak at $1.45 to the recent low of 36 cents pretty much mirrors the point when the new website was started to when it was finished. We’re not entirely surprised to see the stock perk up lately, now that the site is done.

Is it time to start wading back into Stockgroup’s waters? It may well be; someone seems to think so anyway. Accumulation has been huge since the stock has gotten this low. And why not? The company has never been better-positioned for revenue growth, and the current market cap is right around last year’s revenue total. We think that’s about half of what its valuation should be.

In the meantime, here’s the Yahoo! Canada Finance news release.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

4/3/2008

Stockgroup’s (SWEB) New Stockhouse.com Site Launched

Filed under: — SmallCapNetwork Editor @ 6:06 am

We’ve been talking about it here at the Small Cap Network for months now. But, since it was officially unveiled by the company this morning, we figure we may as well help spread the word…

The new stockhouse.com site is up and running. As you may know, Stockgroup (SWEB) has been working on the build for nearly a year, and can now pick the fruits of their labor.

My suggestion? Just go to the site and surf for a bit. If you saw it before, then you know it’s like night and day. If you’re new to the site, you can still see how easily it would be to foster a sense of community and information-sharing. They’ve got a lot of nice bells and whistles too, like blogs, groups, portfolio trackers, a rating system, etc.

The coolest part of all (I think) is that the site can handle bulletin board stocks as well as NYSE-listed stocks. You’ll see some Canadian symbols as well as United States symbols; Stockgroup had both markets in mind…plus others.

As the press release put it, it’s a Facebook for financial media. Personally I think it’s much more than that. It has a real social networking feel to it. I suggest you take a look for yourself. Pretty cool stuff.

Here’s the press release, and here’s the new stockhouse.com site.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

4/1/2008

April Fool’s…An Appropriate Description So Far

Filed under: — SmallCapNetwork Editor @ 7:24 am

I’m not superstitious or paranoid, but I’d swear somebody has to have a camera spying on me this morning and having a good April Fool’s laugh. It’s been a total scramble so far (my head is spinning), and it’s only 9:30 am EST (I’m an East Coaster). If you caught this morning’s newsletter, then you already know it. We saw four news items hit all about the same time. I’m not going to rehash them here - just click here if you want to see what’s going down.

Anyway, the ‘Morning Call’……you know what? Let me rant a little first.

Most of you know by now I’m inherently skeptical, but perpetually open-minded (which may be why I need some sort of therapy). I really want to like some of the companies we follow, or even have followed in the past. I’m brutally honest, but like I said, also open-minded. So, when I learned Stockgroup (SWEB) would be announcing earnings and hosting a conference call yesterday afternoon, I was planning on taking an unbiased look.

Sometimes though, a company uses up all my patience, and/or taints their status with me.

Just for the record, their full-year earnings were supposed to be released on March 4th. They were delayed, as was the conference call, until March 31st. Fine. March 31st came. No earnings came out. The call that was supposed to start at 4 pm EST was postponed; the company let people know via a press release issued at 4:44 pm EST….nearly an hour after the fact.

Earnings were finally released at 6:00 am EST Tuesday (today). However, the company sent the wrong press release. The word ‘unaudited’ should have been removed from the headline, so they sent a corrected version at 8:44 am. They also changed the conference call start time from 9:05 am to 9:00 am…..about 15 minutes before the event began.

I’m sorry, but what the *$%#@ is going on up there? I know stuff happens that’s out of your control sometimes, but quarterly reports and press releases are fairly routine stuff. If they can’t do those simple things, I can’t help but wonder what else is a total cluster-#$@*& for the company. Geez.

OK, as far as the market is concerned, today’s strong open (and gap) is bearish for me, though only for the day. I refer you back to the message I’ve been sending in most of the morning calls the last few days…traders are wishy-washy, and can’t commit to a trend. The result is a range-bound market. So, I’m not impressed by the early gains.

Pick of the Day: ICT Group (ICTG). Nice chart…breaking above some key resistance lines. Terrible fundamentals, yet, the stock is still pointed higher now. This is not the kind of thing I see as an investment…at least not yet. It’s strictly a trade (and a high risk one at that). I guess I’m just a sucker for stocks that are at multi-year lows, but also look like they’re getting turned around. I’d do some serious research before doing anything else though, as I know very little about this company…there may be a ticking time bomb buried in the books.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

Small Cap Stockgroup (SWEB) Announces Earnings, Conference Call

Filed under: — SmallCapNetwork Editor @ 5:02 am

OK, looks like small cap company Stockgroup Information Systems (SWEB) finally released their quarterly and annual numbers this morning. We’ve got the summary here (they look pretty good), but we’ll also remind you they’ve rescheduled the conference call for 9:05 am EST today. We have the dial-in number below, but first, the results…

Revenues were actually up; for the three month period, total sales moved to $3.8 million versus $2.3 million for the same quarter a year ago. On a full-year basis, 2007’s $14.1 million almost doubled 2006’s $7.7 million.

EBITDA for the quarter came in at a loss of $922K, where they made a $133K profit for Q4 of 2006. For the year, the EBITDA was a loss of $3.7 million, compared to a loss of $622K the year before.

What happened to earnings? Two words…web site. Stockgroup spent the better part of last year (and apparently a few million dollars) upgrading their StockHouse web site, and it wasn’t free. It was, however, an investment that shouldn’t require any further development. Why? The beta-test site became the ‘official’ site this past weekend.

As for the top line components, there’s some encouragement. Advertising sales (the banner ads you see on the Stockhouse site) generated $1.1 million in revenues last quarter…a hair better than the same quarter a year ago. For the year, the $4.0 million in ad revenue was about $200K higher than last year’s figure.

All in all that’s not bad, because the uncertainty of the new site made it a tough product to sell to advertisers. With a clear product in place, those numbers should be ready to grow.

The licensing/subscription component also improved, from $1.2 million for Q4 of 2006 to $2.7 million in Q4 of 2007. For the year, Stockgroup drummed up $10.2 million in subscription business, up from last year’s total of $4.0 million. A combination of the old mobile finance business of Telecommunications Systems Inc. (acquired in January of last year) business and their institutional-level data product remain the mainstays on this front.

The news release had a pretty detailed summary of 2007, and an equally thorough outlook for 2008. Click here if you want to see it.

If instead you’d rather ask questions – or at least hear them asked – don’t forget there’s going to be a conference call early Tuesday.

To participate in the call/webcast, just dial 1-866-400-3310 a few minutes before the 9:05 am EST start time. Or if you only want to listen in, you can do so via the web using Windows Media Player. Visit http://www.stockgroup.com/ to connect to the webcast.

There will also be a replay of the webcast available via the Stockgroup website for a few days afterwards.

Our take: The company has never had a problem generating cash flow or growing the top line. Now that the new site is in place and the expense is behind them though, the company needs to start doing something about the bottom line – a reality CEO Marcus New addressed briefly in the news release. I suspect that will be the focus for most of the call.

In the meantime, what you have with Stockgroup is $16.7 million market cap for a company doing $14.3 million in annual sales…and growing them consistently, even if slowly.

I wasn’t an enthusiastic fan when the market cap was pushing $50 million. But, with a price tag $16.0 million and profitability now in view for late 2008, my curiosity is peaked again. I’ll be on the call for sure.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

3/28/2008

Reader’s Small Cap Stock Questions Answered (or at least addressed)

Filed under: — SmallCapNetwork Editor @ 8:34 am

Sorry I haven’t had a chance to get to all your small cap questions lately. Between V2k (VTOK) and Bio-Matrix (BMSN), I haven’t had much time to get to them. That’s all going to change today though. Anybody who’s sent in a question to the Small Cap Network within the last couple of weeks is about to get an answer…or at least a response. I’ll put them all here in the blog so everyone else knows what other readers are thinking.

1) Hi, Can you provide a recent Balance Sheet for Bio-Matrix?

A. Sure, though I don’t think it means much for this particular stock pick. They have next to nothing. They’re staying afloat by issuing a little debt ($50K for the last round) until they can get licensed…which should be (hopefully) in less than a couple of months. Here’s the last balance sheet: http://yahoo.brand.edgar-online.com/fetchFilingFrameset.aspx?dcn=0001157523-08-001453&Type=HTML

2) Hi Can you recommend a small cap company like mos (Mosaic), pot (Potash) or mon (Monsanto)? Would like to find one to invest in.

A. I can’t, but if you have a brokerage account you may have a screener that could do the job. Yahoo’s stock screener is actually not bad, though I don’t know if you can get that detailed with the industry. MSN’s isn’t bad either. Agriculture has been a good one of late though…maybe worth a look. Here are the screener sites:

http://moneycentral.msn.com/investor/finder/customstocksdl.asp

http://screen.yahoo.com/stocks.html

3) On their (Heritage Capital - HCPC) website they show they close a $672,000,000 BCLOC loan. Their current listing price on the otc.bb is .0004. There has been a lot of talk on Allstocks and IHUB forums that it could explode into the pennies after the funding clears. Any thoughts?

A. I’m nowhere near as enthusiastic as anybody on the boards. Sounds like a pump and dump. I’d steer clear.

4) Delcath (DCTH) Believe this company (Delcath - DCTH) fits the profile of the type of companies your profile. 1. $40mill cap 2. about 18mill cash 3. pIII liver cancer study 4. multiple pII liver cancer studies 5. published data thus far has been outstanding (70%+ response rates) 5. NCI partnership 6. Huge upside on FDA approval (could see in the next 12-18 months)

A. Not bad. We’re including it here so our readers can make the decision for themselves. Thanks.

5) Is ZUPC completely worthless now. Is the company still here?

A. It’s still ‘alive’, though barely. We dumped them long ago. Yeah, basically worthless (in more ways than one).

6) i cant understand why you aren’t recommending shorting - this is a phenomenal bull market for shorting - one of the best in years - and i can’t understand why you aren’t recommending short positions - you just plain short every rally and will succeed a minimum of 3 out of five times - the shorts not working you just cover - no big deal at around 7 bucks a trade

A. Oh, we don’t disagree. We personally don’t mind shorting, but not everybody on our list can, or wants to. For those folks there’s always the option of a short ETF or put options. Point well made though…if you’re not playing the downside, you’re missing opportunities.

7) You wrote up a report on SWEB I believe and was wondering how you feel about that now with these big ups and downs. I have held onto it and actually have owned it for sometime. Also could you give any thoughts on ATML.

A. There’s been more down then up for StockGroup, but here’s what we see now…the stock is a nice value idea. I also think the company has been distracted by the new website, which cost more and took longer than they planned. It’s over now though, so maybe they can get something going. Personally, I love the concept of what they do. They just haven’t made enough money (or progress) to justify the share price….at least not yet. Maybe 2008 will be the breakout year (not out of the realm of possibility). At this point you have more upside than downside, I think. As for ATML, I’m torn.

8) Hello, I’m interested in investing in ADR’s but do not want a mutual fund type of investment. Can you recommend sources for independent investors to purchase them for their portfolio?

A. Not exactly sure what you mean here, but I think this will answer…..an ADR is just a single foreign stock traded on an American exchange. As long as you have a brokerage account, you can buy anything any U.S. exchange trades. Technically it’s not direct ownership of foreign stock, which is either difficult or impossible to do for most retail investors. To facilitate the American ownership of foreign stocks, a company will buy foreign stocks, and issue what are essentially vouchers for that stock to U.S. investors. It’s a basket concept (like an ETF or fund), but there’s only one stock in the basket. As for resources, find all the ADRs right here. http://www.adrs.com/. In terms of other resources, you’ll find most ADRs peppered in along with American stocks, so wherever you find those, you’ll find most ADRs.

9) Ran across this on spng from Beacon (traders notes) Link: http://www.beaconequity.com/index.php?option=com_content&task=view&id=885&Itemid=73 Does this mean it is now a good entry point on spng. Thanks for the input

A. It should mean it, but nothing has helped SPNG yet. So, no.

10) Can you tell us what has happened to or the latest info on Source Petroleum Inc. (SOPO). The stock seems to still be trading but the last news information they released was in 2007. I cannot find a quarterly report and the web site Source-Petroleum.com has been taken down.

A. I can’t find anything either, which is never a good sign. They also stopped reporting to the SEC, which is a particularly bad sign. I say take the non-presence at face value….they’re dead or near death.

11) Hello. Thank you so much for the stock picks over the last several months. You guys do a great job. I was wondering if you could find out the first couple locations of the kiosks that are going to open up selling the window treatments, etc. I like to see things first hand, and this will allow me to get an early read on the worthiness of this extension. Thank you.

A. I can’t, because they don’t want anybody to know (including me) for proprietary reasons. I can show you one though….it’s then image nearby.

That’s it for now, but keep ‘em coming.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

3/5/2008

Reader Questions: Why is Spongetech (SPNG) Dropping, What’s Up With StockGroup (SWEB)?

Filed under: — SmallCapNetwork Editor @ 10:24 am

We received two reader questions about some of our recent small cap stocks. Since my mission for 2008 is to develop this site into a true small cap community, I’m going to ‘A’ as many ‘Q’s” as I can in the blog. Feel free to chime in with your own thoughts below (if they’re pertinent). Or, if you have something to say about a small cap besides one of these two, find that company’s most recent entry in the blog and say your piece there.

All your comments in the blog are read; most are posted (provided they aren’t spam, blatantly self-serving, or whining). I usually add my thoughts as well.

Anyway, here we are….

1) You wrote up a report on SWEB I believe and was wondering how you feel about that now with these big ups and downs. I have held onto it and actually have owned it for sometime. Also could you give any thoughts on ATML. 

Thanks for the question. StockGroup (SWEB) has one of the coolest investor-oriented sites I’ve ever seen (besides ours of course). However, the growth here has just been too slow. Anybody can buy a company and increase the top line; the point is to do more with a company than the previous owners did. StockGroup is a good company, but it’s just not growing fast enough. Less talk, more action…or more results. We’ve been following ir for a year, and the hype was huge in early 2007. Shattered dreams over the last 6 to 7 months have really let the wind out of the sails.

As for the future, I still think they’ll get bought (which is what they want). But, they have to get on the horse and get it going.

Regarding the stock’s ups and downs, a lot of it may have to do with the overall market’s mood. On the other hand, the market may also just be bored with the stale story. Keep it on you radar, though I don’t know that I’d be willing to hold it indefinitely right now.

No thoughts on ATML….I don’t know the company well enough.

2) Any specific reason for the price of SPNG to be dropping?

No, and that worries me. My fear is the short sellers have taken over SpongeTech (SPNG) again. If so, we’re back to square one. I won’t see the next short report until next week though, so patience is merited. Maybe I fear too much.

It doesn’t change the reality of the situation…this company is a steamroller, and God help anybody on the wrong side of the chart when the market finally sees it. Those short could get their heads handed to them at the drop of a hat.

The other possibility is a major holder is selling out, and just needed to wait for enough demand. I’ve not seen any insider selling reports, but it would explain the weakness.

Regardless, unlike SWEB, I’m more than willing to ride out almost anything for SPNG.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

2/6/2008

Stockgroup (SWEB) Sets Q4 Earnings Date

Filed under: — SmallCapNetwork Editor @ 7:06 am

It seems like only yesterday we were discussing Stockgroup Information Systems’ (SWEB) Q3 earnings results. But, per the company’s press release today, it’s time to get ready for Q4’s numbers. They’ll announce the latest Q4 (and therefore annual) results on March 6th at 3:00 PM EST.

Just to catch you up, last quarter the company pulled in $3.4 million in sales…much better than the $1.9 million generated in the same quarter a year earlier. A key acquisition was the main reason for the bump. In terms of earnings, Stockgroup ended the quarter in the red by $2.2 million. Of the loss, about $650K of it was a one-time expense related to the development of the new website.

A couple of things came up in the conference call following the Q3 announcement. First, the issue of improving margins and increasing ad revenue was well discussed, and Stockgroup’s management had a plan of action to work on both. Second, investors wanted to know what to expect regarding the smaller revenue-bearing properties like StockStream and Reuters-Connect. Again, those opportunities were being addressed by the management team.

Why rehash the old news? Because those are the first issues and questions I expect to hear during the next conference call, which will be held about an hour after the announcement is made on March 6th.

To participate in the call/webcast, just dial 1-866-400-3310 a few minutes before the 4:05 PM EST start time. Or if you only want to listen in, you can do so via the web using Windows Media Player. Visit www.stockgroup.com to connect to the webcast.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

1/31/2008

Stockgroup (SWEB) Now On The Scandinavian Scene

Filed under: — SmallCapNetwork Editor @ 7:04 am

Remember what I was saying about Stockgroup Information System’s (SWEB) wireless service - MarketStream - being a potential big improvement for the company’s top line? Today’s news is an example of why I thought so. They just found a big partner who will be promoting the service overseas.

The story itself is simple enough - Norwegian company Trigcom AS will be promoting Stockgroup’s financial data platform called MarketStream - a package specifically designed to bring equity market data and quotes to wireless devices such as a BlackBerry.

As far as the caliber of potential partners in Norway, I’d say they pretty much found the ideal one. Trigcom specializes in BlackBerry technology, and has a few hundred corporate customers (each of which presumably has multiple BlackBerry users). Aside from tapping those current customers first, I’m confident being able to offer such a service will also open doors to a few new financial-business customers.

Though the press release didn’t explicitly say it, I think this is ultimately a subscription revenue sharing deal. And despite not knowing the exact details of any of their recent deals (Stockgroup forged a similar deal with Reuters), I think it’s safe to say even just a few hundred users could mean an annual six-figure opportunity. A few thousand users, and I’d say the deal moves into seven figure territory. Just a guess on my part.

That’s not the important part for investors though…at least not in my opinion. There are two key ‘bigger picture’ ideas I see lurking in the news.

First, this is ‘easy money’ for Stockgroup….well, as easy as money can be in this day and age. Stockgroup already designed the software, so there’s no real developmental cost here. Trigcom is doing the promotion, so it’s not like Stockgroup has a big marketing expense there either. In other words, margins are expected to be wide.

Second (and more importantly), I think this partnership plants a seed for parallel relationships in the future. Norway is only one of dozens of countries with capital markets that are developed enough to merit a wireless data service like MarketStream. Once other telecom outfits see what can be done in Norway, I look for them to start shopping the possibility of doing the same in their respective market.

You know what though? As of yesterday, even the Trigcom news isn’t the most interesting thing Stockgroup’s got going on.

Did anybody see SWEB’s volume on Wednesday? The 1.1 million shares we saw trade hands was the highest volume we’d seen in over a year, and the fifth highest volume day ever for the stock. And no catalyst? I smell institutional buying, since most individual investors wouldn’t be buying so boldly just three days after a multi-month low (nor would most people be buying when they see SWEB’s long-term downtrend).

Somebody - or somebodies - with deep pockets may have been waiting for this stock to really get to a deep undervaluation point. And, I’d say the move from a peak of $1.45 to a low of $0.42 (a 71% pullback) more than qualifies as just that. Picking up on an undervalued stock the rest of the market didn’t pick up on, they pounced. 

The question to be asking is obvious - what do they know that nobody else does? It’s mostly a rhetorical question though; the right thing to do may just be to follow their lead.

Here’s the press release.

Are you a subscriber to the Small Cap Network newsletter? If not, you’re missing out on some great trading ideas and exclusive market commentary. To sign up, just go to the top right corner of any page of our website. You’ll be joining thousands of other subscribers who have already benefited from our news and views.

1/17/2008

Stockgroup (SWEB) Scores A Personnel Hat Trick

Filed under: — SmallCapNetwork Editor @ 7:07 am

In hockey, there’s a rare feat dubbed a hat trick. It’s really something special too….the great Wayne Gretzky only scored 50 hat tricks in his 20 year career, and most players never score one at all. What’s the feat? A hat trick is when a player scores three goals in one game. Even if you’ve played the sport or watch it regularly, you’ve probably never actually seen one - that’s just how difficult it is to achieve.

What’s that got to do with Stockgroup Information Systems (SWEB)? After reading today’s news, I realized the company scored something of a corporate hat trick…they hired three industry aces over the past three quarters.

I know most new-hire announcements are just routine. I don’t think Stockgroup’s recent new hires are merely routine though. In fact, I think these newest additions are the kind of players that make the kind of impact nobody else could. More importantly, the three newest team members each bring their own unique expertise to the company…an expertise that’s perfectly aligned with Stockgroup’s specific need. Back to that in a second.

Today’s press release officially announced that Dana Stetson  is the new VP of Licensing Sales. His background is more than a little impressive.

Now I’d be the first to acknowledge one person can make a difference, but I don’t know that one person can make or break a company….even Dana Stetson. However, that’s where the ‘hat trick’ comes in.

Stockgroup didn’t just bring one great person into the fold. I think two other recent hires in addition to this one could mean the difference between good and great for Stockgroup.  And I’m not saying this for general reasons. I don’t like generalities. I’m saying it because each of these three guys does something very well that is unique to them, and quite essential to Stockgroup’s business model.

In a nutshell, there are three ways for Stockgroup to make money. They can (1) sell ads on their high-traffic website, (2) sell subscriptions and services to retail investors through the website, and (3) sell tools and data to financial institutions. All three can be profitable - especially #1 and #3 - even though they’re all quite different in terms of how you market them.

As it turns out, Stockgroup seems to have a resident expert for each of the three profit centers. Check it out.

Joe MCWilliams - Hired on July 18th as VP of Advertising Sales. Mr. McWilliams spent the 10 years with Hoovers (an online provider of business information) in a variety of roles ranging from Sr. Advertising Sales Manager to Director of Global Advertising Sales. While at Hoover’s Mr. McWilliams contributed to the major expansion in clientele and strong revenue growth the company experienced before being acquired by Dun and Bradstreet in 2003.

Karl Buhr - Hired on January 14th as Chief Operating Officer. Mr. Buhr is formerly from Telemedia, a provider of mobile content on wireless carrier platforms that target wireless subscribers. Mr. Buhr helped lead the company to a 400 percent increase in revenue and its recent sale to Conectium Ltd. Prior to Telemedia, he was the Director of Operations for 365 Plc. (now operating as Eckoh Plc.), an Internet and media direct response company, which grew from $12 million in revenue to $90 million during his tenure.

Dana Stetson - Hired on January 17th as VP of Licensing Sales. He worked recently as the Director of Broker Dealer Sales for Lava Trading, a software services company that provides order management and execution systems for traders throughout North America. Under his leadership, annual revenues of the company’s order management solution, during a two year period, grew over 600% to more than $10 million dollars. Lava Trading is now a subsidiary of Citigroup.

See any history of success there? McWilliams should be great for ad sales - one of Stockgroup’s biggest opportunities for improvement, as we saw with last quarter’s conference call. Stetson should be great in the effort to get more ‘big ticket’ institutional sales to companies needing to provide dynamic financail/investment content…which is Stockgroup’s bread and butter. Even Buhr, who is only distantly involved in revenue production, still has a history of improving top lines for web-based businesses. (On a side note, maybe Buhr is the ideal candidate to help grow Stockgroup’s wireless data delivery venture.)

In terms of timeframes, I don’t know if their impact will show up immediately (as in the next reported quarter). However, I do think within the next six months we could start to see significant enhancements to Stockgroup’s top and bottom lines.

Here’s the press release.

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