3 Pennies on Fire 1

[David Randolph]

Good morning !

On this post I will write 3 analysis of 3 penny stocks (stocks traded on OTCBB or Pink Sheets).

This doesn't mean all three will be bought for the 3 Pennies on Fire Portfolio (which starts today with $10,000, being $5000 managed by myself and the other $5,000 managed by Frederick Ramsburg).

For the next 2 months this board will be opened to all public, free. During this period I will tell which stocks were effectively bought for the 3 Pennies on Fire Portfolio shortly after we actually purchased the stocks. After September 30th, when this board will only be viewed by our dear subscribers, we will tell which stocks to buy before we actually buy them (before the open).

So, let me welcome everyone on this new board and then start to work on this speculative venture through the world of fast moving penny stocks.

Here comes 3 Pennies on Fire #1 !!!

[David Randolph]

... the market value of its subsidiaries.

AMRE.OB current market cap is 360,127,294 shares outstanding * $0.051 stock price = $18,366,492.

The number of shares outstanding isn't accurate on the Yahoo or marketwatch websites, you have to check the SEC statements to get the valid information.

AMRE.OB owns 51% of NAUC.PK (Net2Auction Inc) and 47% RBSY.PK (Roboserver Inc).

The market cap of NAUC is 49,154,500*$2,14 = $105,190,630, so the 51% owned by AMRE.OB are worth, at market prices, 51%*105,190,630 = $53,647,221.

The market cap of RBSY is 55,000,000*$0,47 = $26,950,000, so the 49% owned by AMRE.OB are worth, by market prices, 47%*$29,250,000 = $12,666,500.

The market value of AMRE's participations in these two companies is $66,313,721. But the market cap of AMRE.OB is just $18,366,492 as we've seen. So the stock is undervalued 3.61 times, that's why I came up with the 260% appreciation potential in AMRE's stock price.

Anyway, probably we should take into account the liabilities of AMRE, that is, without these two subsidiaries the company would be worth less than zero. Is this credible? No, I think that even without the participations in NAUC and RBSY, AMRE would still be worth something on the market, like so many companies out there that sell nothing, are just a project or idea, and still they're worth millions.

Technically speaking, the stock had a huge 2 day run up of 1316% (I got more than 1200% of that rise, the best trade ever on 3 Stocks on Fire   ) and then came down a lot, about 87% at one time. Then it started building a base, NAUC did that too, and now it seems, from the technical formation and volume increase, it is set to make another speculative run.

The sector of NAUC and RBSY is very modern and innovative, they are good ideas and if they're able to succeed this stocks will indeed rise thousands of percentage points.

I see that NAUC already has 28 drop off locations (they then try to sell our unwanted goods on EBAY and collect a fee for the service - when I first bought the stock, 2 months ago, they had just 14 stores, so I see strong growth as promised by the company) and it is planning to get to 50 drop off locations by the end of 2005.

I thought NAUC's share price had dropped much more, but the stock is making a comeback and it is trading over $2 now.

Let me leave both charts, AMRE.OB and NAUC.PK.

As said, I still don't know if I'm going to buy AMRE.OB at the open, if I see a big gap up I'll pass for now ...

[David Randolph]

The first thing I did was to check if the market cap on marketwatch.com was right, and it wasn't if you take into account full dilution, as you should. So the market cap of FCCN.OB is 34,519,282*$0.071=$2,450,869.

Still we're talking about an extremely small company in market value.

The company did show a profit in the first quarter, of $0.005 per diluted share, which gives us a P/E ratio of 14.2, pretty conservative given the growth of the company. But, you see, this profit was made out of profitable private investments more than from actual revenues.

What do these guys do? «The Company  invests in  developing  and franchising  casual  dining  restaurants.»

They also say this in the latest SEC statement: «At March 31, 2005 our investment  portfolio  totaled $602,480 at fair value. Our investment objective is to achieve current income.»

On July 26th we've had these news: Franchise Capital Corporation Announces Agreement for 12 Kokopelli Franchises in S.E. Michigan Market

I would like to highlight this: «This latest sale of 12 franchises in Michigan reflects Kokopelli's goal to reach all the corners of the country. I would like to remind shareholders that each Kokopelli franchise sold is expected to generate up to $60,000 or more per year for the franchise company on an on-going basis from royalties, in addition to the cash sum from the purchase itself. To date, Kokopelli has sold 49 franchises from coast to coast. This number will only continue to grow with more announcements of franchise sales to come in the coming weeks."»

So, 12*$60,000 = $720,000 from this deal alone. Considering the 49 franchises Kokopelli has now, we can figure the company will get about $2,940,000 in revenues per year, and that's more than the current market cap of FCCN.OB.

FCCN.OB has other franchises, besides Kokopelli (this picture was taken out of the 10-Q SEC report for the first quarter of 2005, the situation has improved since then):



Considering FCCN's chart, it has a bullish trend:



Still, just $2.45M in market cap, so there's a lot of room to grow ...

I guess this stock could still rise 10 fold, doesn't matter it has risen 10 fold already. Ramsburg bought the stock near its lows and still has it, read here: FCCN.OB... My bet as the next big penny mover

Perhaps we'll buy this stock for the 3 Pennies on Fire Portfolio today !

[Ramsburg]

Hello Everyone!

This will be my first «official» pick

WorldWater Corporation  (WWAT) is a solar engineering and water management company. The Company designs, develops, and markets proprietary technology with water and power applications.

WWAT is having a very powerful technical behaviour in the last weeks... Volume has increased a lot, a first primary breakout in late July caught our attention, now after some accumulation, and we have a «classic» G-Pattern on the way.
Friday's session showed another volume increase, breaking out the G-Spot price level. The candle has a big spike, but $0.48 was just 1 minute candle with no technical relevance, which means that we just watched a closing value near the actual real tradable high of the day.

This pattern shows that «real» money is entering the stock, and this could be only the beginning of a bigger movement... Also take a look at recent good news from WWAT

It's very difficult to find such a good looking chart... So WWAT is one of our 3 Penny Candidates for today...

[AussieTrader]

Yep a great pick the chart is strong and closed the day on the cusp of 52 week high. Volume is building and to me that 1 minute blip just points to where WWAT is headed. I took a position on Friday.

[la-onda]

WWAT sum up from other board

http://www.3stocksonfire.org/trading/index.php?topic=861.30

[OhadOnFire]

Ramsburg,

How much of the 5,000$ capital will you invest in WWAT?

[Ramsburg]

Ramsburg,

How much of the 5,000$ capital will you invest in WWAT?

Hi,

We are using 10% of total portfolio in each position: $1000

Take a look here:
http://www.3stocksonfire.org/3penniesonfire.php

best regards,

[David Randolph]

We've bought $1000 of each stock mentioned on the 3 Pennies on Fire 1, as you can see on the 3 Pennies on Fire Portfolio page.

Of course, we didn't buy on gap ups like we told we wouldn't do, waited a bit for the gap to be closed and then entered position ...

Now everyday this holdings will be updated before the next opening bell, so one knows when to sell ... the selling part of a trade is usually much harder than the buy part, but our strategy changes that, all the work is done before buying the stock, then we just have to design and follow a technical trading plan.

Have a nice day !

[soldbytes]

here is one to keep an eye on it is pyst.pk its in the process of being relisted on OTCBB. if that happens i think you will see a big jump.

[slomo007]

here is one to keep an eye on it is pyst.pk its in the process of being relisted on OTCBB. if that happens i think you will see a big jump.

Relisting can be a very long and drawn out process.  I agree that it's good news if you plan to hold the stock for long term, but so many things can happen between now and then that it probably isn't a good strategy to invest based on this news (see: GRYF.PK).  From the PR today, it states that ``PayStar is anticipating the filing of the overdue financial reports, quarterly and annual reports to be completed by early next year. Each quarterly and annual report will be posted to the EDGAR system as they are completed.'' 

In other words, it looks to be a long ways off.  Use caution if that's the reason you invested in it. 

[fill_the_gap]

Please clarify this finding during my research:

The same CEO Frank Holdraker is listed for the company that bought an FCCN subsidiary.
How is this possible ?

here are some updates for CEAT.

Creative Eateries Corp. Acquires Q's House of Barbecue with its Acquisition of Restaurant Companies International
Tuesday July 12, 8:30 am ET


SCOTTSDALE, Ariz.--(BUSINESS WIRE)--July 12, 2005--Creative Eateries Corp. (OTCBB: CEAT - News) announced today its acquisition of Restaurant Companies International (RCI) for 30,802,367 shares of the corporation's restricted common stock. RCI is the managing member and majority owner of Q's Franchise Co., LLC, who DBAs as "Q's House of Barbecue." In addition to the acquisition, Frank Holdraker, president of RCI, was appointed president of Creative Eateries and to the board of directors.
Creative Eateries will assume the business plan of RCI, which is a franchise development company organized to capitalize on the new, growing demand for "fast-casual/full-service" restaurants in North America. The company is poised to take advantage of this new phenomenon by targeting emerging and undervalued restaurant/franchise concepts and owning equity directly in these brands. Creative Eateries intends to grow these brands through expanding corporate growth and franchising by leveraging its skilled team of restaurant and franchise development professionals, deep operational expertise and a database of potential franchisees.

The first, of many to come, franchise concept for Creative Eateries is Q's House of Barbecue. Q's House of Barbecue restaurants feature a specialized menu including appetizers, slow-smoked ribs, pulled pork, chicken wings, seafood, beef brisket and other barbecue favorites, soups, salads and desserts in a casual, sophisticated, upscale setting, as well as catering for on-premises and carry-out consumption, utilizing certain distinguishing characteristics including distinctive exterior and interior design, decor, color scheme and furnishings; uniform standards, specifications and procedures for operations; quality and uniformity of products and services offered; procedures for management and inventory control; training and assistance; and advertising and promotional programs and other products prepared with our recipes, procedures, and techniques from a location within a designated territory under the name Q's House of Barbecue.

Frank Holdraker   ???was president/owner of Franklin & Associates from 1989-2004, a full-service concept development company. He helped develop for La Salsa, Fresh Mexican Grill, their franchise program, the manufacture of proprietary products and the establishment of purchasing and distribution procedures. From 1986-1989 Holdraker was president and CEO of Ponderosa Inc., a 750-unit steakhouse chain. From 1980-1986 he was senior vice president of Coulter Enterprise, a major multistate Pizza Hut franchisee. Prior to that he was vice president of Pizza Hut from 1974-1980.

"This is a great time for Creative Eateries and its shareholders," Holdraker stated. He continued by saying, "All of us at Creative Eateries are very excited about the team we have assembled and the restaurant concepts under development. We anticipate the first Q's House of Barbecue to open in the coming year with many more openings to follow and over a hundred franchises sold in the year following."

Creative Eateries is listed on the Nasdaq Electronic Bulletin Board under the trading symbol CEAT.