It’s an exciting time for penny stocks, especially SGOCO Group (SGOC), Ceres (CERE), and CardioNet (BEAT).  Let’s take a closer look at these three hot penny stocks…

SGOCO Group (NASDAQ: SGOC)

SGOC soared 142% last week!

SGOCO Group is a Chinese company that offers LCD/LED monitors, TV’s, tablet computers, e-reader notebooks, and other such products for the flat-panel display market in China.  The company is also developing LCD/LED systems for educational institutions, government departments, and corporate offices.

Why’s the stock surging?

SGOCO recently reported blowout first quarter earnings. 

Revenue increased 58% year-over-year to $54.5 million.  Net income rose by a whopping 87.5% to $1.7 million.  And earnings doubled in value to $0.10 per share.

A terrific quarter any way you slice it!

Management cited two reasons for the company’s strong performance in the first three months of this year.  SGOCO signed up a few large, local distributor clients during the quarter.  Plus, the company boosted sales of other application products and larger-sized monitors with higher sales prices.

Will the rally continue?

After posting big declines in revenue and earnings last year, it looks like SGOC is on track for much better performance this year.  Check out these bullish comments by CEO Burnette Or taken from the April press release announcing SGOC’s fourth quarter and full year 2012 results…

“In response to the increased competition in China’s rapid-changing display market, SGOCO chose to transition from the manufacturing-based business model to the R&D and distribution-focused model, to develop and distribute its own branded products…. We believe that focused distribution of these higher-margin products will create a foundation for establishing SGOCO as a leading supplier in China’s flat-panel display market for years to come.”

It’s too soon to tell if the company’s change in business model will ignite a new cycle of growth.  But given the company’s strong performance in the past two quarters, it’s worth adding SGOC to your watch list.

Ceres (NASDAQ: CERE)

Ceres is an agricultural biotechnology company based in Thousand Oaks, California.  They develop and sell energy crops to produce renewable biomass feed stocks in North America. 

The company’s crops include sweet sorghum, biomass sorghum, switch grass, and miscanthus x giganteus.  Ceres sells it seed products to ethanol mills, utilities, independent power producers, cellulosic biofuel companies, individual growers, and grower cooperatives.

Over the past week, CERE has jumped by an amazing 92%!

Here’s why…

Last week, a Raymond James analyst issued an exciting outlook for the stock. 

The analyst said he expects CERE to move higher after it reports important crop data in the next few weeks.  He’s counting on the company reporting a bumper crop of sweet sorghum after last year’s crop was decimated by a drought in Brazil.

The analyst has an “Outperform” rating on CERE and a price target of $7 per share.  If he’s correct, the stock could double from its recent price of $3.43.

CardioNet (NASDAQ: BEAT)

CardioNet is the leading wireless medical technology company focused on diagnosing and monitoring cardiac arrhythmias.  They provide cardiac monitoring, cardiac monitoring device manufacturing, and cardiac core laboratory services. 

The company’s primary product is the CardioNet Mobile Cardiac Outpatient Telemetry (MCOT) system.  It’s the first to provide real-time ECG monitoring and 24/7/365 analysis and response for patients at home, at work, or traveling. 

Here’s the thing… shares of BEAT have jumped 78% in a week!

What’s going on?

The company announced very exciting news last Tuesday.  Starting July 1st, UnitedHealth Group will begin covering all of CardioNet’s monitoring modalities, including MCOT.

This is a huge win for the company.

The deal expands coverage for CardioNet’s entire suite of cardiac monitoring solutions to UnitedHealth’s more than 70 million members.  As such, the available market for CardioNet’s life-saving technologies has just increased dramatically.

No question about it, investors are very excited about CardioNet’s future.

After the stock closed the prior week at $3.24, investors sent BEAT soaring to a high of $5.95 last week.  And while the stock gave up some of those gains to finish the week at $5.77, it’s up more than 7.6% in morning trade to $6.21.

Profitably Yours,

Robert Morris

Keeping an eye on what company insiders are doing with their shares is an important part of investment research.  After all, no one has a better understanding of a company’s prospects than its officers, directors, and major shareholders.

When insiders are buying, it’s often a good sign that the company’s shares are undervalued.  And when insiders are selling, it can be a useful signal that a stock is overpriced.

With that in mind…

I’ve found three penny stocks that are experiencing a heavy amount of insider selling of late.  If you own any of these stocks, you may want to take a closer look at the companies to decide if now’s the time to head for the exits.

PGT, Inc. (NASDAQ: PGTI)

PGT manufactures residential impact-resistant windows and doors that offer protection from hurricane-force winds and wind-borne debris.  The company operates in the Southeast US, the Gulf Coast, Coastal mid-Atlantic, the Caribbean, Central America, and Canada.

No question about it, the stock has been on a tear since mid-November 2012…

After hitting a low of $3.25 on November 19th, PGTI has been moving higher in a steady uptrend.  By late February, the stock was trading over $5.00 per share.  And on May 16th, it hit a high of $9.25. 

That’s a 185% gain off the low in just six months’ time!

However, the stock may now be poised for a fall.

PGTI’s major shareholder has just unloaded a boatload of shares.  In two separate sales at the end of May, private equity firm JLL Partners Fund IV LP sold a total of 19.4 million PGTI shares.  And in the process, it pocketed over $143 million! 

What’s more, the fund reduced its ownership interest in PGT from 62% to around 25%. 

Now, the company still has a major ownership position in PGT.  But does the significant reduction in this interest suggest they don’t see the stock moving much higher?  I’ll leave that for you to decide.

Harbinger Group (NYSE: HRG)

Harbinger operates as a diversified holding company.  Through its subsidiaries, the company offers various branded consumer products such as batteries, portable lighting products, and small appliances.  Its brand portfolio includes Rayovac, VARTA, Beltone, Miracle Ear, Starkey, George Forman, Black & Decker, Farberware, Black Flag, Remington, and many others.

The stock has done very well over the past 18 months.

Since December 2011, HRG has climbed from a low of $2.75 to around $8.30 per share today.  That’s a gain of more than 200%!  And at its peak of $10.85 in August 2012, the stock was up nearly 300%.

More recently, the stock was trading as high as $9.95 in late May 2013.

However, the good times may be over for a while if insider selling is an accurate predictor of future stock performance.  Since December 2012, company insiders have unloaded more than 23 million shares.  That works out to an 18% reduction in insider ownership.

And in the process, these insiders have raked in more than $172 million.

Plug Power (NASDAQ: PLUG) 

Plug Power is an alternative energy technology provider to industrial off-road markets worldwide.  They make fuel cell systems comprised of the company’s hydrogen-fueled Proton Exchange Membrane systems.

It certainly sounds like an exciting business.

But the stock has been decimated over the past year. 

PLUG’s down more than 56% in the past 12 months to around $0.51 right now.  And at one point in February, the stock was changing hands for as little as 12 cents per share.

A big reason for the stock’s fall of course is heavy insider selling.

Over the past six months, company insiders have dumped nearly 11.5 million shares of PLUG.  And in the process, insiders have reduced their holdings in the company by 30%.

That’s anything but a ringing endorsement by those in a position to know every detail about the company.  While PLUG is currently rising off the February lows, it’s hard to see this rally having legs given insiders’ penchant for cashing out their shares.

The bottom line…

There’s no question that insider transactions are an important factor to consider when researching a company.  Moves by company insiders often provide a signal as to which direction a particular stock may be headed. 

However, you would do well to keep this in mind… 

Insider trading activity is only one factor among many that investors should consider when deciding to buy or sell a particular stock.  You certainly don’t want to give too much weight to what insiders are doing.  But don’t make the mistake of completely ignoring it either.

Profitably Yours,

Robert Morris 

It’s an exciting time for penny stocks, especially Netlist (NLST), Ambient (AMBT), and Kandi Technologies (KNDI).  Let’s take a closer look at these three hot penny stocks…

Netlist (NASDAQ: NLST)

NLST soared 77% last week!

Netlist is a leading provider of high-performance modular memory subsystems for the datacenter server, high-performance computing, and communications markets worldwide.  These memory subsystems consist of dynamic random access memory integrated circuits, NAND flash memory components, application-specific integrated circuits, and other components assembled on circuit boards.

Why’s the stock surging?

Netlist received a favorable ruling in its patent litigation with competitor Smart Modular.  Last Monday a federal court denied Smart Modular’s motion for a preliminary injunction against Netlist’s flagship product, HyperCloud. 

The Court denied the motion because it found Smart Modular was unlikely to succeed on the merits of the case.  Smart Modular’s case hinges on a patent that the Court believes may not be valid.

What’s more, the Court granted Netlist’s motion to stay the litigation pending the results of a reexamination of the patent by the US Patent and Trademark Office.

This is great news for Netlist. 

HyperCloud is the company’s new DDR3 memory chip.  The chip has already been qualified by IBM and Hewlett Packard for use in those companies’ server products.  As such, it’s worth tens of millions of dollars in annual sales to Netlist.

Ambient (NASDAQ: AMBT)

Ambient makes a smart grid communications platform for utility companies.  This platform enables utilities to deploy and integrate multiple smart grid applications on a single communications infrastructure.  It supports smart metering, distribution automation, distribution management, demand response, distributed generation, and other applications. 

Over the past week, AMBT has jumped 54%!

Here’s why…

Last Thursday the company announced a reduction in executive compensation as one of a number of cost saving measures.  Under the new compensation plan, Ambient’s executive officers will receive a 15% reduction in annual base salary.

There’s no question the company needs to cut costs.  Revenue dropped 31% to $42.8 million in 2012.  And the company posted a net loss of $5.4 million or $0.33 per share for the year. 

Investors clearly believe the cut in executive pay is a step in the right direction.

When the news came out, AMBT surged 105% intra-day to a high of $3.29.  While it gave back some of those gains to close the week at $2.65, the stock certainly made a major move higher for the week.

Kandi Technologies (NASDAQ: KNDI)

Kandi Technologies is a Chinese manufacturer of electric vehicles, all-terrain vehicles, go-karts, and specialized automobiles.  The company also makes utility vehicles, three-wheeled motorcycles, refitted cars, super-mini-cars, and various auto generators.  They sell their products primarily in North America, Europe, and China.

Here’s the thing… shares of KNDI have jumped 52% in a week!

What’s going on?

The company announced very exciting news last Wednesday.  The first purely electric sedan jointly developed by Kandi and Geely Automobile was approved by China’s Ministry of Industry and Information Technology.

This government approval is key to the vehicle’s future market success.  It means the purchasers of these electric sedans will now be qualified to receive all national and local electric vehicle subsidies and incentives.

As you can see, investors are very excited about Kandi’s future prospects.

After closing the prior week at $3.75, KNDI soared to a high of $6.95 on the day the news came out.  And while the stock gave up some of those gains to close out the week at $5.69, it’s already moving higher in morning trade.  KNDI’s up more than 9% today at $6.24 as I write.

Profitably Yours,

Robert Morris

Welcome to Pump and Dump Friday, our weekly feature where we identify potentially “bogus” promotions going on in penny stocks.

Today we’re exposing one of the most extensive penny stock pump and dump campaigns of the week:  RJD Green, Inc. (OTCQB: RJDG).

If you don’t know how these schemes work, be sure to check out our free report that exposes the whole thing.

Without further ado, here is today’s disaster waiting to happen:

RJD Green, Inc. (OTCQB: RJDG)

RJDG is one of the most heavily hyped penny stocks of the past week.  According to our sources, at least 28 different promoters have pumped the shares through 137 newsletters.  And a whopping $775,000 has been paid in June so far to hype the stock.

The pump’s being led by the some of the usual suspects…

Stock Mister expects to receive $500,000 for its services.  The Bull Exchange has agreed to pump RJDG for $200,000.  And there are several others involved who expect to receive anywhere from $25,000 to $50,000.

So far, the pump’s working like a charm.

The stock chart shows RJDG was worth $0.10 per share just before the pumping campaign began.  Then on June 5th the pump was launched and the stock soared.

RJDG opened the day at $0.25 to give company insiders a quick 150% gain on their shares.  And the profit-taking began almost immediately.  The stock never climbed above its opening price and closed the day at $0.18. 

On the chart, it looks like RJDG registered a phenomenal one day gain of 80%. 

And it certainly did provide a gain of at least that much for company insiders.  However, many individual investors who bought the stock on the advice of promoters’ emails ended the day with losses as high as 28%!

So, what’s the skinny on RJD Green?

The big story sucking investors into the shares is a press release touting the company’s recent acquisition of privately held Silex Holdings.  The press release states Silex was formed in 2012 to acquire and grow companies in the energy, green-technology based environmental, and specialty niche building material industries.

But the big carrot luring investors into RJDG is an ambiguous statement about the company’s post-merger financials. 

The press release states…

“The twelve month pro forma, post merger, is projected to be greater than $17,000,000 with current acquisitions being fully launched.”

That certainly sounds like a good thing on its face.  However, the press release doesn’t make clear what that $17 million is supposed to represent. 

Is it annual revenue?  Cash flow?  Net income?  Of course, the press release conveniently leaves out this critical piece of information.

If the figure is supposed to be projected annual revenue, it sounds too good to be true. 

According to the most recent quarterly report (filed on May 22, 2013), RJD Green had total assets of $1,423 and total liabilities of $25,980.  What’s more, since its inception in 2009, the company has generated total revenue of $500 while racking up a cumulative net loss of $45,557.

Not the picture of success by any stretch of the imagination.

Yet, RJD Green would have investors believe it has just acquired a company poised to generate $17 million per year in revenue going forward.  And all it paid for the company was 375,390,000 shares of RJDG.

If that doesn’t set your skepticism meter off… maybe this will.

On May 28, 2013, RJD Green filed an S-1 with the SEC.  This securities registration statement indicates a number of current RJDG shareholders plan to sell 37,980,000 shares of RJDG “as soon as practicable”. 

The interesting thing here is…

The biggest intended individual selling shareholder is RJD Green’s former sole officer, director, and employee, Mr. Robert Kepe.  The S-1 indicates Mr. Kepe plans to sell all of his personally owned RJDG stock… more than 20 million shares. 

What’s more, another shareholder… Alliance Real Estate Development, a company owned entirely by Mr. Kepe… also plans to sell more than 33 million shares.

Mr. Kepe sold RJD Green to Mr. Zahoor Ahmad in March for approximately $273,000.

With RJDG now trading over $0.20 per share (after not trading at all prior to June 5th), Mr. Kepe is enjoying a multi-million dollar payday.  That’s a pretty amazing windfall for selling a company that had generated just $500 in revenue!

But here’s the key for individual investors…

RJDG is making bold, unsubstantiated claims about its potential future success following its merger with Silex Holdings.  Promoters are hyping RJDG through more than a hundred newsletters.  And you have company insiders poised to dump nearly 38 million shares of RJDG on the market.

This certainly does not look like an attractive investment opportunity to me.

Other Penny Stocks Being Pumped This Week

VizStar, Inc. (OTCPINK: VIZS) – 35 promoters with 152 newsletters have been paid over $65,000 so far this month to hype VIZS.

Ghana Gold Corp. (OTCPINK: GGCO) – 32 promoters with 122 newsletters have been paid over $60,000 in June to plug GGCO.

As you know, penny stocks are a great place to invest your money.  You just have to do your due diligence to stay away from all the schemes and scams out there these days!

Profitably Yours,

Robert Morris

A couple of weeks ago, I warned you that high flying Chinese solar stocks were poised for a fall.  It was all but certain the European Union would impose anti-dumping sanctions on these companies in early June. 

And as a result, I urged you to lock in your gains on these stocks immediately.

Hopefully, you took my advice.

This morning the EU announced it will indeed impose tariffs – some as high as 67.9% – starting tomorrow.  The duties are meant to punish certain Chinese solar panel manufacturers who have been selling their products in the EU at prices well below their fair market value.

The practice better known as “dumping”.

EU investigators found that over 100 Chinese solar companies have been selling solar panels at 88% below fair market value on average.  And a few companies have been caught selling their solar products with dumping margins as high as 112.6%!

As I predicted… Chinese solar stocks are plunging on the news.

JA Solar (JASO) is feeling the most pain as it’s down 9.5% so far today.  Suntech Power (STP) and Trina Solar (TSL) aren’t too far behind with intra-day losses of 8% and 6% respectively.  And a number of other Chinese solar stocks are also dropping like stones… Yingli Green Energy (YGE) -5.8%, LDK Solar (LDK) -5.6%, China Sunergy (CSUN) -4.1%, and JinkoSolar (JKS) -2.8%.

The worst part is… this could be just the beginning of a major move lower for these stocks.

In fact, the only thing keeping Chinese solar stocks from dropping off a cliff is that the EU decided to phase in the tariffs.  For the next two months, the anti-dumping duty will be just 11.8%.  However, starting on August 6th, those duties will increase to anywhere from 37.2% to 67.9%.

And there’s no doubt these sanctions will have a negative effect.

According to the EU, solar panels imported from China represented over 80% of the European market in 2011 and 2012.  As prices for these products are pushed higher by the anti-dumping tariffs, demand for them is certain to decline in favor of cheaper products made by European solar companies. 

As Europe accounts for about 75% of the global solar market, this will be a major blow for Chinese solar companies.  

What’s more, there may be further sanctions coming down the pike. 

The EU is currently investigating allegations that the Chinese government is subsidizing Chinese solar companies.  If the EU finds that these companies are benefiting from unfair government subsidies, it could impose a separate set of tariffs on Chinese solar products.

The EU is expected to release its findings from this investigation by August 5th.  And the deadline for imposing any anti-subsidy duties is August 7th.

Profitably Yours,

Robert Morris 

It’s an exciting time for penny stocks, especially Celsion (CLSN), LightPath Technologies (LPTH), and Sonus Networks (SONS).  Let’s take a closer look at these three hot penny stocks…

Celsion (NASDAQ: CLSN)

CLSN soared 71% last week!

This tiny biotech is developing targeted chemotherapeutic cancer drugs based on its proprietary heat-activated liposomal technology.  Their leading drug candidate, ThermoDox, is a potential blockbuster that could one day generate billions of dollars a year in sales.  ThermoDox is currently in phase 3 clinical testing for primary liver cancer and two phase 2 trials for colorectal liver metastasis and recurrent chest wall breast cancer.

Why’s the stock surging?

It’s not exactly clear.  There hasn’t been any good news of late.  And the last significant news item was highly negative… a report that ThermoDox had failed a phase 3 clinical trial.

However, there’s plenty of speculation as to why the stock’s jumping.  I’ve heard everything from short squeeze to good news is coming to bottom-fishing by institutional investors.

The most optimistic rumor is that Celsion’s post-hoc analysis of the failed phase 3 trial data has breathed new life into ThermoDox.  The speculation is that Celsion has found large subgroups of patients that appear to have marked improvement in progression free survival and overall survival.

If true, Celsion’s heat-activated liposomal technology may not necessarily be a bust.  And it could mean the biotech’s leading drug candidate might still win regulatory approval.

Stocks of development stage biotechs are inherently speculative due to the difficulty of getting new drugs approved by regulators.  However, this current rally in CLSN is even more speculative than normal as it follows a failed phase 3 trial and is happening on no new public information. 

LightPath Technologies (NASDAQ: LPTH)

LightPath manufactures optical components and assemblies for the defense, medical device, industrial tool, automotive, retail, and telecom industries.  Their products include precision molded glass aspheric optics, isolators, high performance fiber-optic collimators, GRADIUM glass lenses, and other optical materials. 

Over the past week, LPTH has jumped 44%!

Here’s why…

LightPath recently reported encouraging year-over-year trends in its third quarter financials.  The company’s 12-month order backlog increased by 14% to over $5 million.  Gross margins shot up 15 percentage points to a hefty 47%.  And LightPath recorded a profit of $0.02 per share after posting a net loss of $0.05 for the year ago quarter.

But that’s not all…

Management also provided a bullish outlook for the company.  CEO Jim Gaynor had this to say…

“We believe the themes of mobile internet growth, recovery of the Chinese industrial tool market and new product applications bode well for our long term growth.  Even though the overall markets are still weak and somewhat choppy, we have been able to grow our business 51% from 2009 to 2012.” 

No question about it, investors are excited about LPTH.

After finishing the prior week at $0.85 per share, the stock surged to a high of $1.26 last week before closing at $1.18.  And the rally’s not done yet.  This morning LPTH is up more than 13% to $1.34 per share.

Sonus Networks (NASDAQ: SONS)

Sonus provides networked solutions for communications service providers in the US, Europe, the Middle East, Africa, and Asia.  Its solutions address the need to link and leverage multi-vendor, multi-protocol communications systems and applications across customers’ networks. 

Here’s the thing… shares of SONS have jumped 33% in a week!

What’s going on?

Sonus announced last Tuesday it has formed a potentially lucrative partnership with networking industry heavyweight, Juniper Networks (NASDAQ: JNPR).

The two companies have agreed to jointly deliver integrated solutions based on Software Defined Network principles.  Under the partnership, the two companies will integrate Sonus’ session border controllers (SBCs) with Juniper’s routers to help customers deal with the surge in video traffic.

What’s more…

The deal comes on the heels of Sonus’ strong sales of SBCs in the first quarter of 2013.  In the first three months of the year, SBC revenues increased by a whopping 77% year-over-year to $30 million. 

And according to CEO Ray Dolan, the “results reflect consistent execution and position [Sonus] for a strong year.”

If that’s what management believed prior to the partnership with Juniper, they must be even more bullish now.  And given the stock’s big jump on the news, many investors apparently agree.

Profitably Yours,

Robert Morris

Welcome to Pump and Dump Friday, our weekly feature where we identify potentially “bogus” promotions going on in penny stocks.

Today we’re exposing one of the most extensive penny stock pump and dump campaigns of the week:  Xumanii (OTCQB: XUII).

If you don’t know how these schemes work, be sure to check out our free report that exposes the whole thing.

Without further ado, here is today’s disaster waiting to happen:

Xumanii (OTCQB: XUII)

This week’s featured pump and dump penny stock is XUII.  According to our sources, at least 11 different promoters have pumped the shares through 162 newsletters.  And more than $500,000 has been paid in May to hype the stock.

Sadly, the pump has worked like a charm.

Unsuspecting investors flooded into XUII at the first of the month on promoters’ claims the stock would triple in value.  And a self-fulfilling prophecy ensued.  The stock climbed 193% from $0.15 on May 1st to a high of nearly $0.44 on May 21st.

However, these huge short-term gains were just too good for many to pass up. 

And on May 22nd, sellers began coming out in droves.  The stock opened the day 16% below the previous day’s high.  And it proceeded to drop over the next few days to a low of $0.25 per share. 

That’s a 43% plunge in just five trading days in case anyone’s counting.  And at one point, it looked like the bottom might drop out of the stock.

But the promoters are clearly getting smarter… 

They were obviously prepared for XUII to drop like a stone at some point.  How do I know?  As soon as XUII began falling, they jumped in to support it with another email pumping barrage.   

And this time around they’re promising even greater returns.  In fact, a few promoters are brazenly claiming that XUII will post gains of 1,000% or more!

So far, the promise of 10-fold gains has been just the medicine this dying stock needed.  XUII has reversed course and is moving higher again.  As I write, it’s trading around $0.34 per share.

So, what’s the story on Xumanii?

Based on the stock movement and promoters’ claims, you’d think this company’s making money hand over fist.  But that’s clearly not the case.  According to the most recent annual report (fiscal year ending July 2012), the company is a “development stage corporation and [has] not yet generated or realized any revenues from [their] business operations.”

What’s more, since filing its annual report, the company has abandoned its original business concept and adopted a new business plan.

Until recently, the company was trying to build a business similar to Groupon’s under the name Medora.  Their plan was to present a daily discount for a niche market item like a spa, restaurant, or tour outing.  The coupons were to be sent to subscribers by email.

But as I said, the company has abandoned this business plan in favor of a new one and changed its name to Xumanii.

The new business plan is to broadcast live events in HD on its website under a “pay-per-view” model.  Revenue is expected to come from consumers who pay to watch the event and from advertising, product placements, and sponsorship.

The idea certainly sounds interesting.  But at this point, it is just that… an idea.  To date, the company has generated zero sales, racked up a net loss of almost $265,000, and has negative shareholder equity of $224,000. 

And if that doesn’t scare you, maybe this will… 

Management says Xumanii needs to raise nearly $1.4 million to put its new business plan into action.  That means the company is poised to significantly increase its debt load or do a dilutive stock offering.

Still not enough to set off the alarm bells in your head?

Then check out this quote from the company’s annual report…

“We anticipate that we will incur substantial losses for the foreseeable future and our ability to generate any revenues in the next 12 months continues to be uncertain.”

Based on all of the above, it’s hard to understand how XUII deserves a share price of even a penny per share let alone 34 cents.  And if you’re still not convinced, consider this… at $0.34 per share, Xumanii has a market cap of over $109 million!

Do yourself a favor and don’t get sucked into this obvious pump and dump scheme.  While there’s a chance you could make some money if your timing’s right, a trade in XUII is much more likely to end badly for you.

Other Penny Stocks Being Pumped This Week

ENDEXX Corp. (OTCPINK: EDXC) – 60 promoters with 275 newsletters have been paid over $300,000 so far this month to hype EDXC.

ITonis (OTCPINK: ITNS) – 13 promoters with 102 newsletters have been paid over $400,000 in May to plug ITNS.

As you know, penny stocks are a great place to invest your money.  You just have to do your due diligence to stay away from all the schemes and scams out there these days!

Profitably Yours,

Robert Morris

It’s an exciting time for penny stocks, especially Cleantech Solutions International (CLNT), Ballard Power (BLDP), and DayStar Technologies (DSTI).  Let’s take a closer look at these three hot penny stocks…

Cleantech Solutions International (NASDAQ: CLNT)

CLNT has soared 80% in a week!

Cleantech Solutions manufactures precision forged rolled rings and related components for the wind power and solar power industries.  Based in Wuxi City, China, this company is positioned perfectly to capitalize on China’s massive investment in renewable energy sources. 

Why’s the stock surging?

The company recently announced it has become a certified supplier of components to China Petroleum and Chemical (NYSE: SNP) – also known as Sinopec – and China National Petroleum.  In fact, Cleantech has already supplied the two oil companies with prototypes of forged flanges and pipes created specifically for oil and gas onshore and offshore drilling and refinery equipment.

This is a huge deal for tiny Cleantech as its new customers are the two largest oil and gas companies in China! 

As you can see, CLNT skyrocketed on the news! 

After closing at $3.74 per share on May 21st, the stock shot up to a high of $9.75 on May 22nd for a whopping 161% intra-day gain!  And the very next day CLNT shot up to a high of $10.85 for a two-day peak gain of 190%!

The shares have pulled back a bit after the monster two-day run.  But Cleantech’s new relationships with China’s two largest oil companies certainly bodes well for the company’s future.

Ballard Power Systems (NASDAQ: BLDP)

Ballard Power Systems is a global leader in proton exchange membrane (PEM) fuel cell technology.  They manufacture fuel cell stacks, modules, and complete systems for various applications in the motive and stationary power markets. 

A fuel cell is simply a clean energy device to produce electricity.  As long as fuel and oxygen are supplied, it can produce electricity continually. 

Fuel cells have the potential to be used in a variety of applications.  However, the company’s focus right now is on applications where the unique attributes of PEM provide customers with a commercial advantage.  

These areas are currently backup power, distributed generation, material handling, and bus applications.  Ballard’s clean energy fuel cells compete with incumbent technologies like lead-acid batteries and diesel generators.

Over the past week, BLDP has surged 65%!

Here’s why…

The company recently announced the formation of a potentially lucrative relationship with Azure Hydrogen Corporation of Beijing, China.  While the relationship right now is a non-binding agreement to do business together, it has potential to be a huge money maker for Ballard Power.

According to the two companies, Azure plans to develop fuel cell bus capabilities in China with Ballard’s technical support and funding from Chinese sources.  If the Azure partnership is successful, it would lead to the deployment of zero emission fuel cell buses in China.

And make no mistake…

Azure is clearly serious about making this project a success.  The company has already made an up-front payment of $1 million to Ballard.

Investors clearly liked the news. 

They sent BLDP surging from $1.20 on May 23rd to a high of $2.39 today.  That’s a phenomenal 99% gain in just three trading days.  While BLDP has since come off that lofty high, the stock appears to have huge upside potential.

DayStar Technologies (OTCPINK: DSTI)

DayStar claims it’s positioned to become the world’s leading manufacturer of low-cost, high performance, CIGS thin film photovoltaic products for converting electricity from the sun.  The company plans to market its monolithically integrated copper indium gallium selenide (CIGS) modules on glass laminate substrates to utility power plants as well as commercial and residential customers. 

Here’s the thing… shares of DSTI have jumped 76% in a week!

What’s going on?

The company announced on Friday it has acquired a 20% equity position in Premier Global Holdings Corp.  And some investors clearly believe it’s a huge step forward for DayStar.

According to a recent press release, Premier Global is close to launching a new product that enables utilities to cost-effectively store solar energy and use it as needed.  This product would allow utilities to reduce their capital equipment investments and integrate renewable energy without paying higher than ordinary rates for power.

In fact, DayStar’s CEO Mark Roseborough says the product “has the potential to be worth billions of dollars in new revenues for the industry as a whole.”  

As a result, DSTI surged from $0.50 on May 20th to a high of $0.95 yesterday before closing at $0.88.  That’s a big move in a short period of time.  And it could be the start of a larger rally.

Profitably Yours,

Robert Morris

Welcome to Pump and Dump Friday, our weekly feature where we identify potentially “bogus” promotions going on in penny stocks.

Today we’re exposing one of the most extensive penny stock pump and dump campaigns of the week:  GDT Tek (OTCPINK: GDTK).

If you don’t know how these schemes work, be sure to check out our free report that exposes the whole thing.

Without further ado, here is today’s disaster waiting to happen:

GDT Tek (OTCPINK: GDTK)

This week’s featured pump and dump penny stock is GDTK.  According to our sources, at least 15 different promoters have pumped the shares through 108 newsletters.  And more than $75,000 has been paid so far in May to hype the stock.

But this most recent campaign hasn’t worked out too well…

After hitting a high of $0.061 per share on May 16th, GDTK has been dropping like a stone.  The stock is currently down more than 26% from that recent high to $0.045.  And the shares have traded as low as $0.04 earlier this week.

GDTK insiders and promoters were probably hoping for a repeat of the previous pump done in the fall of 2012.  Back then, the stock soared from $0.018 to a high of 21 cents a share. 

It was a mind-boggling 1,066% gain in less than two weeks’ time.

Of course, many unsuspecting investors lost their shirts when the dumping began.  The stock ultimately plunged to a low of $0.011 in early January.  That’s a free fall of 95% in just two months.

So, what’s the story on GDTK?

It’s hard to get any current information on GDT Tek as the company hasn’t filed a quarterly or annual report since July 2011.  However, to be fair, a recent press release from the company claims it will be completely current with all financial filings before September 2013.

We’re not holding our breath…

According to the annual report for fiscal year 2010 (filed in July 2011), the company has gone through several name changes.  It has also engaged in various businesses from food product manufacturing to something internet-related to wireless equipment installations and service.

Currently, the company’s trying to get power plants and landfills to adopt its waste heat to electric power generation technology.  And GDT Tek recently announced plans to acquire a company “that turns landfill gas into electricity”.

More on that in a moment…

Now it’s not hard to understand why the company stopped filing its financial statements.  The FY2010 annual report shows GDT Tek was on life support…

The company had assets of just over $1 million, liabilities of $14.1 million, and negative shareholder equity of $13.1 million.  What’s more, the reported accumulated deficit was a whopping $34.5 million!

And the company’s financial performance in FY 2010 was just as dismal. 

It failed to generate even one penny of revenue during the year.  Plus, it reported a loss of $5.9 million.

So, how is this financially strapped and heavily indebted company planning to acquire another company?  You guessed it… they’re going into more debt.  The company plans to do a $20 million bond offering to fund the acquisition.

But don’t worry…

These captains of industry promise that the bond offering and the debt service on it will “easily be supported from the current net cash flow being generated” by the target company.  That’s a bold statement given management’s track record.  But there’s no way to confirm its accuracy without seeing the financials on the company being acquired.

While it remains to be seen if GDT Tek will make good on its many promises, we’re not very confident in management’s ability to run a company.  As such, we suggest you steer clear of these shares. 

Remember, there’s a reason why any company has to resort to paid promotions to get investors to buy its stock.    

Other Penny Stocks Being Pumped This Week

Tranzbyte (OTCPINK: ERBB) – 45 promoters with 225 newsletters have been paid nearly $200,000 so far this month to hype ERBB.

Trulan Resources (OTCPINK: TRLR) – 24 promoters with 213 newsletters have been paid over $100,000 in May to plug TRLR.

As you know, penny stocks are a great place to invest your money.  You just have to do your due diligence to stay away from all the schemes and scams out there these days!

Profitably Yours,

Robert Morris

If you bet on solar stocks at the end of 2012, you’re feeling pretty smart right about now.  Stocks in this beaten down industry have been soaring off the chart in 2013.  Take a look at the Guggenheim Solar ETF (NASDAQ: TAN) for example.

TAN has exploded from just under $16 per share at the end of 2012 to nearly $26 today.  In fact, the popular solar ETF’s up more than 65% so far this year.  Now that’s a heck of a rally in a short period of time.

As you might imagine, many individual solar penny stocks have also shot higher this year…

• Canadian Solar (CSIQ)… +147%
• JA Solar (JASO)… +122%
• Hanwha SolarOne (HSOL)… +71%
• Trina Solar (TSL)… +65%
• Ascent Solar Technologies (ASTI)… +51%
• Yingli Green Energy (YGE)… +51%

That’s all well and good, but an upcoming event may spell the end of this rally for a certain segment of solar stocks.

You see, the European Union is set to decide on June 6th whether to impose anti-dumping tariffs on a group of foreign solar companies.  If the EU goes ahead with the proposed import duties, the cost of most photovoltaic panels is expected to rise by 45% overnight!

Who are the intended targets?

You guessed it… Chinese solar manufacturers. 

The EU has been investigating claims of dumping by these companies since September 2012.  And according to a recent Bloomberg report, negotiations between the EU and China aren’t likely to lead the EU to extend its deadline.  

If the duties go through on June 6th, over 100 Chinese solar makers producing an estimated $26 billion worth of solar products will be negatively impacted.

The inevitable result of these tariffs would be to drive solar panel prices higher in a hurry.  In fact, they’ve already started creeping up as many expect the EU to move forward with the penalties. 

And once the duties are approved, solar panel prices will likely jump even higher.

This would be bad news for Chinese solar makers.  Significantly higher prices will almost certainly cause demand for Chinese made solar panels to plunge.  And a big drop in demand would mean revenues at Chinese solar companies are about to take a big hit.

What’s more, the EU tariffs wouldn’t be the first penalties imposed on Chinese solar companies in recent months.

The US has already imposed its own set of anti-dumping tariffs on Chinese solar manufacturers.  If the EU follows suit, these companies will be effectively hamstrung in two of the world’s largest solar markets.

In fact, industry experts believe the one-two punch of tariffs in the US and EU would likely cause several Chinese solar makers to follow in the footsteps of Suntech Power (NYSE: STP).  You’ll recall Suntech’s Chinese solar power unit declared bankruptcy earlier this year.

The upshot…

With the EU’s decision on anti-dumping tariffs for Chinese solar makers fast approaching, it may be time to take your profits in these stocks off the table.  Consider locking in your gains on any Chinese solar stocks before they fall back to earth.

Profitably Yours,

Robert Morris 

It’s an exciting time for penny stocks, especially Real Goods Solar (RSOL), Ever-Glory International Group (EVK), and Sky-Mobi Limited (MOBI).  Let’s take a closer look at these three hot penny stocks…

Real Goods Solar (NASDAQ: RSOL)

RSOL soared 117% last week!

Real Goods Solar is a residential and commercial solar energy engineering, procurement, and construction company in the US.  They install residential and commercial solar energy systems that are between 3 kilowatts and 1 megawatt (MW) output as well as larger commercial systems in the 3 to 5 MW range.

Why’s the stock surging?

Investors see potential for stronger growth at RSOL this year and beyond.  The company recently announced a new partnership with Lennar Homes, the third largest homebuilder in the US.  Under the deal, RSOL will offer solar installations to all homes in new Lennar communities in California with potential to expand the program to other states.

As you can see, RSOL skyrocketed on the news! 

After closing the prior week at $1.86 per share, the stock shot up to a high of $4.23 before ending the week at $4.03.  The shares are up another 51% today to $6.12 as I write.

Ever-Glory International Group (NYSE: EVK)

Ever-Glory is a manufacturer and retailer of apparel for men, women, and children.  Based in Nanjing, China, the company offers products to the casual wear, sportswear, and outerwear brands and department stores located in China, Europe, the US, and Japan.  At the end of last year, Ever-Glory operated 727 stores, including 35 flagship stores throughout China.

Over the past week, EVK has surged 52%!

Here’s why…

Last Wednesday, the company posted robust first quarter numbers.  For the quarter, revenue increased by an impressive 47% to $78 million.  Net income jumped 46% to just over $3 million.  And earnings rose by 50% to $0.21 per share.

The strong first quarter was due primarily to an outstanding 107% surge in revenue at the company’s retail stores.  Ever-Glory has added 271 new LA Go Go stores since the first quarter of 2012.  And same store sales are rising sharply as well.   

Investors clearly liked the news. 

They sent EVK surging from $2.12 the prior week to a high of $3.50 on Thursday for a hefty 65% gain.  The stock ended the week at $3.23, but it’s up more than 8% in morning trade to $3.50 per share.

Sky-mobi Limited (NASDAQ: MOBI)

Sky-mobi operates Maopao, the leading mobile application store in China based on number of user visits.  Through its partnerships with over 860 handset makers, Sky-mobi ensures that Maopao comes pre-installed on a large number of feature phones and a growing number of smartphones.  Maopao offers a wide variety of mobile apps, including games, books, and music. 

But that’s not all…

The company also operates Maopao Community, a fast-growing mobile social network in China.  Members enjoy mobile social games, instant messaging, blogging, personal profiling, content sharing, and virtual gifting.  Maopao Community already has more than 248 million members and over 10 million active users.

Here’s the thing… shares of MOBI jumped 35% last week!

What’s going on?

Investors are clearly excited about the company’s prospects amid soaring demand in China for low-end smartphones.  According to management, the number of smartphone users on Maopao more than doubled quarter-over-quarter and now exceeds 20 million users.  What’s more, the number of visits to Maopao from smartphone users topped 251 million visits.

CEO Michael Tae Song put it best when he said, “we remain focused on the monetization opportunities available in this segment and are confident in our strategy to service these users, staying in front of China’s evolving marketplace.”

Thanks to the rapid growth of Maopao’s smartphone user base, MOBI’s fiscal fourth quarter 2013 revenues increased nearly 10% sequentially.  And they beat the high end of management’s revenue guidance.

As a result, MOBI surged from $2.17 to a high of $3.36 before settling at $2.93 for the week.  And the stock’s up 7.5% today to $3.15 as I write.

Editor’s Note:  For more information about Sky-mobi Limited (MOBI), check out my free report that’s included with a quarterly subscription to my investment advisory service, China Stock Insider.

Profitably Yours,

Robert Morris