Penny Stock Blog & Investing Articles

DITC Telecommunications Penny Stock

2011-11-09T15:32:00.000-08:00

DITC is a penny stock within the Telecommunications sector. When considering what penny stocks to include within this sector I recommended considering DITC. The stock is attractively priced, offers high quality products and would see over 100% returns if it returned to its 52 week high.

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LPH Emerging Market Penny Stock

2011-09-29T08:50:00.000-07:00

In the quest for an attractive penny stock you must weight the risk of investment as well as the overall stability of the company. One avenue investors are using to increase return potential is by investing in emerging markets particularly China due to the rapid growth of their economy. This penny stock LPH is an energy company with primary business functions inside of China that should benefit from the increased consumption of the Chinese energy market.

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Penny Stocks Near Lows SBLK, GMR, HIMX

2011-09-14T14:08:00.000-07:00

With strong sell offs in the market, penny stock traders began taking profits which in turn pushed prices to yearly lows. I am highlighting three penny stocks that are near their 52 week lows that may be a good time to get in cheep. The three penny stocks are HIMX a technology company located in Taiwan, GMR and SBLK two shipping penny stocks.

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Income Mutual Funds for Bear Markets

2011-07-28T07:27:00.000-07:00

With the recent market volatility and the performance of the S&P 500 for the past ten years one should consider using bond funds to stabilize portfolio returns and as a strategic approach to take advantage of down markets. Two bond funds that have performed well in the past ten years are Templeton Global Bond Fund and Franklin Income Fund.

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Profit Taking in Penny Stocks TGC, WYY, GSX

2011-05-05T11:42:00.000-07:00

I have noticed in the recent weeks strong selling pressure for penny stocks and micro cap stocks. After doing research on earnings, news releases and the overall market I determined the only explanation was profit taking triggering sell-offs. I will list some penny stocks in this article that may be good buying opportunities due to sell off pressure.
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Magic Software MGIC Stock Report And Earnings

2011-04-27T14:37:00.000-07:00

MGIC reported record breaking results for Q1 2011 with revenues of $25.5M and net income of $3.1M a 29% and 78% year over year increase As the economy recovers, we are seeing early signs of increased investment for technology and IT by small businesses and corporations. It should come at no surprise with corporations currently holding a record amount of cash as a percentage of current assets that now would be a good time for a technology upgrade. Because of this unique situation Magic Software should continue to see strong growth in sales and benefit from the overall recovery.

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Micro Cap Dividend Stocks AMSWA CLCT PRGN

2011-02-24T05:54:00.000-08:00

When investors focus on small and micro cap stocks their goal is generally high returns from appreciation. The focus of this article is to present three micro cap dividend stocks that have the potential for high appreciation and income from dividends along the way. The three stocks listed in this article are AMSWA, CLCT and PRGN.
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Gold Penny Stocks BRD, RIC, GRZ

2011-02-17T05:34:00.000-08:00

Due to the popularity of a previous post highlighting gold penny stocks, I decided to write another article with one new penny stock and an update for the other two. My initial investment rationale was that since gold prices are at all time highs small cap or penny stock gold companies would be better positioned to benefit from the high prices. These companies would find it more economical to do more exploration then previously and would also have a better opportunity for increased earnings.
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Recent Spikes in Volume for Penny Stocks GSX, TGC

2011-01-20T09:21:00.000-08:00

Within the last two months these penny stocks that I wrote a report on have seen immediate returns and strong volume. Both penny stocks are natural gas and oil exploration micro cap companies. The two companies are Tengasco (TGC) and Gasco (GSX) similar names but completely different companies.
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Upgrades Downgrades and Target Price Changes

2010-12-28T08:09:00.000-08:00

Listed in this blog post are the upgrades, downgrades and price target changes for December 28, 2010. Today's list includes one of my most successful picks in a micro cap company ZAGG. The link to the article is contained within.
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Real Estate and Gas and Oil Exploration Penny Stock

2010-11-23T03:57:00.000-08:00

This report includes two penny stocks, one of these penny stocks is a real estate processing company that has an EPS greater than its share price. The other penny stock is a natural gas and oil exploration company with significant growth opportunities due to the increase in commodity prices.
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Gasco (GSX) Natural Gas Penny Stock

2010-11-03T13:07:00.000-07:00

With the Natural Gas Industry exploding in the US and the quest for energy independence; a penny stock natural gas company could be a great investment to benefit from this growing industry. I found a small penny stock company with over 100 natural gas wells that is already profitable.
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Undervalued Micro Cap Stock

2010-09-21T12:12:00.000-07:00

Below is a micro cap/ penny stock with large cash positions giving investors all the right signals. I believe this stock is undervalued due to one or more reasons and could bounce back strong with consumer spending. The stock is The Wet Seal Inc.,
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Keep Your Eye on These Penny Stocks

2010-07-20T09:09:00.000-07:00

Listed in this post are three penny stocks at inflection points with high expectations and excitement. The Penny Stocks are OMEX, WYY and CHIO. For more penny stock picks or websites consider clicking on the related articles provided by Google on the right hand side or the top of this blog. (Click to continue reading.)

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Value In A Volatile Market: APOL and RIG

2010-06-28T15:56:00.000-07:00

If asked, all investors would agree that the stock market has been very volatile in the past few years. Volatility can cause a lot of problems for traditional long term investors, but some investors can use volatility to purchase stocks at low levels and achieve better returns in the long run. For example Transocean and Apollo are facing liability problems which has led to increased volatility. I am going to examine these liability issues and determine if one could benefit from the stocks current lows.

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IRSN, BNX, SHZ Three High Risk Penny Stocks

2010-04-27T11:21:00.000-07:00

The saying goes higher risk higher return so I am listing three penny stocks I found that are as risky as any I have ever come across. These stocks have fallen on hard times and lost confidence from investors but if their managers can turn their companies around stock returns could be through the roof.

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ZAGG Inc: The Next Success Story?

2010-04-19T05:06:00.000-07:00

With the rise of touch screen technology and the popularity of Apple's products; screen protection companies are set to benefit from consumers willing to spend a little extra cash to protect their entertainment investments. One company in particular ZAGG is a small company with an extremely low market cap of 63.63 million and strong potential for growth. There are a few challenges to overcome but I feel with strong demand ZAGG will have a healthy dose of market share to keep investors happy.

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Stock Market Week in Review

2010-04-16T13:15:00.001-07:00

Goldman and Sachs took a huge hit Friday down 12.79% as the SEC charged the financial goliath with subprime mortgage fraud. Goldman and Sachs marketed and sold a shorted bond mortgage fund to customers even though they knew that the hedge fund was betting against the bond fund. The investors of the fund lost millions. The Wall Street Journal also reported that other financial institutions will be charged as well. The majority of the financial sector was down today.

OHI, HCN, MPW Health Care REITS

2010-04-12T06:41:00.000-07:00

REITS or real estate investment trusts are considered low growth high yield investments. But how do you choose the right one for you? If you want to invest in real estate without managing tenants, marketing and finding reliable maintenance companies a REIT could be a very viable option for you. After a little research health care REITS seemed to have the most consistent dividend yields over the past four years so this article will focus on health care REITS

US Stock Market Week in Review

2010-04-02T08:43:00.000-07:00

Week Review March 29 – April 2, 2010

The markets today are closed in observation of Good Friday, so Stocklook is bringing you a weekly recap of the markets and economic news. The report includes March unemployment numbers, crude oil prices, US housing market update, earning surprises and market returns for the past week.

WYY Penny Stock Reports Positive Earnings

2010-03-31T13:42:00.000-07:00

WidePoint Corporation Reports Continued Positive Net Income and Consistent Growth for Fourth Quarter of 2009 -- First Full Year of Bottom Line Profitability

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VPS, HSKA, KAZ Three Penny Stocks

2010-03-22T06:06:00.000-07:00

Listed in this report are three penny stocks with interesting business models. Some of the companies are facing difficulties and could be a good value play. The three companies are VPS a snack food and bottled water distributor, HSKA a pet medical manufacturer and distributor and KAZ a oil and natural gas exploration company.

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Fee Regulation Impact: BAC, STI, MTB, RF, UBSI

2010-03-15T06:09:00.000-07:00

New regulation regarding overdraft fees will begin July 1st for new accounts and August 15 for all others. Some banks such as Bank of America are getting a head start on the regulation and implementing changes before the deadline. With many consumer complaints the federal reserve stepped in to regulate overdraft fees but what will be the impact on banks bottom line.

The new regulation only affects ATM withdraws or debit/credit transactions with your debit card. Consumers will have the option to opt-in and overdraft their account. For more information follow this link. The intention of this post is to explore the impacts on financial institutions.

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Penny Stock Update LMLP, IRLD, XFN, TCX

2010-03-09T06:53:00.000-08:00

This blog report lists various penny stocks that I highlighted in my blog posts in the past few months That provided high returns for investors. Some of these stocks I picked and others I just felt they had an interesting business model. In this post I will highlight some reasons that may be attributed to the increase in stock price.

Intel and AMD Stock Report

2010-03-01T05:19:00.001-08:00

Intel and AMD are the largest players for computer microprocessor chips. Both companies experienced week demand for their products through 2009 due to the weak world economy but saw a glimmer of hope with strong fourth quarter results. Analysts are predicting stronger global demand for computers as the world climbs out of the recession a likelihood Intel and AMD are aware of; but what company will be better positioned to meet the new demand?

Fertilizer Penny Stocks COIN, TSE:WPX, CVE:ICP

2010-02-17T09:34:00.000-08:00

The world demand for agricultural products is increasing dramatically and many experts predict this trend to continue as more people in third world countries begin moving out of poverty into the middle class life style putting pressure on agricultural crops. It takes around 16 pounds of crops to produce one pound of protein. This is important as emerging markets begin consuming more protein. Below are three penny stocks with business segments in agricultural fertilizers. These stocks have the potential to provide impressive returns but come with risks.

Fertilizer Stock Report MON, POT, TNH

2010-02-15T06:22:00.000-08:00

Investment Rationale

During the 2009 growing season farmers neglected to rebuild their depleted inventories due to high prices. My only guess is they assumed prices would come down. In result the fertilizer companies had week revenue from low demand. Many analysts are predicting strong demand going into the spring of 2010 for fertilizers and strong revenues from the fertilizer companies.

Gold Penny Stocks AGT, GRZ, ALTO

2010-02-08T06:12:00.000-08:00

Penny stocks can be a great way to leverage an investment in a small cap stocks and see much greater returns than mid cap or large cap stocks. My report below lists three penny stocks all of which contain certain risks. For more penny stocks or related posts click on the relevant links provided by Google on the top of this blog or on the right hand side.

Gold Exploration Stocks to Beat The Market

2010-02-01T06:12:00.000-08:00

Want to invest in gold without buying the physical asset and paying fees? Consider investing in gold exploration stocks. I just wrote a report on my blog highlighting three gold exploration stocks all of which have beaten the market over the past 10 years. Want to invest in gold without buying the physical asset and paying fees? Consider investing in gold exploration stocks. I just wrote a report on my blog highlighting three gold exploration stocks all of which have beaten the market over the past 10 years.

Limit Legislative Risk in Financials (BCBP) (STD) (MCY)

2010-01-25T06:10:00.000-08:00

The financial sector is under great scrutiny from Washington being blamed for the recession and threatened with legislation. Below are three stocks who will either avoid any US legislation or are positioned to weather it better than other financials.

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BCB Bancorp, Inc. (BCBP) Price: 9.25

Notes

The basic structure of this company may hold more risk than other financial stocks, but the company has remained in the green during the current recession, has an attractive dividend yield over 5% and a low P/E of 7.9 vs. its five year average of 13.5. The stock is a small cap value stock and a local community bank that should be less affected by the Government.

Risks

The bank only has three locations in New Jersey and is a small community bank. If New Jersey’s economy performs worse than the rest of the US BCBP will more than likely perform worse than other more diversified financials.

Banco Santander SA ADR (Ticker: STD) Price 14.98

Overview

One way to diversify any legislative risk or avoid political vengeance in the financial sector is to buy financials outside of the US. Banco Santander is a financial institution located across the UK with its main concentration in Spain. STD has become one of the world’s largest financial institutions.

Notes

STD has had consistent revenue growth for the past 10 year even from 2007 through 2008 something that must large financial institutions failed to do. The company’s dividend yield is nearly 6% and P/S of 1.7 vs. five year average of 2.8

Mercury General Corporation (MCY) Price: 37.49

With a 6.2% dividend yield, a property and casualty insurance stock may be a great way to invest to avoid upcoming legislation. The company has had consistent dividends but did suffer income losses in 2008 because of the economy. The stock is off to a slow start in 2010 down over 4% and was down nearly 15% in 2009.

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Health Care Penny Stocks (CFS) and (SSY)

2010-01-12T12:29:00.000-08:00

Comforce Corporation (CFS)

Current price: 1.31

52 week range: 0.85-1.75

Overview

Comforce a staffing, consulting, and outsourcing company that provides companies with temporary employees for jobs in the information technology, telecommunications, and health care industries. It also provides its clients with the tools to manage such temporary workforces. In addition, the Comforce provides payroll, funding, and outsourcing services to independent consulting and staffing firms through its financial outsourcing services division (Morningstar).

Natural Gas Stocks SLB, BHI, NGS

2010-01-04T08:08:00.000-08:00

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Schlumberger Ltd. Ticker (SLB)
Current Price: 65.09
52 week range: 35.05-71.10

Overview
Schlumberger is one of the largest oil services companies, located across 80 countries. It offers a near-complete array of oil services--from seismic surveys to artificial lifting--to oil majors, exploration and production companies, and national oil companies. The company has a strong focus on research and development and is one of the industry leaders in technology.

Market Share and product lines

Notes

The company is focused on oil and natural gas technology such as detection software and drilling technology. Times have been better for Schlumberger and the company reported poor revenue and earnings for their last quarter compared to a year ago. The world gas markets are currently oversupplied in result slowing production and investment. If demand increases and the natural gas industry expands investment and exploration Schlumberger should experience growth.

Baker Hughes Inc. Ticker (BHI)
Current price: 40.48
52 week range: 25.69-48.19

Overview
Baker Hughes provides a wide variety of oil field services, such as directional drilling, oil field chemicals, drill bits, and electronic submersible pumping systems. The majority of their revenue comes from the United States, but the company is expanding into more areas with a focus on the Middle East and Russia.

Natural Gas Production vs. Gas Rigs

Natural Gas Services Group Inc. Ticker (NGS)

Current Price 18.85
52 week range 6.67-19.50

Overview
Natural Gas Services manufactures compressors that they sell and lease. These compressors enhance the production for oil and natural gas wells. They also manufacture flare ignition technology used at oil and natural gas production plants. The company is relatively young and has had strong revenue growth for the past 8 years. The company’s main focus is renting compressors.

Rental Regions

Risk

The performance of these three investments closely relate to the entire energy sector and fuel prices, SLB has the most diversified product offering and has the least risk, BHI’s risk level is probably medium and NGS has the most risk with the least amount of product offerings and diversification but they also have the most potential for expansion.

Comparison of SLB, BHI and NGS
SLB has had a more aggressive position on mergers, acquisitions and technology investment where BHI has had a conservative approach to limit risk. In result through the economic downturn BHI was better positioned to sustain low demand. Looking ahead SLB is nearly 7 times larger than BHI which means BHI should have more opportunities for growth. The riskiest investment out of the three is NGS; they are the smallest and have a smaller portfolio of products. They also have good potential for growth and expansion.

BHI has the most underpriced stock price according to valuation ratios NGS is second and SLB is third.

Comparison of 5 Year Stock Return for NGS, BHI and SLB

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Penny Stocks INSM, NTII, ITI

2009-12-23T06:48:00.000-08:00

More Penny Stocks

Listed below are three stocks whose prices are under $1, which may be consider as penny stocks or small cap/micro cap stocks. Many penny stocks can be obtained through various lists if you would like to find more penny stocks consider clicking on relative links provided by Google on the right hand side of this blog or right above this paragraph.

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One Year Comparison of INSM, ITI and NTII

Insemed Inc. (INSM)

Current price: $0.76

52 week range: $0.40-2.57

Overview

Insmed Incorporated develops and commercializes medicine for the treatment of metabolic diseases and endocrine disorders with unmet medical needs. The company approaches the correction of metabolic defects in the human body by replacing key regulatory molecules in a physiologically relevant fashion. Furthest down the Insmed pipeline is rhIGF-I/rhIGFBP-3 an FDA approved orphan drug being tested for the treatment of growth hormone insensitivity syndrome and type 1 and type 2 diabetes (Morningstar).

Notes

INSM has had a string of unprofitable years for the past ten years but looks to break this streak this year as the company has TTM net income of $112.1 million due to improved efficiencies by lowering costs.

Future Outlook

The company reported earnings in November with a decline in revenue year over year but an increase in earnings due to cost cutting measures in their R&D segment. This could potentially signal the company is scaling back their efforts for future growth. INSM may believe the products they have currently will suffice their future goals for growth, or it could signal they are running out of opportunities to pursue. INSM stated that are continuing a strategic review of alternatives with their financial advisor RBC Capital Markets and have reviewed many high-quality opportunities.

Iteris Inc. (ITI)

Current price: $1.44

52 week range: $0.95 – 1.75

Overview

Iteris, formerly known as Iteris Holdings, is a leading provider of outdoor machine vision systems and sensors that optimize the flow of traffic and enhance driver safety. The company provides video sensor systems, transportation management, and traveler information systems and other engineering and consulting services to the intelligent transportation systems industry (Morningstar).

Notes

After revenue decline from 2000 to 2004 Iteris has had positive revenue growth from 2004 on. The company has been profitable for its bottom line since 2006. I really like what Iteris does as a company and I could see their products becoming more popular. It would be nice to know if they will benefit at all from the infrastructure spending, I believe they will. I will keep a close eye on this stock and keep everyone updated.

Neurobiological Technologies NTII

Current price: $0.11

52 week range: $0.05-1.05

Notes

This company is the perfect example of the many risks involved with investing in a penny stock. At first glance it appears to be a very speculative investment but at the same time one that could be very profitable. But after looking into the company I noticed they are in the process of total liquidation and dissolution due to the failed approval of one of their more promising drug tests. If penny stock companies are gambling on one or two unproven products, it is a very risky investment that should be taken with extreme caution. If the investment is made, only a small portion of your portfolio should include the investment. (Always seek professional advice from someone who is licensed to sell securities.)

Request Research, or Stock Reports

If you enjoy reading my blog posts and would like to have me do some research for you click the PayPal donation button at the top right of this blog. After sign in, provide me with your email address and stock quote. I will do research and get the report to you in a timely manner.

Reports Can Include

Brief overview of the company and its operating segments, cross sectional analysis, time series analysis, fair value estimate or intrinsic value (using the dividend discount model, free cash flow to equity model and relative valuation) sector analysis, economic outlook and future outlook as well as current technical analysis.

Please note; the amount of research and analysis will depend on the donation amount.

Manipulation of The United States' Stock Market

2009-12-22T08:49:00.001-08:00

Is it possible that financial analysts from Wall Street have manipulated the U.S. Stock markets by setting low earnings estimates to make it appear that firms are performing better then they truly are?

There are many reasons why these financial firms would want investors’ perception of the U.S. markets to appear more attractive. The main reason is for improved investor confidence. If the economy appears to be worsening, many investors will hold more cash in risk free assets hurting the investments industry. The other reason would be, returning favors for special interests. We know this happened for Enron when financial analysts were paid off and bribed to continue reporting favorably for Enron when the numbers lied.

The special interest in this case may be the federal government. A very useful tracking poll is the end of month 401K statements. If people are losing money they become angry and quickly turn to blame the most plausible victim. In 2008 this victim was George W. Bush. Through the beginning of 2009 the worsening economy caused the stock market to tumble. This blame was quickly passed from the new popular democratic president Barrack H. Obama to the former administration. In fact almost every appearance Obama has had with the economy the topic; he passed the blame back to Bush.

Obama did a good job passing the blame on Bush when the S&P 500 opened the day after the election on November 5, 2008 at $1,001.84 and dropped all the way to $666.79 on March 9, 2009. The decline was 50.25%. This could not have been caused by the Bush administration because the stock market is a leading economic indicator which points to things to come. The value of the stock market is a function of expected future cash flows discounted at a certain rate, not the results of past events. The problem with this is only a fraction of U.S. voters understand economics and finance. Obama could easily pass the blame on the Bush Administration even though he probably had more influence over the stock market than anyone has given him credit for.

After successfully passing all blame for the stock market crash on the Bush Administration, Obama would lose his credibility if there were no recovery. To achieve this false sense of recovery the white house has continually put out rosy forecasts and jobs saved or created data that is impossible to prove. The white house has also received help from Wall Street as 80% of companies that make up the S&P 500 beat analysts’ estimates in the 3^rd quarter of 2009. The S&P 500 is the best index for following the U.S. economy.

Although earnings can be manipulated to an extent something that cannot be manipulated is revenue. Using probability, 50% of firms should beat revenue estimates and 50% should miss. We find for the 3^rd quarter of 2009 that 57% of firms beat revenue estimates compared to 47% last year the same time (Data Source: Thomson Reuters).

Although the majority of firms are beating estimates few are actually performing better than they had the previous year. Out of the 12 sectors only three had positive revenue growth from 2008’s 3^rd quarter. Those sectors were financials with 14.3% growth, health care 2.8% and Services with the least at 0.6%. The worst performing sector for revenue growth was energy with a negative 40.7%.

If only 3 of 12 sectors performed better than last year why are 80% of firms beating analysts’ estimates?

Citi group got around $50 Billion in bailout, Goldman Sachs $12 Billion and J.P.Morgan and Chase received $25 Billion (bailout.propublica.org). Another interesting note if we look at political contributions all three of these companies rank in the top ten contributors to the Obama campaign. Goldman and Sachs ranks 2^nd, Citigroup ranks 6^th and J.P.Morgan and Chase ranks 7^th. The total contributions from these companies were $2,391,217 (opensecrets.org).

Not only does the Wall Street owe the federal government a favor for the bailouts they want their choice for president to succeed. These two facts mixed together with the fact they make more money if the stock market goes up is a dangerous concoction for miss information and false perception to manipulate Wall Street by having low earnings and revenue estimates which can be easily beaten. If you can’t beat the standard lower the bar; and in doing so, you would achieve the perception that Wall Street is performing better than expected when it clearly is not.

China INSOnline Corp. CHIO Stock Report

2009-12-21T07:02:00.001-08:00

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China INSOnline Corp. (CHIO)

Current price: $0.66
52 week range: $0.35-2.17

Market cap: 25.3M

P/E 2.7

P/B 1.1

P/S 1.5

Overview

China INSOnline Corp. offers online insurance products and services in China, including a network portal for the Chinese insurance industry. The company offers industry professionals a forum for the advertising and promotion of products and services, website construction for marketing teams and others in the insurance industry, software development, insurance agency services whereby the company generates sales commissions on motor vehicle insurance, property insurance and life insurance and accompanying client support services (Morningstar).

Notes

CHIO only has two years of reported earnings, both of which were profitable. For the TTM the company is currently doing better than 2009 year end results and continues to experience growth. Looking at financial health ratios CHIO has a current ratio of 1.57 a quick ratio of 0.95 and financial leverage of 1.47 for year end results 2009. The current ratio and quick ratio are lower than what I would like to see but not alarming. Looking at the company's profitability I am impressed with their high margins and management ratios i.e. ROA and ROE of 40.69% and 58.90% respectively. Net margin was 51.06% in 2009.

Future outlook

China insonline's main focus is insurance and internet service, they believe that both of these industries are strong upcoming industries in China. The company is predicting 30% organic growth through 2011 and nearly 100% growth of revenue when combining organic growth and growth from acquisitions. I would also anticipate a strong next quarter earnings release due to favorable exchange rates.

• We are a top Chinese insurance agency portal as well as a national licensed insurance agency that represents some of the major Chinese insurance companies and agencies.

• We have superior web technology that allows Chinese consumers to do "One-Stop Shopping" for their insurance needs.

• We are a profitable company serving one of the fastest growing markets in China.

• We have a solid long-term working relationship with major Chinese insurance companies and agencies.

• We have an experienced management team with a proven, unique and profitable business model (China INSOnline Corp.).

Past operating results and future expectations

YTD Stock price with 100 and 200 day moving averages

If you enjoy reading my blog posts and would like to have me do some research for you click the PayPal donation button at the top right of this blog. After sign in, provide me with your email address and stock quote. I will do research and get the report to you in a timely manner.

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Discover Financial Biggest Mover

2009-12-17T09:37:00.000-08:00

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Discover Financial Services (DFS)

Reports disappointing 4^th quarter results with net income of $371 million or $0.63 compared to $432 or $0.89 last year. For the year end results net income of $1,294 million or $2.42 EPS compared to $928 million or $1.92.

Along with the disappointing results of DFS 4^th quarter new unemployment claims rose 7,000 last week when economists were anticipating a decline. This brings a new reality that the recovery will likely be slower than many have hoped. With high unemployment DFS will more than likely continue to experience poor performances.

DFS is down today nearly 10% due to these two factors. The stock price has done relatively well for the past few weeks because of optimism and upgrades. Missing expectations on earnings puts a damper on the momentum but I still feel DFS is a good stock that will experience more growth than any of the other credit card companies. This means that today could be a good day to get a 10% discount on DFS.

For year end results Discover did perform better than last year and experience growth in deposits for its Discover Bank and student loans also increased. The biggest concern for DFS is the decline in sales volume of 1%. This is DFS main source of revenue, which may remain flat until consumer confidence and spending pickup.

Penny Stock List

2009-12-14T09:47:00.000-08:00

Stocks

More Penny Stocks

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Company	Ticker	Market Cap (M)	P/E	Last Price	Current Ratio*	ROE**	Debt / Assets % ***
Neurobiological Tech Inc.	NTII	3	0.98	$ 0.11	22.01	14.41	4.5
Orsus Xelent Tech Inc.	ORS	18	1.45	$ 0.60	2.06	26.58	10.16
Xfone Inc.	XFN	12	11.64	$ 0.67	0.68	2.53	32.55
Tuscows Inc.	TCX	47	4.14	$ 0.69	0.81	45.62	5.4
China INSOnline Corp	CHIO	28	3.05	$ 0.70	1.57	58.9	32.04
WidePoint Corp.	WYY	46	38.52	$ 0.75	1.29	9	17.14
Dynatronics Corp.	DYNT	11	100.93	$ 0.76	1.54	1.62	45.7
Insmed Inc.	INSM	100	0.85	$ 0.77	0.53	184.07	44.18
LML Payment Systems Inc.	LMLP	21	3.73	$ 0.77	1.17	23.29	4.78
Ocean Bio - Chem Inc.	OBCI	7	11.78	$ 0.92	1.83	6.89	41
TOP Ships Inc.	TOPS	30	0.79	$ 0.99	0.15	13.75	51.39
Blonder Tongue Labs Inc.	BDR	6	10.5	$ 1.00	4.19	3	14.85

* Current ratio represents current liabilities / current assets. It is a measure of how many times the company could cover its current obligations with its current assets. This is a valuable ratio for determining if the company has sufficient capital to operate.
** ROE is Net Income / Equity. This is a measure of how well the managers of the company are using equity capital to generate net income. A higher Ratio would suggest the managers are performing better than a company with a low ratio
*** Debt / Assets is a valuable ratio to understand the company's capital structure. A higher ratio would suggest the company is leverage with more debt than equity. This can dilute ROE due to the fact the company has more debt than equity and is more leveraged.

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Three Penny Stocks (SVLF) (XFN) (XPO)

2009-12-08T08:00:00.000-08:00

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Silverleaf Resorts, Inc (SVLF)

Current price $0.64

52 week range 0.25 - 1.74

Market cap 38.25M

Beta 2.07

Target Price $1.24

Overview

Silverleaf Resorts, Inc. develops, markets, and operates drive-to and destination timeshare resorts. Drive-to resorts are close to principal market areas and induce more frequent short-stay getaways. Destination resorts have close proximity to areas with national tourist appeal and offer a wider variety of room choices to meet different budgets. Silverleaf owns eight drive-to resorts in Texas, Missouri, Illinois and Georgia and four destination resorts in Texas, Missouri, and Massachusetts (Morningstar).

Notes

Silverleaf has reported consistent revenue growth from 2003 but recently reported a loss of $3.9 million or $0.10 per share for their 3^rd quarter 2009. This loss was due to a greater than expected provision for uncollectible revenue. This was a non - cash charge and may never materialize but in most cases I would assume the company will be close to their estimate.

Future Outlook

Due to the nature of Silverleaf’s business one can assume if they weather the remainder of the recession their business strategy should prove to be more profitable in the near future. I would watch vacation trends and traveling data to anticipate a rebound.

XFONE Inc. (XFN)

Current price $0.68

52 week range 0.46 – 1.74

Market cap 14.4M

P/E 13.6

P/B 2.0

P/S 0.7

Overview

XFONE provides local, long distance, and international calling and data telecommunication services. The firm also sells phone cards, cellular services, broadband internet, and messaging services, including email. In addition, the company offers Internet services such as web site design and hosting. XFONE operates cable television service in Mississippi. They have residential and commercial customers in over 75 countries worldwide (Morningstar).

Notes

XFN has sustained strong revenue growth since 2001 and has posted consistent earnings. XFONE recently acquired NTS Communications in Texas and expects growing revenues from this acquisition. They also see an emerging growth in the rural broadband build-out incentive from Washington. They feel this incentive will allow XFN to accelerate into new markets with low cost for shareholders. The company benefited from favorable exchange rates in the last quarter, something that should continue into the next quarter as the US dollar continues to slide against the Israeli Shekel. Although their industry faces many challenges, XFONE feels they have a diversified product offering which should hedge against industry decline.

Future Oulook

I would continue to watch XFN’x subscription base, NIS exchange rates to the US dollar and revenue growth turnaround. The company continues to blame their recent revenue decline on the tough economic environment but needs to improve operating efficiencies by cutting costs until the economy turns around.

Express-1 Expedited Solutions Inc. (XPO)

Current price $1.13

52 week range 0.63 – 1.23

Market cap 35.6

P/E 22.5

P/B 1.3

P/S 0.4

Overview

Express-1 Expedited Solutions is a transportation and logistics company that focuses on time-specific delivery along the supply chain. Its services include expedited transportation, deferred airfreight transportation, local cartage, aircraft charters, dedicated delivery, consolidation, warehouse management, and fulfillment. Its freight is transported by independent contractors. The company operates primarily in the southeastern and midwestern United States (Morningstar).

Notes

I am very familiar with using independent contractors to ship freight for others, almost like a freight brokerage service. This can be a very profitable business segment for Express-1 as the economy turns around and even looking forward. This type of companies experience less hardship opposed to the big freight and shipping companies due to the fact they carry little physical assets and have a fraction of the overhead costs. The industry is not as profitable as it once was due to the turndown but can expect things to improve through 2010.

Risks (ALL)

These penny stocks carry a significant amount of risk due to the small market cap which then increase the amount of volatility in the stock price. You should consult a professional investor before you decide to invest in any stock.

Three Penny Stocks to Avoid (HEB) (CIT) (IRLD)

2009-12-04T09:10:00.000-08:00

More Penny Stocks

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Hemispherx BioPharma, Inc (HEB)

Current price $0.65

HEB is a bio pharmaceutical company which recently faced a pivotal moment in its history and fell short. The company had a pending clinical trial with the FDA with optimistic outlooks of growth and profitability. The stock price reached a high of $4.54 making many investors happy. Today HEB’s stock price is trading around $0.65 and facing a class action lawsuit for misrepresenting facts and details about its clinical trial with the FDA and being disapproved. HEP faces difficult challenges ahead and should be avoided if possible.

CIT Group Inc. (CIT) / (CITGQ)

Current price $0.17

CIT is now famous alongside Lehman brothers for not having the right people in the right places such as an AIG, GM or Chrysler to receive bailout money. The company is now facing a steep slope ahead and may never recover and face sure liquidation. Any investment at this point may be a gamble with the odds against you.

Ireland Inc (IRLD)

Current price $0.49

IRLD is a mineral exploration company engaging in the exploration of gold, silver and other precious metals. The company has yet to report any revenues and is operating solely on debt and equity capital.

Due to the speculation of this investment and the lack of historical data or performance this company should provide a few good quarters or even a full year of positive operating performance and cash flows before an investment decision should be considered.

(LOOP) Upcoming Problems

2009-12-02T17:36:00.000-08:00

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Loopnet (LOOP)
Current price: 10.70

What the company does

LoopNet is a leading online marketplace of commercial real estate in the United States. The company's subscribers use its Web site primarily to list or search for commercial real estate properties. At the end of 2008, LoopNet had 77,000 premium subscribers, and its Web site contained 652,000 property listings. LoopNet also operates BizBuySell, a Web site that lists for-sale companies

Introduction

During December, 2nds trading day LOOP hit its 52 week high, a fact that concerns me. I evaluated LOOP when the stock price was trading around 8.28 and determined from my analysis it was overpriced and the company face a bleak future outlook.

Since this analysis most of my predicted factors have either come to play or have become more of a reality.

Predictions

1)Loopnet would lose more subscriptions and have a year over year decline in revenue and earnings for their 3rd quarter.

Loopnet reported reveune of $18.8 million compared to $22.4 million. EPS was $0.9 per share vs. $0.13

Loopnet had a 17% decline in premium subscription customers. On a positive note the company also reported a 21% increase in customers but this did not offset the huge blow from the loss of premium costumers.

2)Loopnet will face tough economic conditions well through 2010 which will continue to drive down their customer base. The commercial real estate market has also come under watch by many economists fearing a crisis. The theory is the commercial market lags behind the residential and the commercial has yet to experience the same deflation as the residential.

3)Heading into 2010 with predictions of strong economic growth and turn around; the commercial real estate online marketplace faces little to no barriers to entry. Any small real estate firm can list their own properties on line or start their own business. This factor of little barriers to entry will diminish any above average returns an investor may anticipate from Loop. This would offset the investment rationale that commercial real estate is becoming more popular online and Loopnet will benefit from it because there will be an increase in competition and firms seeking an economic profit which will draw down returns.

Conclusion
Loopnet is losing premium subscriptions and having to little growth in customers to offset this decline, as well as the risk of a commercial real estate crisis and continued sales decline Loopnet faces many challenges. Because of these challenges an investment in LOOP has many risks that must be considered before making a decision. I personally feel there are better options out there that have less risk and a more optimistic future than LOOP.

3 Stocks Under $1 (ORS) (LMLP) (DYNT)

2009-11-30T09:48:00.000-08:00

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Orsus Xelent Technologies Inc. (ORS) Telecommunication

Current price: $0.63

52 week range: 0.11-1.24

Market cap: 18.6M

P/E: 1.7

P/B: 0.3

P/S: 0.2

Overview

Orsus Xelent Technologies designs, manufactures, and distributes cellular phones in China. The firm’s customers include both retail and wholesale stores. Orsus Xelent sells its products under the company name “ORSUS.” The company markets its products through domestic and international sales distributors. Some of the offered communications systems include GSM and CDMA technologies. Orsus Xelent Technologies is headquartered in Beijing, China.

Future outlook

Recently the company reported it anticipates moderate revenue growth for next year. ORS is in a fast growing market, one of which has continual demand. If this company can place itself in this market as a reliable cell phone manufacturer the company could experience strong growth in the future.

LML Payment Systems Inc. (LMLP) Financials

Current price: $0.78

52 week range: 0.30-1.16

Market cap: 21.2M

P/E: 3.6

P/B: 0.7

P/S: 1.7

Overview

LML Payment Systems provides financial payment processing services to supermarkets, grocery stores, convenience stores, and other retailers. These services include electronic check authorizations, check collections, and check conversions. Principal customers include 7-Eleven and Dillon's. The company is based in Canada.

Dynatronics Corporation (DYNT) Health Care

Current price: $0.69

52 week range: 0.20-1.05

Market cap: 9.4M

P/E: 30.2

P/B: 1.4

P/S: 0.3

Overview

Dynatronics designs, manufactures, markets, and distributes physical medicine and aesthetic products. These products include therapy devices, medical supplies, treatment tables, rehabilitation equipment, massage devices, and skin care products. The company's customers include physical therapists, chiropractors, sports medicine practitioners, podiatrists, plastic surgeons, and dermatologists.

Risks

Each one of these stocks comes with high risk. All investment decisions should be made carefully and you should consult a professional and do your own research before making an investment decision.

3 Stocks under $1 with Upcoming Presentations

2009-11-25T06:02:00.001-08:00

More Penny Stocks

Listed below are three stocks whose prices are under $1, which may be consider as penny stocks or small cap/micro cap stocks. Each one of these stocks has a stock presentation at an investors' conference on December, 03. If investors find their business strategy impressive it could benefit the stock price of these stocks. Many penny stock lists can be obtained through various lists if you would like to find more penny stocks consider clicking on relative links provided by Google on the right hand side of this blog.

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Adex Media (ADXM)

Current price $0.55

52 week range 0.49-5.50

Market cap 17.63M

Overview

ADXM operates as an integrated Internet marketing, advertising, and lead generation publisher, as well as developer, marketer, and distributor of consumer products in the United States. Its marketing platform provides various services, including search marketing, display marketing, lead generation, and affiliate marketing; and offers pay-per-performance pricing/cost-per-action/pay-per-action based services.

The company also provides Overnight Genius, a computer learning course for MS Windows, MS Office, eBay, and others; Rising Star Learning, a math and language arts educational product for children; Debt Snap, an audio seminar to help consumers manage their debt and restore credit standing; Lucky At Love, a relationship strategy product; EasyWhite Labs, a teeth whitening kit; and Acai Alive, a dietary supplement. It sells its products and services to various third-party advertisers, advertising agencies, traffic distribution partners, and consumers.(Information provided by Capital IQ.)

Notes

"We can take any product, whether brand new or existing, and sell it online in high volumes worldwide in weeks."

In a competitive market for search marketing, AdEx will face challenges ahead with big players such as Google, but is still setting its goals high and reaching out into less competitive markets than the US. In August 2009 the company expanded its operations into Canada, and is expanding into Europe in the 4^th quarter of 2009 with the target countries being UK, Germany and France. AdEx will expand its strategic partners internationally. There is less competition, and they will pay less for leads. I'm going to keep a close eye on AdEx and see if they have any success in their global endeavors if they experience growth in these less competitive AdEx could be an attractive investment.

Ireland Inc (IRLD)

Current price $0.44

52 week range 0.15-0.71

Market cap 97.01M

Overview

Ireland, (IRLD) an exploration stage company, engages in the acquisition, exploration, and development of mineral properties in the United States. It owns a 100% interest in the Columbus project comprising 128 mineral and millsite claims with gold, silver, and calcium carbonate deposits, as well as has rights to an additional 147 mineral claims located in the Columbus Salt Marsh in Esmeralda County, Nevada.

The company also holds a 100% interest in the Ireland claim consisting of one unpatented mineral lode claim located in the Yellow Pine Mining District in Clark County, Nevada. In addition, it has interests in the Red Mountain project comprising 60 mineral claims with gold, silver, and tungsten deposits covering approximately 7,500 acres in San Bernardino County and Kern County, California. The company was formerly known as Merritt Ventures Corp. and changed its name to Ireland, Inc. in December 2005. Ireland, Inc. was founded in 2001 and is based in Henderson, Nevada. (Information provided by Capital IQ).

Future Outlook

In September 2009 Ireland announced it had received approval from the Bureau of Land Management to expand its previously authorized 30-hole drill program at the Columbus Project by 28 holes. The 58 holes were drilled to depths ranging from 200 feet to 400 feet below the surface. The objective of the program is to determine the three-dimensional extent and economic potential of the gold/silver mineralization that lies between and beyond the previously identified mineralized Zones A and B of the Columbus Project. In September, Ireland also announced that its second 2,000 pound pilot scale leach test produced 83% recovery of gold and silver (metal-in-hand) ( http://www.irelandminerals.com/).

Notes

With the price of gold rising, the dollar value decreasing and expectations of high inflation Ireland could have an attractive revenue source with its current exploration for gold and silver. Due to the speculation of this investment and the lack of historical data or performance this company should provide a few good quarters or even a full year of positive operating performance and cash flows before an investment decision should be considered.

SPAR Group, Inc. (SGRP)

Current price $1.00

52 week range 0.36-1.10

Market cap 19.14

Overview

The SPAR Group, Inc. is a supplier of in-store merchandising and marketing services, and premium incentive marketing services throughout the United States and Canada. The company also provides database marketing, teleservices, marketing research, and Internet-based software. The company's operations are divided into three divisions: the Merchandising Services Division, the Incentive Marketing Division, and the Internet Division. Spar Group Inc. has a market cap of $19.14 million; its shares were traded at around $1 with a P/E ratio of 25 and P/S ratio of 0.27.

Notes

SPAR Group just reported operating results with some positive and negative news. The company reported net income of $157K or $0.01 per share compared to a net loss of $117K or $0.01 per share. This is the good news, which masks the bad news that the company's revenue declined to $18.9 from $22.8 for the same period last year. SPAR Group became profitable due to strict cost cutting and improved efficiency. The decline in revenue was due to the loss of one of its larger customers who filed for bankruptcy.

Revenue Decline

Looking at SGRP's 10 year income statement the company has had negative growth in revenue since 1999 and has had more negative years for net income than positive this could mainly be due to larger companies become big players and stealing market share, as mentioned earlier one of these companies Spar Group is not thanking this Thanksgiving is Google who has become the world's largest cost per click advertising company.

Risks (ALL)

Each of these stocks has very low volume and is subject to more stock volatility. Because there is more variance in price and volatility there is more risk involved with the investment. Consider all risks and options before investing and seek professional advice.

Three Undervalued Stocks (AJG), (WMT), (T)

2009-11-24T08:07:00.001-08:00

Here are three undervalued stocks based mainly on valuation ratios and future growth. If you would like to receive email notifications of future blog posts subscribe to stocklook's group through the Google Groups Icon.

If you would like to read relative articles on investing or try a new investment service consider clicking on the various links provided by Google on the right hand side. Thank you.

Arthur J. Gallaher (AJG)

Current price	22.76
52 week range	14.82-6.02
Market Cap	2.3 billion
P/E	17.8
P/B	2.6
P/S	1.3
5 year average
P/E	35.8
P/B	3.5
P/S	1.8
Target price	32.38
Return	42.26%

If you add in a 5% dividend yield for 5 years your return increases to 67.26%

Overview

More than two thirds of revenue at Arthur J. Gallagher & Co. comes from insurance brokerage. Gallagher advises corporate and institutional clients on managing risk and recommends insurance products from third-party providers. Through its risk management business, Gallagher processes claims for its clients and provides related services. The financial services arm invests the firm's extra cash, largely in tax-advantaged ventures.

Notes

On a recent blog post, I compared AJG to another insurance company MMC and found on a relative valuation AJG was highly undervalued. They had sustained economic down turn and posted strong 10 year revenue growth vs. this other insurance company but this performance has not been reflected in AJG's stock price. AJG is a four star stock according to Morningstar with a fair value estimate of $32. To read more about AJG vs. MMC view my recent blog http://stocklook.blogspot.com/2009/11/insurance-company-stocks.html

Wal-Mart Stores Inc (WMT)

Current price	54.68
52 week range	46.25-9.23
Market Cap	212B
P/E	16.1
P/B	3.1
P/S	0.5
Beta	0.2
5 year average
P/E	17.9
P/B	3.7
P/S	0.6
Target price 5yr	83.30
Return	52.34%

Notes

Just because my fair value estimate is 83.30 does not mean WMT will ever reach that. For my calculation I used 2-4% growth over 5 years. Some things I like about WMT, its becoming popular among consumers for staple and discretionary products. Such as tooth paste and flat screen TVs. WMT has done a good job providing cheap discount products to its customers through the economic down turn and will keep the majority of these consumers long term.

AT&T, Inc (T)

Current price	26.78
52 week range	21.44 -30.65
Market Cap	162.6
P/E	12.9
P/B	1.5
P/S	1.3
Beta	0.57
5 year average
P/E	17.6
P/B	1.9
P/S	1.9
Target price 5y	35.03
Return	30.82%

If you add in a 5% dividend yield for five years your total return increases to 55.92%

Notes

For the fair value estimate of T I used 6.5% growth for 5 years. ATT has had amazing 10 year growth due to the explosion of cell phone use and has positioned itself on the global market for growth. Management anticipates growth in their business services segment and improved efficiency to free up cash flow heading out of the recession.

Please carefully consider all investment variables carefully before making an investment decision including the risk and do your own research.

WidePoint (WYY) Penny Stock Report

2009-11-23T13:03:00.001-08:00

Penny Stocks

This article focuses on a stock whose price is under $1, which may be consider as penny stock or small cap/micro cap stock. Many penny stock lists can be obtained through various lists if you would like to find more penny stocks consider clicking on some links on the right hand side of this blog.

WidePoint Corp (WYY)

Current Price $0.77

52 week range 0.15 - .99

Market cap 60.68

P/S 1.2

P/B 3.6

5 Year average

P/S 3.9

P/B 7.8

5 year target price

$2.2

Introduction
I happened to stumble across WidePoint while using a stock screener. The numbers looked interesting, so I then continued to evaluate WYY's business plan and noticed it was relatively simple with only three operating segments. They derive the majority of their revenue from the federal government, but have a growing private sector consulting segment. WidePoint also sees a growing need at the state and local government level and could capitalize on this growing need and opportunity.

Overview

WidePoint is the leading provider of certificate-based security solutions and mobile telecom expense management systems to the federal government.

Provides reoccurring revenue products targeting unexploited multi-billion dollar markets.

WidePoint intends to continue significantly expanding its revenue base by growing, acquiring and cross-marketing emerging but proven public-sector technologies that have a high probability of wide scale adoption in the commercial sector.

WYY maintains numerous contract vehicles, major government certifications, key IT partnerships and a top secret security clearance

Last quarter

Q3 2009 net income of $515,000 vs. net loss of $335,000 last year

Revenue growth of 28% YOY

Increase gross margin 24% vs. 17% YOY

Management Outlook for this current quarter

Expect double digit growth in all three operating segments

Fourth consecutive quarter of net income and three quarters of EPS growth for next quarter

Opportunities within Mobile Telecom Managed Services continues to look promising in the federal sector

Pleased to see development at the state and local municipal market

Expect the programs and our affiliations with our partners to further support and widen our sales reach and long-term growth.

Telecom Managed Services segment was up 28% on revenue of nearly $6.8 million for the quarter.

The PKI Credentialing and Managed Services segment recorded a 34% revenue increase to almost $1.6 million

Consulting Services segment was up 26% to $3.0 million for the quarter

This was the result of both new contract awards and renewals along with expansion work.

Risks Involved

Top three customers account for 26%, 20%, and 14% of revenue

Transportation Security Administration, U.S. Department of Homeland Security and The U.S. Department of Defense

Our contracts with the U.S. Government, and many contracts with other entities, permit the government client to modify, curtailor terminate the contract at any time for the convenience of the government, or for default by the contractor.

Conclusion

WYY is a young company with a bright future ahead. They are continuing to grow their market share with the federal, state and local governments and expect double digit growth in the near future

WYY is also focusing on growth in its commercial markets with its consulting business

The reward outweighs the risk involved with a small cap stock

Company is beginning to be profitable and has low debt levels

Three Stocks Under $1 (BDR), (AFN), (TOPS)

2009-11-18T08:31:00.000-08:00

Listed below are three stocks whose prices are under $1, which may be consider as penny stocks or small cap/micro cap stocks. Many penny stock lists can be obtained through various lists if you would like to find more penny stocks consider clicking on some links on the right hand side of this blog.

Blonder Tongue Laboratories Inc. (BDR) Telecommunication Sector
Current Price $0.97
52 week range 0.25- 2.10
Market cap 5.9M
Valuation
P/E 11.3
P/B 0.3
P/S 0.2

Company Overview
Blonder Tongue Laboratories designs and manufactures electronics and systems equipment for the nonfranchised cable-television industry. The company's products are used in the acquisition, conversion, distribution, and protection of television signals. Customers use these products to provide communication services to apartment complexes and condominiums, hotels, and other facilities, including schools, hospitals, and prisons. Principal customers include On-Command Video, Lodgenet Enterprises, and Phoenix Technologies.

Risks
Blonder has been unfortunate over the past 9 years and has faced negative revenue growth since 2000. In the past few years BDR has flirted with the red ink. With the maturing cable industry and intense rivalry BDR needs to establish a strong product line or service offering to achieve any future growth.

Alesco Financial Inc. (AFN) Financial Sector
Current price $0.67
52 week range $0.30-1.44
Market cap 37M
Valuation
P/B 0.2
P/S 0.3

Company overview
ALESCO Financial Inc. (AFN) is a real estate investment trust (REIT). Unlike many REITs which own real estate directly, AFN makes investments in real estate-related and other securities. AFN's portfolio consists of investments in Trust Preferred Securities (TruPS), Mortgage Backed Securities (MBS) and Corporate Loan Obligations (CLO). AFN is externally managed by Cohen & Company, a leading investment banking and asset management firm focusing on lending to the real estate and financial services industries.

ALESCO just reported poor financial results, due to loan losses and the economic down turn. AFN has had more down years than up in its operating history. In this environment all things real estate have a substantial amount of risk involved with their day to day business model. I would recommend in-depth and extensive research before considering investing in AFN

TOP Ships Inc (TOPS) Transportation
Current price $1.00
52 week range $0.67 – 3.88
Market cap 30.1M
Valuation
P/B 0.1
P/S 0.1

Company Overview
TOP Ships is a provider of international seaborne transportation, carrying refined petroleum products, crude oil, and dry bulk cargoes. TOP Ships manages the deployment of its fleet between spot market voyage charters, which generally last from several days to several weeks, and time charters, which can last up to several years. The company serves customers in the international tanker industry, including charterers, oil companies, oil traders, brokers, suppliers, insurers and others.

Insurance Company Stocks

2009-11-13T05:34:00.000-08:00

Arthur J. Gallagher & Co. (AJG)

Current price: $22.90

52 week range: $14.82-26.02

Market cap $2.3 billion

Valuation |5 year average

P/E 18.1 |35.8

P/B 2.7 |3.5

P/S 1.3 |1.8

D yield 5.5%

Relative valuation target price: 44.33

Other analysts: 35

Overview

Arthur J. Gallagher & Co., one of the world's largest insurance brokerage and risk management services firms, provides a full range of retail and wholesale property/casualty (P/C) brokerage and alternative risk transfer services globally, as well as employee benefit brokerage, consulting and actuarial services. Gallagher also offers claims and information management, risk control consulting and appraisal services

to clients around the world.

Gallagher has operations in 15 countries and, through the Gallagher Optimus Network and its international operations, Gallagher offers client-service capabilities in more than 100 countries around the world. Some of the company's offices are fully staffed with sales, marketing, claims, loss control and other specialists; some function as servicing offices for the various divisions.

Marsh & McLennan Companies (MMC)

Current price: $24

52 week range: $17.18-25.58

Market cap $12.5 billion

Valuation |5 year average

P/E 40.2 |---

P/B 2.1 |2.7

P/S 1.2 |1.3

D yield 3.3%

Overview

Over time, Marsh & McLennan has developed one of the largest and best-respected risk-management services firms in the world. But in 2004, a regulatory crisis arrived, as investigations into insurance industry compensation and a civil suit from the New York attorney general included charges of bid rigging in MMC's insurance brokerage subsidiary. Head winds stiffened further in the last few years, as softening insurance market pricing (and brokerage commission revenue) coupled with the dramatic slowing in the overall economy. But we think MMC has been laying the basis for better revenue momentum and margin expansion. The firm has become leaner, cleaner, and more client-focused following the regulatory trials, and we think returns should improve in years to come.

(Comparison of the two)

Performance of Stock Price

On 3/03/2009 right around the time the stock market hit its’ lows MMC was down YTD (26.58%) while AJG was down (41.95%). This is a significant factor when evaluating these two stocks because I intend to use one of these stocks to better diversify my financial sector. Just looking at historical performance MMC’s stock price has outer performed AJG. But when we look at revenue growth AJG’s revenue growth was 171.54% from 1999 to 2008 much better than MMC’s 26.54% for the same period!

If we compare quarterly results to explain the difference in decline for the beginning months of 2009 we see that AJG has revenue growth for each quarter from 12/08 -9/09 where MMC’s sales declined every quarter. From these facts you would expect that AJG’s stock price would have outer performed MMC’s for 2009 but it has not. MMC’s stock price is down around 1% and AJG’s stock price is down around 12%!

Explanation of Decline

These discrepancies would suggest one of two things. 1. MMC’s stock price is overpriced and lagging behind AJG 2. AJG’s stock price is underpriced and its’ gains should be well above MMC’s due to the better performance, growth and valuation. Another explanation is the market cap of the two MMC is nearly 6 times that of AJG which would explain the volatility in AJG’s price for the beginning of the year. But this volatility should have worked positively for AJG and pushed the stock price up much faster than MMC. This hasn’t happened, yet.

Conclusion

In a cross sectional analysis, AJG beats MMC. In a time series analysis AJG has sustained better growth and this growth has yet to be factored into its’ stock price. Using relative valuation and other analysts estimates AJG is more undervalued then MMC.