In the world of penny stocks, you’re sure to find oodles of great, unknown companies to invest in. But there are also penny stock scams designed to bilk hard-earned cash from investors. And usually you’ll know it’s hit you after you’ve watched your investment evaporate into thin air!
We know what to look for, and tell you who’s out there pumping stocks using paid promoters.
It’s our job to expose penny stock pump and dump scams…
And we take real pleasure in putting the smackdown on the latest penny stock pump and dump scams.
As you read, you’ll see the big red flags we’ve come across on these companies. And with all the great penny stocks out there… there’s no reason to put a single dime into any of these companies!
This week, we’re exposing pump and dump scams on two companies: Southern Home Medical (SHOM), and New Western Energy (NWTR).
Southern Home Medical (SHOM)
The symbol may look like the Yiddish word “Sholom”, but buying this penny stock will give you anything but peace! It’s nothing more than a tiny small business with common stock issued. You could as easily ask your local pizza restaurant for shares- and somehow I think those might hold more value!
Let’s get into the pumping first, and then I’ll tell you about the numbers…
Red Flag #1: Paid PUMP!
Penny Stock Rumor was paid $10,000 by an undisclosed party. I’m also seeing emails from the known pumpers Stock Exploder, Bullseye Stox, Stock Mister, and 007 Stock Chat. I’m pretty sure some, if not all, of these pump and dump shops are getting a paycheck as well.
Red Flag #2: Low Revenue & Earnings Levels
This one’s easy… The latest quarterly report covers July 2012 to September 2012 In that time period, the company did generate revenue… but expenses chewed up most of the profit. Here’s the recap…
- $158,727 Gross Profit
- Expenses totaled $136,685 for the period
- Net Income of $22,549
While this is one of the more profitable companies you’ll ever find here… remember- the stock is currently getting pumped… by known BIG TIME pumpers. Even with some income, it’s tough to justify why a small business like this needs to be publicly traded.
Red Flag #3: No SEC Registration
Here’s the thing… all of the data above comes directly from the company at their discretion. The format, timing, included information, etc… all voluntary. My research shows the last communication the company had with the SEC was in 2008- over five years ago!
Without SEC oversight, investors are relying on the company to voluntarily keep some semblance of order in their financials.
Red Flag #4: Long-Term Sub Penny Stock
Plain and simple, shares of SHOM are trading down near $0.003 right now- and that’s up from the beginning of 2012. Back then, shares could be owned for $0.001! While investor can pick up lots of shares, it’s not always a good thing. Take a look the action on this stock…
One wrong move on a chart like this, and investors can lose 30%- just in intra-day trading!
And that’s not something you want to be holding when it happens.
New Western Energy (NWTR)
NWTR has the potential to be one of the larger and longer running pumps heading into the next few weeks. The reason being, shares are already under rapid accumulation, and the price tag being paid the pumpers is a bit larger than normal.
The pumpers, for their part, are trying to capitalize on the OK and TX oil and gas industry expansion. And just as the company I just wrote about (SHOM), New Western Energy has revenue.
But revenue isn’t everything…
Red Flag #1: Revenue positive while running a loss
In the past year, NWTR has generated revenue- kudos to them. The problem is, they’re not making enough of it.
Here’s the breakdown…
- $24,398 in revenue for the quarter ending Sept 30th
- Loss from operations for the same quarter- $103,131
- Loss over the past 9 months: $321,836
That leads us to our next issue….
Red Flag #2: The Company’s auditors flagged NWTR with a “Going Concern” statement
That’s right. Just imagine, NWTR’s accountants are concerned the company will go out of business unless it can raise more capital, or turn cash flow positive. Here is an excerpt from that statement-
“The Company currently has on ongoing private placement equity offering and has raised $499,200 during the nine months ended September 30, 2012 and through the date of this report. At September 30, 2012, the Company had a working capital deficit of $217,216, incurred a net loss of $321,836 during the nine months ended September 30, 2012 and used cash in operating activities of $190,162. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern.”
Well, that doesn’t look all that swell, now does it? And remember… this company is being pumped!
Red Flag #3: Paid PUMP!
Oh yes my friends, don’t forget the reason WHY this company is here in the first place… it’s part a pump and dump scheme! Oh yes, the fellas down at Pennies Picks (.com) are happy to tell you how great this company can be- because they were paid $300,000 to pump NWTR!
Here again, is directly from their disclaimer:
“PenniesPicks.com has also agreed and expects to be compensated an additional Three-Hundred Thousand Dollars Cash by MNR Inc. for the continuation of marketing efforts regarding NWTR.”
With this penny stock trading up near $0.66, a sane investor would be hard pressed to buy shares right now. Even though it’s been a gradual climb… the latest round of pumping would put up a big road block for me.
As always, be careful my friends!
The Wrap Up:
Too many investors get sucked into these nightmare penny stocks scams. They fall for the overly-optimistic projections the paid promoters are selling. In the search of easy money, investors lose sight of what a real return should be… and end up holding the bag.
At the end of the day, the predatory practices of penny stock pump and dump scams are allowed to continue by the SEC and our government. As long as pumpers disclose they’ve been paid, everyone is willing to look the other way.
It’s the ultimate case of “let the buyer beware!”