1st Down Week In 2012 For CDN Markets, U.S. Markets Also Drop
allpennystocks Newsletter
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http://ymlp293.net/zk5lGJ ——————————————————————————– February 12, 2012 Week In Review…
Week In Review For February 6 to February 10, 2012 Canadian Companies mentioned include:
* Cabo Drilling Corp. (TSX-Venture:CBE) * Encanto Potash Corp. (TSX-Venture:EPO) * Crown Point Ventures Ltd. (TSX-Venture:CWV) * Bold Ventures Inc. (TSX-Venture:BOL) U.S. Companies mentioned include:
* Revolutions Medical Corp. (OTCBB:RMCP) * Ireland Inc. (OTCBB:IRLD) * Biodel Inc. (NASDAQ:BIOD) * NovaStar Financial Inc. (Pink Sheets:NOVS) This week on AllPennyStocks.com:
* Article Published, February 7, 2012: Asphalt and Paint Paving the Road to Profitability for Junior Services Contractor (http://www.allpennystocks.com/aps_us/special_reports/236/Asphalt-and-Paint-Paving-the-Road-to-Profitability-for-Junior-Services-Contractor.htm) (U.S. Company) * Article Published, February 8, 2012: Junior Miners Ink Definitive Agreement for Merger; Shares Rise for Both (http://www.allpennystocks.com/aps_ca/special_reports/246/Junior-Miners-Ink-Definitive-Agreement-for-Merger;-Shares-Rise-for-Both.htm) (CDN & U.S. Companies) * Article Published, February 9, 2012: Junior Restaurant Services Company Rises on Distribution Agreement (http://www.allpennystocks.com/aps_us/special_reports/238/Junior-Restaurant-Services-Company-Rises-on-Distribution-Agreement.htm) (CDN Company) Video charts for the week:
* February 6th Technical Video Chart For RMCP. Volume came pouring into Revolutions Medical Corp. on Friday as the PPS surged by more than 20 percent. Technical traders will be looking to this chart to continue its push through the 200 dma. The indicators are shifting and the volume may be a hint that there could be a charge this week to challenge old highs and resistance around 32 cents. view:
( http://www.youtube.com/user/AllPennyStocks#p/a/u/1/x8kfYVbUoOA ).
* February 6th Technical Video Chart For CBE:CA. A strong climb from $0.07 to $0.17 has been followed by consolidation in the 14 to 17 cents range for Cabo Drilling. Call it a flag pattern or a cup and handle pattern, but look for the chart to try and breakout through the top resistance. Bottom support at 14 cents needs to hold on any pullback. view:
( http://www.youtube.com/user/AllPennyStocks#p/a/u/1/VF4vfuQf7RM ).
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WEEKLY UPDATE – EU AND CHINA CONCERNS WEIGH DOWN MARKETS; TSX STOCKS SUFFER FIRST FALL OF 2012 Investors are suffering from a bad case of “Greece fatigue” as the financially beleaguered country was back in the headlines this week.
Concerns over Greece filing for bankruptcy loom as traders seem to be growing tired of the head fakes being delivered on whether or not deals are officially going to be had to get the country more much needed bailout funds as well as settling matters with private sector creditors to write-down a portion of its debt. The markets have largely shrugged-off the EU concerns throughout 2012 that were an albatross around the neck in 2011, but the unfinished negotiations overseas paired with disappointing news from China and a thin week of economic data from North America weighed-down market sentiment this past week.
Showcasing the weakness, all 30 Dow Jones Industrial Average components ducked-back on Friday. Corporate earnings reports were also in full swing again this last week with the results somewhat disappointing, adding to risk avoidance in the markets.
The Canadian markets felt their first down week in 2012 – and first fall after seven straight up weeks – with both the TSX Composite Index and Venture Exchange shedding points. News from China that international trade took its biggest hit in January in more than three years put a black cloud over commodities by giving signs of a slowing economy in China, a major consumer of iron ore, copper and other commodities. Exports to the country slowed, according to reports, having a dulling effect on future projections for North American markets. An increase in China`s inflation rate was also reported last week. The country`s Consumer Price Index rose 4.5% in January compared to the year prior period. These new facts lend support for the People`s Bank of China to exercise caution with regards to easing monetary policy. China`s expanding economy has helped in propping-up global growth figures and declining numbers breed caution in the investment community.
In other international matters, the Bank of England and ECB both left their benchmark interest rates unchanged. Looking to stimulate its economy through its own version of quantitative easing, the Bank of England said that it will be buying nearly $80 billion worth of U.K.
bonds.
Optimism that Greece was nearing a resolution did enter the scene mid-week as investors finally got the news that Greek political parties had agreed upon austerity measures and reforms that should keep the embattled country from defaulting on upcoming due loans by snagging some more bailout funds. The agreement is the first step in Greece securing 130 billion euros from the European Union, International Monetary Fund and European Central Bank; monies it desperately needs to make a payment on a 14.5 billion euro bond redemption in March. Any optimism was squelched on Friday as eurozone finance ministers said that the deal was not sufficient and that more spending cuts must be demonstrated before they would sign any agreement for access to more bailout money. The Greek Parliament is meeting again this weekend on its reform package, so there is – once again – the possibility that a deal could be finalized this upcoming week.
Canada’s dollar surrendered its position above parity with the USD by falling 0.73 cents on Friday. It was the first retreat by the loonie after a four-week run at the greenback. The stark reversal in equities on Friday has forex traders hawkeyeing the USD this coming week for a stronger reversal if market weakness continues next week as the USD is often moved towards as a safe haven during market volatility. On the week, the loonie lost 0.79% on the USD. Next week will begin with one Canadian dollar buying US$0.99845.
Commodity Snapshot:
* A stronger U.S. dollar put pressure on Gold futures and the metals industry in general. Because commodity prices are denominated in USD, a strong dollar makes commodity prices higher for investors using other currencies. Additional burden was placed on bullion with the EU concerns prompting investors to sell commodities and shelf their cash.
On the week, April gold contracts, the most actively traded, stumbled lower by $15, or 0.86%, to close at $1,725.30 per troy ounce.
* Silver had stormed upward in January, but February is giving no love to gold`s cousin. For the second straight week, silver continues to struggle with a resistance point around $34 an ounce and faded mildly again. March contracts, the most actively traded, settled the week at $33.604, representing a drop of $0.145, or 0.43%, after giving-up 0.12% the week prior.
* Copper and other base metal prices were damaged by the weak economic data from China, the largest consumer of copper in the world.
Copper has been on a steady upward trajectory throughout 2012 on optimistic U.S. data and hopes that Chinese officials would loosen lending requirements to support economic growth; keeping demand high for multi-use metals such as copper. Prices flirted with $4.00 per pound during the week, but fell sharply on Friday with the Chinese data, erasing the gains from the rest of the week. March contracts, the most actively traded on the Comex division of the New York Mercantile Exchange, unloaded nearly 3 percent on Friday and settled the week at $3.862 per pound, for decrease of 1.01%, or $0.0395 cents per pound.
* Oil prices were pacing upward through Thursday, but fell as part of a broad market sell-off on Friday to pare gains. Prices fell as the International Energy Agency cut estimates for global demand in 2012 by 0.3 million barrels a day in addition to saying that the markets had enough flexibility to handle any losses related to Iranian oil. On the week, crude prices still gained ground with March contracts, the most actively traded, advancing by 0.85%, or 83 cents, to end at $98.67 per barrel.
Equity Market Snapshot:
(All percentages on a weekly basis unless otherwise noted) * Research in Motion got some bad news as the Blackberry maker found out that the National Oceanic and Atmospheric Administration, a U.S.
federal agency that studies climate and the atmosphere, said that it plans to replace a portion of its Blackberrys with Apple iPhones and eliminate some of the servers that power the smartphones by June. RIM has been struggling to retain consumers as it is, but has been able to leverage its corporate and government accounts for strength. Toronto shares of RIM fell for the second straight week, losing 7.87% to $15.46.
* Gold miners Kinross Gold (-3.14%), Goldcorp (-2.81%), Agnico-Eagle Mines (-3.74%), Yamana Gold (-4.34%) and Barrick Gold (-0.70%) all were a drag on the metal sector again this week.
* Financials were strong in the prior week, but with the anemic week for positive economic data and Greece still thumb-wrestling to settle deals, the space took a hit with U.S. majors like Goldman Sachs Group (-2.90%), JP Morgan Chase (-1.75%) and Citigroup (-1.83%) all falling from highs into the red.
* Banks in Canada outpaced their U.S. counterparts with big banks Royal Bank of Canada (+0.51%) and The Bank of Nova Scotia (+1.26) posting gains while Toronto-Dominion Bank (-0.09%) had basically an even week.
* Base metal plays Teck Resources (-6.28%), First Quantum Minerals (-9.18) and Century Aluminum Co. (-3.64%) aided in dragging the base metal sector lower as the worst performer in the Toronto subgroups when all 14 dropped on Friday.
* Shares of Yahoo got a boost when Chinese conglomerate Alibaba said that they want to buy-back the 40% stake of their company that Yahoo owns. Yahoo also said last week that four of its board members, including Chairman Roy Bostock, are stepping down. The news comes only weeks after Yahoo co-founder Jerry Yang stepped down from the company`s board of directors as part of a “changing of the guard” as Yahoo tries to reposition itself as a content creator while simultaneously improving profit margins. Shares of YHOO climbed 1.38%.
* Theme park operator Six Flags approved a lofty increase in the company’s quarterly dividend on common stock to 60 cents a share, up from the prior payout of 6 cents a share. The dividend hike, payable March 12 to stockholders of record as of March 1, comes shortly after the company reported a $250 million expansion through 2012 of a stock-buyback program. Shares of SIX closed near highs and surged 7.00% on the week to $47.08.
* Amazon (-1.14%) announced on Wednesday that it will expand the selection on its streaming service catalog through a new rights agreement with Viacom (+3.02%). Included in the deal are Paramount movies, as well as shows from Comedy Central, MTV, VH1 and Nickelodeon, to name a few. The new deal puts more pressure on Netflix (-1.98%), which is already feeling some heat from a recent agreement between Redbox parent company Coinstar (+13.58%) and Verizon (-0.40%) to bolster streaming content offerings.
* Pulp producer Fibrek Inc. agreed to a friendly deal to be acquired by Mercer International Inc. The cash and share offer by Mercer tops a $130 million hostile takeover offer by Resolute Forest Products (formerly AbitibiBowater). The news came after earlier reports that an independent firm’s analysis valued Fibrek between $162.6 million and $188.6 million. Fibrek shares galloped ahead by 28.16% to $1.32 on the news.
* Fertilizer producer Agrium Inc. reported that its quarterly profits increased 43% to $193 million in Q4. Sales jumped up 32% to $3.18 billion, but shares shed 2.25%.
* Pershing Square Capital, the largest shareholder in Canadian Pacific, came to Toronto to speak with shareholders about its plan to get the company operating in the black again. Pershing Square wants to see to it that Hunter Harrison is appointed as CEO of Canadian Pacific. Harrison was the former CEO of CP rival Canadian National Railway. Shares of CP added 0.91% as shares of CNR fell 6.54%.
* Canada’s airlines were in focus early in the week as airliners reported record passenger load factors in January. WestJet’s traffic bumped-up to 79.9%, compared to 77.8% in January 2011. Air Canada said its load factor was 79.1% this year compared to 78% last year. Porter Airlines said that its load factor increased from 51.7% in 2011 to 55.7% in 2012.
* WestJet also reported that profits fell by 4.3% to $35.6 million on increased revenues or 12.9% to $721.5 million in the fourth quarter.
The company boosted its dividend by 20% to six cents a share. Airline plays were stubbed this week and WJA fell 1.84% as well.
* Battling with higher fuel and maintenance prices, Air Canada, the country`s largest airline, reported fourth quarter results that were worse than expected, sending the share price diving. The company announced a net less of $80 million, or 22 cents per share, as compared to a net profit of $89 million in the year prior quarter. Q4 revenue grew 3.2% to $2.7 billion. On the year, Air Canada`s net loss totaled nearly a quarter of a billion dollars. The company was also in the news with the union representing Air Canada`s pilots calling for a strike vote and a tentative agreement being reached with its mechanics, baggage handlers and cargo agents. Shares of AC/B tumbled 19.85% on the week to $1.09.
* Quarterly financial reports were prevalent throughout the week.
Toy and board game maker Hasbro nipped ahead of earnings predictions by a penny, but missed revenue projections. HAS added 2.73%. Humana saw profit rise in Q4 as compared to the year prior quarter and also provided guidance higher than anticipated. Shares still dumped 4.86%.
* In an all-share merger, Glencore International PLC, the stalwart commodities trader which went public in London in 2011, and Xstrata PLC, one of the world’s largest miners, reported Tuesday to have agreed to terms to join forces, creating a $90 billion natural-resources giant. Some shareholders, however, feel that the deal undervalues Xstrata (merger values Xstrata at $61.9 billion).
According to David Cumming, head of equities at Standard Life Investments (which has about a 2% stake in Xstrata), “it is our intention to vote against the deal unless the merger terms for Xstrata shareholders are materially improved.” London-traded Schroders, which has a 0.6 stake in Xstrata, also said they would vote the deal down as is.
* Wal-Mart Stores Inc. (-0.21%) said that it will spend more than $753 million to expand its presence in Canada ahead of the opening of rival Target Corp.’s (+0.56%) first stores in the country early in 2013. Through expansion, remodels, new stores and relocations, the retail giant plans to add more than 4.5 million square feel of retail space and boost its store total in excess of 375 throughout Canada by the end of January 2013.
* Nevsun Resources (-38.08%) took a shellacking upon news a downward revision coming to resource estimates at its Bisha mine in Eritrea, East Africa. The company expects to produce around 200,000 ounces in 2012, well short of the 375,000 ounces it had predicted as a result of overestimation in the oxide gold resource.
* Shares of Sears Holdings (+6.81%) rebounded again this week on rumors that Goldman Sachs is working to find the beleaguered retailer a suitable buyer.
* In more earnings news, BP (-0.47%) reported increased Q4 profits and raised its dividend, citing a tipping point finally happening after recovering form expenses from the Gulf of Mexico oil spill in 2010. Adjusted for one-time items and changes in inventory, Q4 earnings rang in at $5 billion compared to $4.36 billion in 2010, topping earnings of its larger rival Royal Dutch Shell Plc. Investors still seem sketchy about BP, though, as trials related to the spill are on tap for later in February.
* TMX Group Inc. (-1.78%) said its profits dropped 21% to $52.7 million in the fourth quarter as revenue shaved-off 7% to $161.7 million from $174.1 million.
* Canada`s telecommunications giant BCE, Inc. missed estimates for earnings despite reporting Q4 earnings that jumped 52.8% to $486 million, or $0.62 a share. Shares fell for the fourth consecutive week, losing 2.36% to $39.38 this time around.
* The EU debt problems and losses associated with a $2 billion rogue trading scandal were in part to blame for UBS (-5.25%) posting a 75% nosedive in fourth quarter profit. Missing those expectations, the big Swiss bank also issued a cautious outlook for 2012.
* Yum! Brands (+1.41%), the parent company of KFC, Taco Bell and Pizza Hut reported a 30% increase in Q4 profits driven by growth in China, the company`s largest market. The company has set its sites on China and other emerging markets, opening more than 1,500 restaurants overseas last year. Yum posted a profit of $356 million, or 75 cents a share, up from $274 million, or 56 cents a share, a year earlier.
Shares of Yum! have risen in 9 of the last 11 weeks.
* PepsiCo shot itself in the foot in posting Q4 profit and revenue that topped expectations, but said that it would be laying-off 8,700 workers at the same time. The company intends to employ the cash saved by cutting the jobs to increase its marketing and advertising efforts; not exactly the type of news that the general population likes to hear. Shares unleashed 4.07%.
* Buffalo Wild Wings reported an increase of 9% in same-store sales in the fourth quarter, aiding in a 35% revenue boost to $220 million U.S. and a 34% climb in net earnings to $13.6 million. Shares soared 21.93% to $85.72.
* Apple has been a beast, adding more than 20% to its share value already in 2012. News that the iPad 3 will be coming in March helped keep pushing the stock further ahead into all-time highs, now testing $500 each. AAPL is always one that`s fun to reflect upon the fact that in 1998, shares were around $3 each (that`s an increase of around 16,500%). Last week shares rose another 7.34% to close at $493.42 with a high of $497.62.
* Pointing the finger at sales expenses related to the launch of its iPhone, Sprint Nextel (-1.29%) suffered a sharp loss in the fourth quarter, dumping $1.3 billion U.S., or 43 cents per share. It could be considered “from bad to worse” as in the year prior quarter the company reported a loss of $929 million U.S., or 31 cents per share.
* Reporting financial results for the first time as a public company, daily deals site Groupon surprised by posting a loss last quarter.
Making a bad first impression, the company reported a loss of 8 cents a share. Excluding acquisition costs, the loss came to 2 cents a share. Shares squatted 13.92% lower.
* Online networker LinkedIn shares glowed with a strong fourth quarter report showing that revenue more than doubled from the previous year to nearly $168 million, about $8 million above analyst estimates. The company reported a profit of $6.9 million, or 6 cents a share; up from $5.3 million a year earlier. Shares closed the week ahead by 12.62% at $89.96. Shares of LNKD are holding about 100 percent higher than their May 2011 IPO price of $45.
* Shares of Diamond Foods plummeted 37.53% on reports that it will be restating two years worth of financial statements after auditors discovered that the company had made errors in accounting for payments made to walnut growers. The CEO and CFO of Diamond were put on administrative leave as a result.
* Casino entertainment provider Caesars Entertainment made its NASDAQ trading debut on Wednesday after raising $16 million through an initial public offering. In another impressive first week of trading for an IPO, shares opened at $9, screamed to $17.90 and eventually settled on Friday at $14.24.
Weekly Indices Results:
The S&P TSX Composite Index gave back last week`s gains, shedding 187.86 points, or 1.49%, to 12,389.42. The TSX Venture Exchange slid for the first time in eight weeks, carving off 11.56 points, or 0.69%, to finish at 1,653.55.
In the States, the Dow Jones Industrial Average fell from highs to close the week red, fading by 61.00 points, or 0.47%, on the week to 12,801.23. The much-broader S&P 500 ending its five-week run by losing 2.26 points, or 0.17%, to close at 1,342.64. The tech-rich NASDAQ Composite closed higher than it opened the week, but still finished lower than the prior Friday; subtracting 1.78 points, or 0.06%, to 2,903.88.
Canadian Economic Data:
* Statistics Canada said that municipal building permits totaled $6.8 billion in December, up 11% from November and representing the highest level since June 2007. Strong increases in multi-family dwellings in Ontario and commercial building in Alberta were primarily attributed to the rise.
* Canada Mortgage and Housing Corporation reported that housing starts decreased by 1.0% in January to an annualized pace of 197,900 versus expectation of a larger drop to 194,000. A lower number of starts in Quebec and Atlantic Canada were primarily attributed to the overall slide.
* The New Housing Price Index rose 0.1% in December, following a 0.3% increase in November. Building in Oshawa, Toronto and Montreal paced the gainers, while decreases in Vancouver and Hamilton pared the gains.
* Canada`s merchandise exports rose 4.5% and imports edged up 0.8%.
As a result, Canada`s trade surplus rose sharply against expectations from $1.2 billion in November to $2.7 billion in December. Economists had expected a decrease to $800 million.
Next week will include a flurry of economic data from Canada with New Motor Vehicle Sales on Tuesday; CREA stats on Wednesday; the Monthly Survey of Manufacturing and International Transactions in Securities on Thursday; and Leading Indicators, Employment Insurance and Consumer Price Index updates on Friday.
U.S. Economic Data:
* The Labor Department said the initial claims for state jobless benefits dropped 15,000 to 358,000. A four-week average of new filings, which provides a better view of the trend, hit its lowest level since April 2008. The report comes on the heels of last week`s news that the unemployment rate fell to its lowest level in three years and supports the idea of strength building in the labor market.
Economists had expected first time claims to rise to 370,000. Adding some noise to the situation, however, continuing claims rose by 64,000 to 3.5 million, ahead of expectations of 3.47 million.
* The latest edition of the Reuters/University of Michigan Consumer Sentiment Index showed its second straight month of decline with a drop from 75 in January to 72.5 in February. Expectations were a smaller decline to 74, showing that Americans believe it is harder to find jobs than originally thought.
* The Commerce Department said that the U.S trade deficit grew from a revised $47.1 billion in November to $48.8 billion in December, its highest level in six months. Exports (+0.7%) were outpaced by imports (+1.4%) with the widening deficit mildly worse, but basically inline with projections. Imports rose $3 billion to $224.6 billion on increases in capital goods, consumer goods and automotive vehicles.
Exports edged upward by $1.2 billion to $177.7 billion, mostly on industrial supplies and materials as well as automotive vehicles.
Next week, the data pace will significantly increase with Retail Sales coming on Tuesday; Industrial Production on Wednesday; Building Permits, Housing Starts, PPI, Philadelphia Fed Manufacturing Index and Jobless Claims on Thursday; and Consumer Price Index updates on Friday.
Penny Stocks to Watch & Company Spotlight Results:
Among the stocks we watched this week, Saskatchewan potash explorer Encanto Potash Corp. (TSX-Venture:EPO) pushed north immediately and peaked at an intraweek high of $0.365 on Thursday before slipping some on Friday with the markets to close the week up by 4 cents, or 13.11%, at $0.345. The other stock we had on radar, drilling services company Cabo Drilling Corp. (TSX-Venture:CBE), tested its intraweek high of 18 cents on three occasions, but couldn`t break through and wrapped the week at 17 cents, ahead for the week by 0.5 cents, or 3.03%, at $0.17.
In the States, medical device and software company Revolutions Medical Corp. (OTCBB:RMCP) started lower on Monday and Tuesday before kicking it in gear to surge forward on the week by $0.07, or 30.43%, to 30 cents with an intraweek high of $0.31. The other U.S. stock on our watchlist, mineral explorer Ireland Inc. (OTCBB:IRLD), completed a green sweep for our penny stocks to watch this week by rising to $0.51 for a gain of a penny, or 2.0%, with an intraweek high of $0.54.
If you`d invested in all four stocks and held them to the end, you`d have seen a solid gain of 12.14%. However, if you`d bought all four at the beginning of the week and sold each at its peak, you`d have realized average gains of an equally impressive 17.89%.
Next week, we focus on Crown Point Ventures Ltd. (TSX-Venture:CWV) and Bold Ventures Inc. (TSX-Venture:BOL). In the States, look for big things from Biodel Inc. (NASDAQ:BIOD) and NovaStar Financial Inc.
(Pink Sheets:NOVS).
————————- Forward Looking Statements This report includes forward-looking statements that reflect the mentioned companies current expectations about its future results, performance, prospects and opportunities. the mentioned companies has tried to identify these forward-looking statements by using words and phrases such as “may,” “will,” “expects,” “anticipates,” “believes,” “intends,” “estimates,” “plan,” “should,” “typical,” “preliminary,” “we are confident” or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause the mentioned companies actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company`s growth expectations and ongoing funding requirements, and specifically, the Company`s growth prospects with scalable customers, and those outlined above. Other risks include the Company`s limited operating history, the Company`s history of operating losses, consumers` acceptance, the Company`s use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company`s securities, the possible volatility of the Company`s stock price, the concentration of ownership, and the potential fluctuation in the Company`s operating results.
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