Canada Invest.com recommends AIR!
MARKET WATCH
Heaven From Pennies?
Thu, May. 25, 2000 07:22
By Thien Huynh, Canada-iNvest
Not all pennies are lucky ones...especially those on the CDNX. But for some investors, the lure of watching a stock go from a few cents to a few dollars (or more) will always be too hard to resist.
Penny stocks literally trade for pennies per share. The beauty of penny stocks is that they sometimes "grow up" and become mid-cap stocks, multiplying in value hundreds of times over and making investors very wealthy. But with penny stocks you will see much greater price volatility, and thus greater and quicker losses as well as potential gains.
There are many differences between penny stocks and other types of investments.
ú The difference between the bid and ask price is generally greater for small cap stocks.
ú Penny stocks are often very volatile and can make large percentage moves in short time frames.
ú The smaller relative size of many penny stock companies makes them more likely to be taken over by larger companies in the same industry.
Many smaller companies have the rights to important exploration lands or technology patents, but they don't have the resources to exploit them. When a company is taken over, it is the benefit of the shareholders, as they often realize a price increase in their holdings.
Penny stock companies can be found scattered all over the CDNX. Most of the companies are small and spunky, trying to become leaders in their niche markets. These companies and the CDNX may be slumping as investors continue to park their money in safer, bigger stocks. But for the gambling investor looking for a potentially huge payoff, there are still some worthy picks.
Today we feature two penny stock companies from the $150 billion sports merchandising and specialty sector.
Airbomb.com (AIR), founded in 1997, is in the business of retailing sporting goods, specifically bicycles, outdoor sporting equipment and sunglasses, through the Internet. The company has a strong competitive advantage because of factory direct prices. Its largest shareholder is Yuh Jiun Industrial Co. Limited, the largest bicycle manufacturer in Asia.
"We are in a growth market, a niche market. The market is $5.4 billion and we're on our way to dominating that market," says Airbomb president, David Houston.
Houston expects revenues to build over 30 per cent each quarter. The next goal is getting into the U.S. market by using the Bulletin Board as a stepping stone into the Nasdaq. There are 11 million shares outstanding and the company is trading at .60 Cdn.
Airbomb has a market capitalization of under $5 million. The company has re-domiciled in Delaware and expects to file it's 10SB with SEC soon. |
