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  • Caution: FUEL, SFIO, MDOR, EWRC Heavily Promoted Today 0 comments
    Aug 31, 2009 2:38 PM | about stocks: Q
    eWorld Companies, Magnum D'Or Resources, SMF Energy Corporation, and Smokefree Innotec may be artificially strong today.
    By James E Brumley

    Before jumping onto the next rising-star stock, traders may want to think twice about today's apparent strength from eWorld Companies, Inc. (OTCPK:EWRC), SMF Energy Corporation (NASDAQ:FUEL), Smokefree Innotec, Inc. (OTCPK:SFIO), and Magnum D'Or Resources, Inc. (OTC:MDOR). Though the buzz is loud, it may only be loud because each of these stocks was heavily promoted within the last 24 hours.

    Here's the 'rest of the story' investors may need to know before taking the plunge.

    By the way, note that the investor awareness efforts may or may not have been sponsored or purchased by the companies in question.

    To their credit, the pictures released by Magnum D'Or Resources, Inc. (MDOR) and/or its promoters pump up the credibility factor quite a bit - at least the market knows it's a real company with a real facility that is far more apt to drive real revenues than, say a mere shell company.

    Magnum D'Or Resources is a rubber-recycling solutions provider. The pictures are of the newly-purchased tire landfill property... a 120+ acre (30+ million tires) facility. The company says they're sitting on $130 million worth of contracts to turn all that rubber into something somebody else can use. That's the upside.

    The downside is that this is a brand-new venture for Magnum D'Or Resources. Prior to now, Magnum's quarterly revenue was measured in tens of thousands of dollars. That's not to say that the jump to $130 million in revenues (no time frame was offered) is an impossible leap. It's just that there's not much fiscal clarity.... particularly in terms of the cost of the landfill property. 

    Nevertheless, analysts have established a price target for MDOR of above $3.00 per share. At that price, the market cap from MDOR would be $137 million. Depending on the rate that Magnum can collect on that $130 million in contracts, the target price may be reasonable. The hype in the meantime may override reason and make for very erratic trading.

    eWorld Companies, Inc. (EWRC) was also the subject of a pumping campaign this weekend.  Rather than describe it, let's just take a look at a segment of it (only we corrected the typos)...
    EWRC looks ready to RUN HARD - This is a trader's special.... could move up very quickly and make our members serious cash.... The stock was on fire last week and it gained 86% as it moved from .0007 to .0013....The stock is a trader's special as liquidity is enormous in EWRC.  The stock traded a staggering 145,255,600 shares.
    We're still not clear on what a 'trader's special" is but whatever.

    The more tangible news stemmed from a press release that eWorld Companies was on track to produce $1 million in gross profits per month through its Boomerang Media Station(r). That's actually a pretty exciting milestone for the web distributor of third-party movies, music videos, webcasts and other streaming video content.

    The challenge here is that there's so little information about the company... no audited filings, and the filings we can find are pre-revenue. All companies start small, but pink sheet companies need to by hyper-transparent to interest investors. This one isn't.

    In any case, liquidity had indeed improved and the interest in the stock is growing. That might make for a good trade, but for longer-term holders of EWRC there are still an awful lot of concerns.

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    If the name SMF Energy Corporation (FUEL) rings a bell, it's because the stock made our most-promoted list a few days ago as well. Though the effort seems to have worked early in today's trading session, there's been little upside follow-through.... much like last time.

    SMF Energy Corporation is a mobile fuel provider, meaning they bring the gasoline/diesel to where the fleet is rather than the other way around. The concept and business model is fine, as we mentioned last time. The worry is the capitalization.

    The new market cap of $14.8 million versus Q1's $35 million in revenue seems uncanny, in favor of the stock. The tough pill to swallow is that recent recapitalization reduced short term debt by $9.5 million, and the total debt on its balance sheet was reduced by $4.4 million. The annual servicing expense for interest and dividends was reduced by over $1 million, and shareholders' equity improved by at least $4 million.

    Those are all positives, but those are also symptoms of a company - when the market cap and revenue are what they are - that's heavily burdened by debt.

    Today's pumping effort, nevertheless, seems to be getting traction. Given the massive amount of volume we've already seen though, one can't help but wonder why shares aren't even higher than they are. Could someone else be selling into the promotion-induced strength?

    And finally, Smokefree Innotec, Inc. (SFIO) is up firmly today on a concerted investor awareness effort of its own.

    The product is actually quite clever - Smokefree Innotec makes an odorless cigarette-style electronic device that delivers a liquefied tobacco extract. They're designed to protect the non-smoker from second-hand smoke, while simultaneously offering smokers a way to enjoy a smoke-free cigarette anywhere (like places where smoking is prohibited).

    Crazy? Don't laugh yet - the 'Zig' is now part of a pilot test marketing pilot in some European markets. It will soon, hopefully, be introduced in most countries in the European Union including Spain, Italy, Germany, France, United Kingdom and Scandinavia. Asian and American markets are hoped to follow.

    The stock is up today on the announcement of that test market program for Europe, and last week's distribution agreement for the South American market (and the promotional effort). 

    What potential SFIO investors may want to consider about this start-up is that it's a one-trick pony. There are no revenues yet, and the only revenue driver in the pipeline is the Zig. Distribution agreements will mean little if there's no customer demand.

    Yes, the idea of a smokeless cigarette seems very marketable.... to non-smokers who don't like second-hand smoke. The smokers are the one who will have to pay for the device though. The test marketing may indicate more regarding the viability of Smokefree Innotec.

    In the meantime, SFIO is an $11 million company with no revenues, no real certainty of impending revenues, and no real idea of what kind of revenue (let along profits) may be in store, if any.

    If you'd like to know when or if we issue trading alerts specifically for MDOR, EWRC, SFIO, and FUEL, then be sure to subscribe to our free e-newsletter. It's delivered two to three times per week.
    Stocks: Q
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