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Penny Stock BioNeutral Group (BONU) - The Ygiene Trade

Shares of penny stock BioNeutral Group Inc. (OTC:BONU) were up big today…. until they weren’t. Good news of the company’s ‘hospital grade’ Ygiene being able to eliminate black mold spores (commonly referred to by nerds and geeks as ‘Aspergillus Niger’). The Ygiene antimicrobial agent killed all the black spores in record time, according to a test performed by AST Labs.

What does this mean for investors?
Hold that thought a second - I have another question to ask first.

Did anybody else just get a really weird vision of a bunch of people with white lab coats and magnifying glasses crouching down, looking at a big pile of spores they had just sprayed with a big bottle of Ygiene? Something tells me I can’t run to my local A&P and grab some off the shelf.  Or, maybe I can. Anyway….

All joking aside, it’s actually a pretty impressive and important feat. Black spores are a legitimate problem that’s tough to tackle, but Ygiene is also expected to equally handle Staph (MRSA), and some forms of pneumonia bugs. And perhaps most important right now, Ygiene should be effective against the swine flu virus.

So why did all the BioNeutral Group buyers from this morning turn into sellers a couple of hours ago? Two words…. profit taking. It wasn’t just today’s move from Tuesday’s close at 54 cents to the peak of 64 cents that prompted the profit-taking (as that wasn’t much profit). I think it was the move from the April low of 12 cents to today’s peak of 64 cents that’s inspired several exits.

The question remains though… what does this mean for investors?

Even if Ygiene sales go hog wild, this isn’t going to make BioNeutral Group profitable. The company seems to be burning about $600,000 per month in expenses, which isn’t likely to change. (It may actually get bigger if BioNeutral goes into full-scale production of Ygiene.)

However, BONU is a penny stock, and a bulletin board stock, so the bottom line is pretty irrelevant in this speculation-filled world. The chief concern here is whether or not enough other investors are going to like it in the foreseeable future; we ‘trade’ those movements caused by investor actions.

My guess?
Given that this is possibly going to create BioNeutral’s first ever-revenue, I don’t see how the market won’t like it, and buy some BONU based on the euphoria. The company could be off the “where are the profits?” hook for months.

I also like the overall uptrend of the chart.

Were it me and my money, I think I’d wait for a full dip back to that long-term support line before diving into a trade. Scratch that - I think I’d wait for a pullback and then an uptick before getting in. This penny stock doesn’t have enough of a history to be trusted yet.

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