• $SPOW is on my radar this week. #
• It is looking like a bright week ahead for penny investors! #

Over-the-counter (OTC) stocks are notable for their volatility and their ability to experience relatively large swings in share price throughout the intraday trading cycle. Stories abound of a stock up big one hour and then down and “in the red” (i.e. dropping below its opening price that day) in the next. Many OTC stocks also experience price increases and declines on relatively small transactions. In all, if one is looking for excitement and short term profits on a day trader basis, for one, the market for OTC stocks (more familiarly known as penny stocks) is the place to be.

Several OTC stocks this week have performed in a bullish manner.

So; which OTC stocks this week have, so far, vigorously traded or otherwise done well for their investors? While dozens upon dozens could be listed we feel the ones below stand out for various reasons:

This first is Garb Oil & Power, Corp. (GARB), which has seen its shares traded at an extremely high clip the last few days (30 to 40 million) while also increasing in share price from “triple zeros” (ex. 0.0008 up to 0.001), where it had hit a low of 0.0006, back up to 0.001 and a finish “in the green” (a net increase in price per share) the last two days. GARB has recently benefited from positive news, including securing short and long term financing and the development of a number of joint ventures with other energy related companies. After a heavy period of increases in its outstanding share count, which seems to have stabilized, the company appears to be poised to begin generating possibly significant revenues in the future.

The second company doing well this week on the OTC markets is Andiamo Corporation (ANDI), a holding company that’s heavily involved in real estate title services as well as a variety of Internet-based technologies. The stock will open today (October 13, 2011) at 0.0032, which is nicely above what it opened the October 12th trading session at (0.0015 or so). Average daily trading volume is a healthy 13.38 million shares, too, and the stock shows no sign of slowing down as yet.

A third stock that’s performed in an interesting manner is AERN (Aer Energy Resources, Inc.), with the company now referring to itself as FTPM Resources, Inc. It trades as an OTCPK (OTC Pink), and its intraday performance this week has made for a good day trading opportunity, with the stock’s price rising and falling at somewhat predictable entry and exit points.

Overall, the stock has also been up for the week and predictions have been noted that say the stock should experience as much as a 57 percent increase in share price by the close of the trading week from its open at the beginning of the week. AERN shares will open the October 13th trading session at 0.068, and the October 12th session saw shares reach highs exceeding 0.085. Shares in AERN also trade at a healthy pace, with 4.56 million of them moving on an average daily basis.

The last stock of note continues to be NXOI (Next 1 Interactive, Inc.) which is up more than 25 percent for the week, though share price rose only about 3 percent over the course of the October 12th trading session. It’s also trading nicely, at between 3 and 4 million shares per day for the week. Today’s trading session will see NXOI stock open at 0.0195, which is a nice increase from its open last Monday at 0.0148 per share. The company also has a healthy market cap of $1.63 million, a relatively low amount of shares outstanding (about 120 million) on 500 million shares authorized and a raft of positive news indicating that its real estate and travel television network and VOD (“video on demand”) capabilities are on a path to generate significant revenues in the short, mid and long terms.

Overall, all markets (especially the OTCs) have been fairly bullish this week, making it perhaps the best time this year, so far, to enter them with a concerted and intelligent trading strategy. Certainly, OTC stocks seem to be presenting opportunity after opportunity to hopeful traders.

We always take pleasure in highlighting a stock that turns out to fulfill certain of our expectations and the stock we pointed out earlier today (NXOI) certainly performed well. In fact, at one point today shares were worth almost 30 percent more than at the opening bell. In addition, Next 1 Interactive, Inc. shares traded on the OTCBB at a brisk pace, powering well past 4 million for the day, with the promise of even better performance over the next week. In all, the stock finally settled at a 12.16 percent increase from its opening price of $0.0148 to finish the day at $0.0166.

Word on the stock also seems to be getting around, with several well-known over-the-counter stock tout websites taking note of NXOI and speaking positively about it and the company issuing the shares, Next 1 Interactive, Inc. We look forward to the next several days of trading on a stock that’s shaping up to be a good play in the short, mid and long terms.

It’s a given in today’s technology-drenched world that people expect more from their television-watching experience than just a series of images flashed in front of them at a rapid pace. A high degree of connectivity needs to combine with equally high levels of interactivity to deliver information in large enough amounts that the viewer need not go anywhere else to learn what he or she needs to know. Next 1 Interactive, Inc. (OTCBB: NXOI), which specializes in delivering travel and real estate-related content over a variety of digital platforms, looks to be working hard to become the epitome of information delivery to its viewers.

NXOI and targeted content together to raise revenues greatly.

Sending out tons of targeted content (aimed at a viewer as his or her preferences become ever more discernible to Next 1) via satellite, cable, over-the-air broadcast, broadband (Internet, etc.) and even mobile applications (think smartphones and the like), NXOI has been making a concerted push of late to expand its in-house network, R&R TV, Inc., to even more households, expanding on the 26 million homes it’s now in. The network itself specializes in highlighting what it calls “great vacation destinations and real estate.”

Targeted content from NXOI is tailored to the individual preferences of each viewer as his or her activities (i.e. Internet websites visited, travel channels watched, data requests made through the computer or smartphone and so on) become clearer to the network. Of course, this means that Next 1 Interactive, Inc. is then able to deliver to its customer base appropriate and germane advertising. This also means that NXOI can promise its advertiser clients a higher degree of “buy in” from its viewers because they’ll be looking at advertising that they’re really interested in. It also means NXOI can charge more per view or ad campaign, meaning more revenues to the company.

Structurally, the company seems on sound footing, with a market cap exceeding $1.1 million. As of July 18, 2011, there were more than 83.5 million shares outstanding and a float of a little more than 65 million shares. In all, total authorized shares of NXOI number a relatively (for an OTC stock) low 200 million. Next 1 Interactive, Inc. is also a fully reporting company, current on all reporting requirements. At present, it trades at a nice 2.16 million shares, on average, daily. Shares of NXOI stock are also due to open today, October 10, 2011, at $0.0148. The last intraday trading activity chart (October 7, 2011) saw the stock experiencing a drop in price per share to its present status.

In all, it just may be that Next 1 Interactive, Inc. could see a quite-active trading week, with the possibility of moving into the stock at a low price while profiting from rises throughout the week. One could buy in, divest stock on periodic rises (before inevitable drops) and then buy back in to do it all over again throughout the trading week. Alternatively, for those investors looking for a bit of risk but with the prospect of high rates of return eventually, NXOI may also work well over the longer terms.

In speaking with large commercial airline insiders, one fact has become amazingly clear: Passenger airlines generate huge amounts of revenue but they also burn even more revenue in the form of expenses than they tend to take in (the only exception being the cut-rate low-cost carriers, or LCCs). However, there’s a subset of the aviation industry that thrives in almost any economy. Companies within this subset specialize in a wide variety of aircraft maintenance and service for other aircraft operators, and they often have subsidiary aircraft operator companies of their own. Avstar Aviation Group, Inc. (OTCBB: AAVG) is just such a lucrative operation.

Can Avstar Aviation Group, Inc. ascend to even greater heights?

One reason AAVG may be a good bet to improve its position is that it exists within an industry that begs for quality aircraft maintenance services delivered at a good price point and in a timely fashion. Additionally, the market for aircraft that can deliver passengers and materials into smaller, less-congested airports is sure to grow as those making use of such aircraft seek to avoid the overcrowding that’s evident at many of the world’s large commercial airfields.

Operators of such aircraft surely require highly skilled maintenance and service companies, as it’s generally a given in the air transportation industry that keeping such activities in-house is almost ruinously expensive without huge economies of scale present at almost every point in the input (passengers, cargo and freight), throughput (moving passengers and goods from Point A to Point B) and output (delivery of passengers and goods) cycle. Avstar Aviation Group looks ideally positioned to capitalize on aircraft operator needs to keep their aircraft flying safely and at a nearly constant utilization rate (after all, aircraft don’t make any money for an operator when they’re sitting on the ground).

AAVG also looks to be working hard, as well, to secure for itself a piece of the lucrative Bahamas inter-island passenger and mail transportation business. The geography of that particular region (many islands separated by just as many stretches of water) means that the only way to reliably move around is either by boat or by air. While sea travel has its allure, it’s hardly a way to move either people or critical mail and packages about that area very quickly.

In answering the need for speedy and reliable transportation of people and mail in a part of the world that prizes such an ability, Avstar uses two subsidiary aviation transportation companies, Twin Air Calypso Services, Inc. and Twin Air Calypso Limited, Inc. AAVG, in other words, looks uniquely positioned to be the aircraft service and operator corporation of choice in a market segment that richly rewards those who can deliver services in a cost-efficient manner. Based out of Houston, Texas, Avstar leadership has expressed, on the record, an intent to continue to push for vigorous growth through a continuing, and growing-stronger-by-the-day, ability to generate revenues and increase customer satisfaction.

AAVG is a vigorous daily trader on the OTC markets, with an average daily trading volume of about 7.7 million shares. The price per share is attractive, too, with a close on October 5, 2011 of 0.0025 and a 52-week range of 0.0012 to 0.0440. For traders, there are nearly 315.5 million shares issued and outstanding and 500 million shares authorized, making for a good base from which to design a winning trading formula. Lastly, the float currently stands at almost 246 million shares. In all, a trader could do much worse than to take a look at such a high-flying operation as Avstar Aviation Group, Inc.

There are few industries or market sectors that tend to be more durable through difficult economic times than the broad entertainment business. Movies and music tend to appeal to people on a number of levels, including viscerally and emotionally. There’s an old axiom, in fact, in the dinner theater and nightclub-type world that “people have to eat and they want to laugh (i.e. “be entertained”). A business that can find a way to consistently deliver product that entertains and can be experienced in a variety of convenient formats (movie theaters, streaming digital, DVD, CD etc.) almost automatically has an advantage in the hyper-competitive entertainment industry. Seven Arts Entertainment, Inc. (NASDAQ: SAPX) seems to be one of those companies that possess that advantage.

Is SAPX moving up in the movies and music business?

Born of a number of other predecessor movie companies, and headed by founder and CEO Peter Hoffman, SAPX has been steadily building a catalog of movie titles over the years, beginning in 1996. Hoffman himself is considered a top industry player, having led former movie powerhouse Carolco Pictures a studio responsible for, among other titles, the Arnold Schwarzenegger blockbusters Terminator 2 and Total Recall in addition to one of the more memorable flicks of the Nineties; “Basic Instinct.” For every large-scale production, though, a studio also releases dozens of smaller, more intimate, movies and Hoffman’s a skilled, steady hand at such activities.

The above makes a good case for SAPX, because the entertainment company – which recently acquired the independent music label Big Jake Music (BJM), partly to enable the production and distribution of its movie soundtracks, an increasingly lucrative part of a movie’s total profit structure – looks to be making a strong push to improve its position in the entertainment market.

Evidence of this is apparent in SAPX’s business philosophy, which revolves around the production and release of what are known as “small to mid-budget films” ($2 million to $15 million in cost) that receive limited to wide release which are then moved into the more lucrative, DVD, home video, pay-per-view (streaming or otherwise) and even free TV outlets. In other words, SAPX seeks to keep costs down while enhancing revenue through distribution channels, and it’s been mostly successful at it.

Currently trading on the NASDAQ, Seven Arts Entertainment, Inc. possesses an extremely rational share structure and an attractive price per share, generally speaking. As of close of trading, October 4, 2011, the amount of outstanding shares stands at almost 6.5 million on a float of only 2.01 million. At only $0.289 per share on October 4^th (up 9.06% from its open that day), the company’s stock is certainly a bargain, considering its 52-week trading range of $0.22 to $5.75 and an average daily trading volume of nearly 671,000 shares. Prospects for a continued improvement in its share price are good, though, with SAPX due to release several much-anticipated films in the science fiction, comedy and drama genres (the last being a production featuring acclaimed actors John Malkovich, John Goodman and Dana Delany).

Combining a high degree of success in picking winning movie plots and then bringing them to market at a cost-efficient rate with a good share structure and a top leadership team led by a longtime industry player, SAPX seems ideally positioned to move up strongly from its present share price, possibly making this the right time to add this movie and music conglomerate to one’s investment portfolio. Besides, owning of few shares of a company like SAPX is almost like owning a part of the magic of Hollywood, and how often does that sort of opportunity come along? 

On occasion, and especially whenever the Dow begins to approach bear market status (it’s currently only a few hundred points from doing so), the question arises as to whether or not there’s an appropriate time to invest more heavily in over-the-counter (OTC) stocks vis a vis their cousins over on the main exchanges. The answer to that depends on a number of factors, including the level of tolerance for risk an investor possesses and the expectations as to reward, or yield.

Is now the time to invest in penny stocks?

Certainly, the OTC markets come with an element of risk attached, though most smart investors and investing experts would say that risk in investing in anything can be mitigated (though never eliminated) through the use of good research, which is most often referred to as “due diligence” or “DD.” In addition, risk in OTC investing is also reduced through education, either gained by one’s own self or through learning extended by various reputable sources like books or websites devoted to investing and investment, or through a combination of the two. And there’s always no substitute for hard-won experience.

Given the above, then, the matter of what markets to invest in becomes somewhat easier to understand. At present, the Dow’s been on a wild ride of ups-and-downs, though over the last month or so the downs have somewhat outweighed the ups. As of close of trading on October 3, 2011, the Dow was fast approaching a bear market, the classic definition being a downturn of 20 percent or more in multiple broad market indexes such as the Dow (DJIA) and the S&P 500 (for the full definition, go here). According to Investopedia “As investors anticipate losses in a bear market and selling continues, pessimism grows.” That seems to definitely be the condition the broader markets are presenting investors today, most would agree.

As to the OTCs, or “pinks” or “penny stocks?” Through experience of the OTC markets and consistent observation of their behaviors they’ve proven themselves to be a lot more resilient of late than the Dow and other major indexes. This isn’t to say that OTCs don’t have many downs but it also isn’t to say that they don’t have just as many (or more) ups. For the smart investor – whether he/she is looking for a quick strike day trade “flip” (buying in low early in the day and selling for a profit later in the intraday trading cycle) or something more mid-to-long term – now may be the best time of all to participate in the OTC penny stock world. There are several reasons for why, including:

-  Some stocks are amazingly low-priced, with a mere $100 being able to control 100,000 or more shares of common stock in a company. Investing that amount of money and then “parking” (i.e. letting it sit for a long term) it for a period of time until the stock doubles, quadruples or increases in value to much higher amounts, and in a relatively short amount of time compared to its Dow-affiliated cousins, is quite possible and, indeed, happens every day on the OTC markets. Remember: Today’s penny stock could possibly become tomorrow’s blue chip stock. Of course, one should never just blindly throw hard-earned money at any stock, OTC or otherwise, without (wait for it) “due diligence.”

-  In support of the above, penny stocks tend to be more volatile than their major index brethren but they also tend to move in a more predictable fashion, which quickly becomes evident the more time you spend studying OTC stocks. The same can’t be said of the major index stocks, in actuality. As well, if you lose a hundred bucks you haven’t really lost your shirt. To control a hundred shares of Apple, say, you’d need to invest over $37,000 (Apple’s running at about 372.04 or thereabouts, currently). The matter of risk versus reward, then, becomes ever clearer.

Lastly, the OTC environment (some refer to it as “pinkyland” or “pennyland”) can be a great training ground for investors before they move to the big board stocks such as Apple. After all, OTC stocks are stocks just like any other. The OTC exchanges have slightly different reporting requirements and trading rules, granted, but a stock is a stock is a stock, and each rises or falls in much the same way and for many of the same reasons. As long as an investor keeps in mind the “high-risk-but-high-yield” (though, right now, the risk is most likely less than what’s being presented to big board investors) nature of penny stocks there’s little to lose and much to gain from investing in a few over-the-counter securities, most investment experts would say.