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Another Microcap Scam Sucks in Unwary Investors

I’ve said it before, I’ll say it again: NEVER BUY PENNY STOCKS

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Nestle trades more than 450,000 shares daily at about $60 a pop. You’d have to invest $6.75 million to grab 25% of the volume in that pick.

Nestle also has a market cap of nearly $200 billion, so you can be sure this is a “real” company. Save the World Air? A mere $50 million market cap. That’s way too small and way too risky.

The longest answer:

I sometimes get maligned by penny stock and microcap investors for making blanket statements that all companies this size are a gamble and nothing more. So allow me to give my expert commentary on the stock based on the merits of its balance sheet:

Save the World Air by it’s own admission generates almost zero revenue and is bleeding cash. Check out the investor information on its site here, where I took this screenshot.

pennystockredux2 Another Microcap Scam Sucks in Unwary Investors

You know you’re in trouble when a company needs to look back 171 months just to record a paltry $69,000 in sales.

It has an operating cash flow of about -$4 million. Its EBITDA is -$8.5 million. Considering this stock has a market cap of just $50 million, that’s insane.

Deb, I would tell you to run screaming from this stock, but I’m afraid that will make you dump your shares all at once. That would undoubtedly cause the stock to crash, and you’d push share prices down for other investors who bought in out of naivety, crazed optimism or greed.

And for the record, I do not have a stake in this or any related company. I am not trying to profit from this in any way — I just want to protect unwary investors.

Please bleed down your position a little at a time, maybe $2,000 or $3,000 a transaction using limit orders to protect your sale price.

And never — EVER — buy another penny stock. If you want to gamble, stick to roulette, slots or blackjack. At least you get free drinks.

Jeff Reeves is the editor of InvestorPlace.com and the author of “The Frugal Investor’s Guide to Finding Great Stocks.” Write him at editor@investorplace.com or follow him on Twitter via @JeffReevesIP. As of this writing, Jeff Reeves did not own a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, http://investorplace.com/2012/07/another-microcap-scam-sucks-in-unwary-investors/.

©2014 InvestorPlace Media, LLC

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