Are These Two Penny Stocks Worthy?

| October 22, 2014

mailbagCustomer Questions About Penny Stocks…

So, for the last few weeks, I’ve been encouraging you to write me back… I’ve offered to take a look at specific stocks and I’ll give you my two cents worth on what I think.

Of course, Itchy and Twitchy – My two crackerjack attorneys are asking that I remind you these are not recommendations – just my opinion… penny stocks are risky and you can lose everything – even if I think the stocks are great…. And you trade at your own risk.

So with the mumbo jumbo legal stuff out of the way, here we go…

What’s Your Opinion On EGLE?

This question comes from Joe D.

Thanks Joe, great question…

So let’s start from the top…

EGLE is the ticker symbol for Eagle Bulk Shipping.  They’re an operator of supermax dry bulk vessels… in other words, really big boats to ship goods around the world.

Take a look at the chart…

Eagle Bulk Shipping

So what’s with all the crazy action?

Well, consider the company’s history… they’ve been struggling under a boatload of debt. (Pun intended – Ha!)

And on August 6, 2014, they entered into voluntary bankruptcy.

Then the jump you see is the company exiting bankruptcy.

But looks can be deceiving…

You see, as part of the bankruptcy, the company diluted current equity holders – anyone owning the stock – down to 0.5% of the company… and the debt holders took control of 99.5% of the stock.

So… if you owned stock in Eagle before the bankruptcy, what you now hold is severely diluted!

The shares you own will be cancelled and new equity shares will be issued to you.  Problem is, you’re going to get 0.5% of your original holdings… that’s right… you just ran into a buzzsaw that crushed your shares by 99.5%.

Sorry, but that’s what happens when buying shares in companies that are in bankruptcy.

As for the new entity… if their bankruptcy was done right, the company should be stronger and healthier than before… and that’s great news for shareholders who buy in the coming weeks and months.

Now, with that said, I can’t really judge the stock as it sits… I want to see the next SEC filings and financial statements – I want to see what the capital structure looks like… but no bones about it… EGLE is looking stronger than before.

We had another subscriber question…

Is Penny Stock Pharmagen, Inc. (PHRX) Still In Business?

This question is form Terry D.  who went on to ask… “Are shares going to $0?”

Well, let’s look at the chart.


Honestly, it’s not too impressive.  Any stock that traces below a penny is never one I’m fond of… but we’ll dig in a bit more.

The first place I go is the SEC website looking for company filings.

All I’ve got to say is I hope you don’t own any of this stock Terry…

The first filing I see is a 15-12g filing with the SEC.

That’s the form you use when you want to terminate your listing as a public company.  Needless to say, it doesn’t look like there’s much in the way of a business here… and with the current stock price and recent filings to terminate the listings… the shares are essentially worthless.

Sorry to break the bad news.

 More Questions On Penny Stocks

I don’t have much more room for today, but if you have questions on penny stocks you own, or are considering buying… shoot me a quick email and let me know what company you’re looking at and what concerns you have.

I’ll try to get to as many questions as I can!

Profitably Yours,

Penny Stock Research

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Category: Penny Stock Tips

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