Penny Stock Watch - CTCH

If a stock is identified as a penny stock, it normally means either the company is too new to have any product on the market or the company was doing so badly that it got punished by investors. Most stock I found is the later one.

The penny stock we spotted today is no exception. Commontouch Software Ltd. (CTCH), an Isreal based anti email spam solution provider, was once traded $68 per share during the dot-com boom before the bubble burst send it all the way to about $0.06 per share in October 2002. Now after three years of fluctuating around $1 per share, the stock may be ready for a big break thru.

The company's anti-spam product should be getting more and more attention as addressing the increasing annoying email spam has become many company IT's top priority. Recent deals from AhnLab, Korea's largest security vendor on December 14 and from Rising Tehnology, China's leading antivirus vendor also meant Commontouch has positioned itself well in the Asia market.

According to the technical chart the stock has been on a rally recently trading above both 50 day moving average and 200 day moving average, a bullish sign for a stock. MACD and KD also indicate buy signal although ROC is showing the stock maybe overbought and could be in correction.

Financially the revenue, after bottoming in 2003 had surged five times in the following year. It would be interesting to see how the new deals would help the revenue for next year. The Cash Flow chart still shows risk to the stock with increasing net loss, liabilities and sales of stock which means the company still needs a lot of money. Nevertheless at this stage the company do needs money for expansion.

The shareholders have been selling the stocks this year but with no transactions from top executives it is hard to tell if the management team is bullish or bearish on the company.

Penny Stock Score (1~5) 5 is highest
1. News Buzz: 4
2. Technical: 5
3. Financial: 3
4. Market Potential: 5
5: Insider: 2