Penny Stock Pick - FONR

Bullish Insiders One way to see if the stock is worth buying is to see if the top management, or the insiders are buying the stock. Because this means either the executives are optimistic about the company or they are commited to make the company better. One penny stock company which fits into this category is Fonar Corp.(FONR), a Melville, NY based medical scanning equipment maker using commonly know MRI technology. On Wednesday, February 15, Fonar annouced that Dr. Raymond Damadian, Chairman, President and founder purchased 100,000 shares of stock in the open market. Dr. Damadian hasn't sold a share of Fonar and now has total of 2.5 million shares. Another insider purchasing the stock in the open market is Rober J. Janoff, a member of Board of Directors, who purchased 10,000 shares of Fonar stock.

Technical
The puchasing of common stocks from insiders should give a boost to the disappointing peformance of Fonar stock which went from $1.5 per share last February to 52 weeks low of 57 cents on Monday, February 13 this year. However at this time the stock is still trading below both 50 day and 200 day moving average showing weakness on the stock. In addition, falling MACD, now below 0, also indicates bearish trend. The only possible positive indicator is KD which could begin to cross up at the low point of 20.

Financial
Fonar generated revenue of $100 million in the fisical year of 2005, up from $70 million from previous year. However revenues for the third and fourth quarter of 2005 were significantly lower than the preceeding two quarters. In addion the net loss also increased in the two quarters. So it appears that top management at this point is trying to turn the company around to bring the stock back.

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