Penny Stock Watch - NFI

Are you one of those day traders that always want to get the stock that rise 10% in one day? Or you are the more greedy one that want to get those 20% one day swing? Would you be tempted to get the stock that gave some lucky one 100% in just two days? What!? 100% in two days? Who's the lucky one?

Those who bought the hard hit mortgage company Novastar Financial Inc. (NFI) around $1.31, the closing price on November 29, 2007 are now probably bragging about how smart they are buying the stock where everybody else is afraid of buying. Indeed this company's fundamental is pretty shaky as it reported $598 million of loss and could be de-listed from NYSE which is why the stock sank to historic low of $1.12 in November. When taking account of the reverse stock split of 1:4 in July, this was still a $100 stock in January.

However all the sudden the company is back alive again on announcement that Treasury Secretary Paulson is working with the regulators and bank executives to stop the foreclosure rate and to save more mortgage company from going bankruptcy. With also hope of further rate cut, bargain hunter began to come in and send this stock to the roof. The stock at this moment is trading at $2.79 per share, up 113% in just two days.

So is this a good time to buy NFI? Well, it's very hard to predict the diretion but do expect profit taking and do watch how the news progresses. Because if the news continue to go to the positive direction, this could be a steal for the long run.