Penny Stock Pick - IMH

Which is the best place to find penny stocks? Years ago technology and biotech startup would probably the place for penny stocks. It is hard to imagine a supposedly "stable" industry like financial - especially the mortage sector would be filled with penny stocks. However the waves of foreclosure and default caused many company either going bankrupt or massive layoffs. So now we are left with mortgage penny stocks such as Impac Mortgage Holdings(IMH). Although this sector may seem dangerous, the aggresive fed rate cut and rising mortgage applications may indicate this sector is ready for comeback. So will this stock be back?

Technical
Although the moving average still shows weakness as 50 day moving average is below 200 day moving average, positive momentum seems to be back as the stock is back above 50 day moving average. In addition MACD is also back above 0 indicating the stock is back in bull market.

Insider
Although for the past year most insider transactions were sales, this year all the transactions have been purchases of the stocks from Ashmore William, the director and president of the company. Watch and see if more insider other than William start buying. From the institution side there is no activity for the past quarter.

Financial
In the latest quarter the company posted a huge net loss which is expected from most of the mortgage related company. The balance sheet shows dangerous sign as the stockholder equity is negative which happens when total liabilities exceeds total assets. We will probably not seeing any institution buying in the stock until the financial situation improves.

Conclusion
If the financial situation improves, this is a Strong Buy stock.

Penny Stock Score (1~5) 5 is highest
1. News: 5
2. Industry (mortgage investment): 2
3. Technical: 4
4. Insider: 3.5
5. Financial: 1
Recommendation: Accumulate