Penny Stock Winner #1: Digital Ally, Inc. (NASDAQ:DGLY)

Ready to benefit from stimulus buying

Digital Ally, Inc. supplies video imaging and storage products for security and law enforcement applications.

When I first mentioned this company to TFN readers back in January, its revenues had increased 65% over the year prior.

The stock then climbed over 15% until March when the company accompanied their stellar results with grim predictions for the future.

Delays with some of their products and declining economic conditions caused them to suspend their fiscal year 2009 guidance.

The share price came crashing down within days and hasn’t recovered.

The perfect purchase price

Now is a great time to pick up shares (or buy more shares, if you’re still holding on from our original recommendation).

As the stimulus money for local police departments and other law enforcements agencies gets doled out, Digital Ally should see profits rolling in.

Then there’s the international market…

In mid-April, the company signed a lucrative contract with the British Airport Authority for Digital Ally’s DVM-500 in-car surveillance systems.

The company is also launching a pilot program for its equipment with the Saudi Arabian Police.

Proactive approach

Digital Ally received repeated requests for assistance from U.S. police departments and other services in relation to how they could receive federal funding for their products.

The company has now pulled together instructions and resources to assist agencies to prepare the paperwork they need for grants to purchase the company’s products.

I recommend you buy shares of Digital Ally, Inc. (NASDAQ:DGLY) under $2.25 and hold on for double-digit gains by the end of the year.

Penny Stock Winner #2: ThermoGenesis Corp. (NASDAQ:KOOL)

Supplying today’s stem cell research

ThermoGenesis Corp. processes, stores and supplies stem cells retrieved from bone marrow, blood and tissue. Their clients include researchers, hospitals and blood banks.

The biotech’s automated, semi-automated and single-use products allow for the retrieval of autologous stem cells and would-healing proteins from a patient’s blood in less than one hour.

The future of medical treatment

Research indicates that stem cells instinctively go to an injured area and aid in the repair process.

Stem cells use as a standard treatment is not as far off as you think…

Just a few weeks ago, for the first time in the U.S., a stroke patient was treated with his own stem cells. The patient has missed the three-hour window for the standard clot removal treatment.

Knowing of the research regarding the possible regenerative quality of stem cells, medical personnel removed bone marrow stem cells from his leg, purified and intravenously returned them.

Other items of interest:

• ThermoGenesis’s subsidiary, Vantus Veterinary Stem Cell Laboratories, is tackling equine health by harvesting, processing and preserving stem cells of horses for the orthopedic injury therapies.
• The company recently brought J. Melville Engle on board as CEO. With 30 years of management experience in the healthcare industry, Mr. Engle should be able to bring the company to the next profitable level.

I recommend you pick up shares of ThermoGenesis Corp. (NASDAQ:KOOL) under $0.80 and hold on for 20% gains by the end of the year.

Penny Stock Winner #3: Denison Mines Corporation (TSE:DML)

Long-term uranium gains

Canadian Denison Mines’ share price has remained low large due to weak uranium prices.

In mid-April, 19.9% of the company was sold to Korea Electric Power Corp. (NYSE:KEP). KEPCO will also receive 20% of its annual production through 2015.

This greatly reduced the company’s debt levels.

Later in April, Denison announced it had signed a contract to provide 5 million pounds of uranium over 5 years beginning in 2011 to an unnamed customer.

The miner has another three long-term sales contracts and is aggressively looking for more.

Get in while the getting’s cheap

Uranium prices appear to be ready to climb once again.

Perhaps because of the world sees uranium as the lesser of evils for their energy needs.

This is the most speculative of our plays, and you need to be able to buy off the Toronto market, but it’s worth your consideration.

I recommend you buy shares of Denison Mines (TSE:DML) under $2.50 for 20% gains.

Source: Three Penny Stocks You Need to Own Now

Capstone Mining produced 26.1 million pounds of copper in concentrate in the first quarter of 2009 at total cash costs of $1.05 per pound. Meanwhile drilling at its Minto North target in the Yukon continues to show signs of adding tonnage to the Minto operation with results like 2.26 per cent copper and 1.11 gram gold per tonne over 26.7 metres. Capstone ended the day down C$0.11 at C$1.97.

Denison Mines (AMEX:DNN) added C$0.21 to close at C$1.51 after the uranium miner entered into a memorandum of understanding with Korea Electric Power (NYSE:KEP) to purchase 20% of Denison’s U3O8 production and acquire 58 million common shares of Denison by private placement at $1.30 per share.

Pan American Silver (NASDAQ:PAAS) has stepped up to the plate to co-develop Orko Silver’s La Preciosa project in Mexico. Pan American will fund the development in return for a 55 per cent stake. Orko ended the session down C$0.04 at C$0.96, while Pan American added C$0.13 at C$20.30.

San Gold cut 207 grams gold per tonne over 2.3 metres in a 50 metre step out hole from the Hinge zone on its Rice Lake property in Manitoba. San Gold ended the day up C$0.13 at C$1.73.

Shares of Rodinia Minerals added C$0.12 to C$0.295 after announcing that a two-dimensional reflective seismic survey has been contracted for its Clayton Valley lithium brine prospects in Nevada.

A stock to watch is Western Prospector Group. The company was halted from trading pending news at C$0.54. CNNC International has offered to acquire all Western shares for C$0.56 each.

The broader bourse appears to be at a crossroads in terms of direction. Perhaps it is merely a consolidation phase after a nice runup or perhaps buyers have run out of gas. We shall see what Wednesday trading has in store.

Source: Resource Stock Roundup: Wednesday, April 15th, 2009

You may reasonably ask why you should care. There are, after all, about 183 countries in the world, perhaps 100 of which are more or less democratic in nature, which gives you roughly 30 elections a year to worry about. Figuring out who are the “good guys” in that number of races is absolutely impossible – even in Korea, which is one of our more-important trading partners.

Every now and then, however, an election brings a change that is truly significant, either politically or economically. In Korea, this election has brought significant positive economic change.

Since the Asian crisis of 1997, Korea has been run by the center-left. That group didn’t do too bad a job: Economic growth ticked along at an average annual rate of between 4% and 5%. The per-capita growth rate is about the same, given that Korea has only 0.4% per annum population growth. There’s a budget surplus, and the country also boasts a balance of payments surplus. Overall inflation is only 2.5%. The stock market is around double its 2003 level, which is when the previous [and now-outgoing] government came into power.

As nice a job as the outgoing government managed to do, its policies also included a few that held back growth. For instance, government spending rose from 21% of Gross Domestic Product (GDP) to 28% over the decade the left was in power. That increase in government outlays saps resources from the private sector by diverting the resources into less-productive public sector uses – reducing the economy’s overall productivity growth.

The outgoing government also imprisoned the chairmen of three of Korea’s top six chaebol conglomerates, and placed severe restrictions on their expansion. SK Telecom Co. Ltd. (SKM), for example, part of the Sunkyong Group, was not permitted to increase its cell-phone market share significantly above 50%. Only after Lee’s presidential election victory in December did restrictions start to relax. In February, SK Telecom was permitted to acquire 44% of its competitor, Hanarotelecom.Inc. (OTC: HANAY).

However, President Lee’s more free-market approach seems likely to ratchet Korean growth up a notch. He ran for election on the platform that Korea should expect a growth rate of 7% – not 5% – and with a budget surplus and low inflation rate he is well positioned to deliver his goal. Lee has promised both corporate and individual tax cuts, and a major program of privatization, starting with three state-owned banks – including the Korea Development Bank.

He is also likely to take a tougher stance toward the potentially volatile leadership in North Korea, cutting back on handouts and adopting a harder line against its northern neighbor’s alleged nuclear-weapons programs. This newfound aggressiveness by the South Korean leadership will save money both for the government and for the big conglomerates, since they had been expected to undertake unprofitable prestige projects in the North.

There are five Korean stocks that have American Depository Receipts (ADRs) that are fully listed on the New York Stock Exchange and that trade in reasonable volume. Some of these are more attractive than others-Kookmin Bank and SK Telecom in particular seem especially good bargains. Let’s take a look at each of the five, starting with an overview and including an investment rating on the shares:

• Kookmin Bank: (KB): The largest bank in Korea, KB has been hit by investor disillusionment with the financial services sector; at one point it was down 50% from its 2007 high. However, the stock has rallied recently. The bank’s earnings have continued to make steady progress and it has no exposure to the U.S. subprime mortgage market. Kookmin’s shares are trading at a Price/Earnings ratio of only 7.5 on trailing 12 months’ earnings, and its P/E on projected earnings for the next 12 months is a staggeringly low 6.6. Those earnings are expected to increase in a big way. One last benefit: Kookmin’s shares feature a dividend yield of 4%, which is more than you’ll get out of Treasuries these days. Rating: “Strong Buy.”

• Korea Electric Power Corp.: (KEP): Shares of the Korea’s electric power company are up slightly from where we recommended them back in December. The shares feature a P/E of 11 on projected earnings, and a dividend yield of 2.4%. KEP’s steady growth should benefit from any acceleration in Korea’s economic growth rate, but it is forced to buy coal from overseas, which has doubled in price in the past year. With an election in the offing, it suffered from price controls in the latter part of 2007, but should presumably have more freedom to raise its tariffs going forward. Rating: “Hold.”

• KT Corp.: (KTC): Formerly Korea Telecom, KT is now Korea’s leading “fixed-line” telecommunications provider, which was privatized in 2002. While the P/E ratio on trailing earnings is less than 9, its forward P/E is 11.5 as its margins are under assault from the hyper-competitive Korean telecom market. It has a dividend yield of 4%. Rating: “Hold.”

• Posco: (PKX): Korea’s largest steel company, and the world’s most-efficient steelmaker, Posco’s shares sport a Price/Earnings ratio of about 11, and a dividend yield of 2%. The company is a major exporter into China, making it a key participant in that country’s explosive growth. The company does buy its iron ore from Brazil’s Vale (RIO), and was socked with a 65% price increase in this crucial raw material. But don’t forget that investment guru Warren Buffett made Posco one of the 20 Korean companies he invested in last year. If nothing else, that’s a reminder that Posco will become very attractive when the commodities bubble deflates, even though it may be a tad early to make your move right now. Rating: “Buy/Hold.”

• SK Telecom: (SKM): It’s Korea’s largest mobile phone company, with operations in China and Vietnam. The stock is now trading at only 8.7 times estimated 2008 earnings, and has a hefty 4.9% dividend yield – so income investors do well from it, also. For many years, its market share in Korea was capped at 50%. But now the shackles are coming off; in fact, SKM recently got the green light to buy 44% of Hanarotelecom, Korea’s second-largest cell phone company. In 2006, SKM invested in a $1 billion convertible offering for China Unicom, Mainland China’s No. 2 mobile-phone company; in August 2007, the bonds were converted into a 6.6% in China Unicom with a current value of almost $2 billion. In Vietnam, SKM’s 73% owned Vietnamese subsidiary had 3.5 million subscribers in 2007, and it’s now aiming for 5 million in 2008. Only its U.S. operations are showing losses, but even those could turn around. Rating: “Buy.”