Blog : AWRE's 75% Jump, Mining Values

by Peter Leeds on April 28th, 2012

I'll start by congratulating subscribers of Peter Leeds penny stocks who own AWRE.  Shares absolutely LEAPT higher Friday, by as much as 75% or just under a $3 gain, to settle finally at $6.15 (or 65% gain).  That's the type of sudden and significant moves you can see in penny stocks, like the excellent quality penny stocks we profile.

I must say, on April 25th we wrote "Watch for the potential spin-off or sale of some of their many patents, which could really solidify their financial position."

It was April 27th when they announced the $75M patent sale, two days after we gave penny stocks subscribers the heads up!

Get our next penny stocks before they jump in price!

The move in this penny stock came in response to several events, all announced at one time.   The BIG one was the signed agreement of sale of certain of it's selected patents to Intel for $75M.  Not bad at all for a penny stock valued at $77M before the announcement.

Then, they also declared a special cash dividend of $1.15 per share, for anyone holding AWRE as of May 11th.  After that date, you can expect the shares to drop back down by about the value of the dividend.  The company is sitting on lots of cash, and they felt it best to distribute some of it to shareholders.  In penny stocks, you don't often see a dividend.

Keep in mind, this wasn't a full blown "let's help shareholders out of the goodness of our hearts" move.  Since 60% of this penny stock is owned by insiders, it's relatively just a way for them to take out a huge pay check, and as a dividend the money will be subject to very lenient tax impacts.
 
Now, while it was decided by insiders, and it benefits insiders, it also benefits regular shareholders, by the resulting increased share price in he penny stock, but also due to the fact that all shareholders get the payment.  It will automatically go into your penny stock brokerage account.

Now, AWRE also released first quarter results.  Net income was up (to 5 cents from 3 cents), but revenues were down.  With the other two events mentioned above, it actually overshadowed the financials, which were OK.

You can see how, in penny stocks, you need to keep an eye on them.  Penny stocks like AWRE can trade range bound for a long time, and then leap higher in an instant.

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On another note, gold is up over 5% compared to a year ago.  However, mining penny stocks and precious metals penny stocks are all down significantly.  Uranium penny stocks, silver penny stocks... all sunk like a stone.

Currently, the value of these underlying penny stocks is being ignored.  There are some penny stocks trading at 1 times revenues, other penny stocks (like our Hot List pick from last week) that are almost trading at their cash per share level!!??!  The situation is ridiculous and temporary, in my opinion.  Select penny stocks in the right sectors, with long reserve life indexes, that are well funded, and don't have a lot of forward hedging, are poised to snap back up to realistic valuations.  

Check out some of the resource penny stocks we're profiled in the last few months, and the mining penny stocks we've written up recently to see some great penny stocks trading at extremely attractive valuations.