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MagneGas Makes Move to Boost Revenues (MNGA) By Kevin Johnston | January 14, 2017 — 7:31 AM EST

MagneGas (MNGA) received a payment of $191,500 on January 12 from Green Arc, and subsequently shipped its Plasma-Arc Gasification system to Green Arc. This will give Green ARC the distribution rights to the MagneGas waste-to-liquid process in Louisiana, Texas, Arkansas, Mississippi and Oklahoma. Not all of the territories are exclusive, but Green Arc has the right to gain exclusivity through the purchase of more equipment.

MagneGas will receive a $0.02 per cubic foot royalty payment. The company expects the royalties and future equipment purchases to provide it with a capital infusion that could impact growth positively

The stock responded to the news with a breakout from a base. The base had been forming since late November of 2016. (See also: MagneGas May Be Forming a Promising Base.)

The breakout occurred on significantly higher trading volume than MNGA usually experiences. This is a healthy breakout so far. The high volume bodes well. Investors should watch for a follow-through day, also on high volume. (See also: MagneGas Drops Second Time Since Breakout.)

Note that this alternative energy company is a penny stock because it is priced as under $1 per share. However, it is listed on the Nasdaq, and has important contracts not only with Green Arc but also with the New York City Department of Transportation, as well as at least one unnamed major automaker.

Despite those contracts and agreements, investors should remain aware that penny stocks are subject to volatility and even failure at a rate much greater than higher-priced stocks.

This would be a play in the alternative energy sector for investors who want some exposure there. The conversion of waste to fuel suggests that MagneGas may have developed a technology that could be in high demand in the near future.

For now, that is speculation, so invest cautiously and cut your losses quickly if you decide to move into this stock. Never put the bulk of your investment dollars in a penny stock.

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