Spongetech Delivery Systems, Inc. (fka SPNGQ)

[ClearlyStocks]

WOW!! READ THIS!

http://www.smallcapnetwork.com/scb/spongetech-spng-close-to-being-one-hot-small-cap-stock/1836/

5/9/2008
SpongeTech (SPNG) Close to Being One Hot Small Cap Stock
Filed under: SPNG— SmallCapNetwork Editor @ 6:20 am
I don’t know if it was being featured on ‘The Price is Right’ that prompted yesterday’s big surge from our bulletin board stock pick SpongeTech Delivery Systems (SPNG), but it may have helped. Or, maybe it was CEO Michael Metter’s letter to shareholders. Frankly, it doesn’t entirely matter what the reason is, because I think SpongeTech’s sales and revenue results merit this small cap stock’s gain. It’s about time we saw this breakout.

The nearby chart tells the whole story. We saw a high-volume gain yesterday…though major accumulation isn’t entirely new here. The other thing we saw was new - a move above the 200 day moving average line, for the first time since there’s been enough data to actually calculate a 200 day moving average line.

There may be one more hurdle, though I don’t really think it will be a problem. February’s peak was 4.9 cents…a line that acted as a ceiling for several days before sending the stock back to multi-year lows. This time seems to be different, in that we have plenty of volume supporting the rally this time.

If we see SPNG hit 5 cents, it may be a good time to start accumulating even more.

By the way, my confidence level in the stock is largely driven by Michael Metter’s letter yesterday. He didn’t tell us anything we didn’t believe already, but it was a nice confirmation of our expectation.

Basically, Metter said the company was on track to ship $3.3 million worth of sponges in their fourth quarter (which ends on May 31st). Annualized, that’s $13.2 million in sales per year. Yet, the backlog is still bigger; it’s about $20 million at this point. I suspect we’ll see several quarters of significant growth.

As a reminder, they did $1.22 million in sales last quarter, and posted decisive profits. I expect to see higher sales translate into higher earnings this time around.

This is shaping up to be one solid bulletin board pick as the company enters its high-growth stage. Of course, that’s the whole point of trading small cap stocks.

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