Once again, VIP members pounced on our alert to watch the penny stock of former Nasdaq listed Cereplast, Inc. (OTC: CERP) for a bottom bounce to go long on. After discussing the possibilities last week of seeing .01 on CERP stock, the trigger to take action at a 90% discount from one of the Company’s more aggressive insiders took place. The “bull” showed up prior to the opening bell with the 8-K filing which allowed for a rare event — dollar volume traded exceeded the actual market capitalization of the bioplastic developer. The best part is that its just getting started.
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CERP Stock Chart
Market Cap: 851.68K
Last: 0.0248 ▲ 0.0133 (115.65%%)
Dollar Volume: $890,159
Issued and Outstanding: 34,342,167
14-Day Rel Strength: 43.35%
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Cereplast has had a rough time, not only adjusting to the OTC since delisting from the Nasdaq just over a month ago, but to watching investors loss faith at the waist side prior to effectuating a 1-for-40 reverse stock split back in March, 2010. During that same period, the Company reported Q1, 2010 sales of $319,217 versus $564,383 from Q1, 2009 when the share price of CERP stock had already fallen from over $30 pre-split since Q1, 2008. Confidence lost but business continued.
During Q3, 2012, Cereplast reported net sales for the three and nine months ended September 30, 2012 to be $477K and $770K, respectively, a mere fraction of the $5.37 million and $20.22 million the company reported for the same periods the year prior. The Company proclaimed that the decline in net sales was due to transitioning significant resources and efforts toward recovery of past due accounts receivables from customers and minimizing any additional exposure to their accounts receivable credit risk by converting their business model to primarily shipping only to prepaid accounts and nominal shipments to established existing customers with low risk credit limits.
The change in risk exposure was enough to cause one insider group, Interinvest Corporation Inc. and their subsidiary, Interinvest (Bermuda) Ltd., to see an opportunity and began grabbing shares in the open market to increase its shareholdings to 7.02% of all of the outstanding shares of CERP Stock outstanding as of November 26, 2012. (see here) The transactions were as follows:
|Date||Price||$ Amount||Share Volume|
Now, ask yourself as a penny stock trader: “What do these guys know that I don’t and if they are paying over a dime to increase their stake in the company, is my thought about CERP worth a penny?”
The volume traded Tuesday was epic for CERP and, considering that (i) the PPS is currently less than half the 50 Day moving average, (ii) the PPS is currently discounted 75% from the lowest price Interinvest acquired shares at, and (iii) the penny stock closed at just .0001 from the HOD all force Cereplast to be on the list of every traders watch list for a short to mid-term trade. The fact that the Magna Group, LLC and the holders of the Company’s 7% Convertible Senior Subordinated Notes, $12.5 million worth as of May 24, 2011, provides that the holders waived the event of default and agreed to forbear from exercising their rights and remedies under the Indenture with respect to the Company’s failure to make interest payments that were due on June 1, 2012 and December 1, 2012 is a massive bonus.
About CERP Stock
Cereplast, Inc. developed and are commercializing proprietary bio-based resins through two complementary product families: Cereplast Compostables® resins which are compostable, renewable, ecologically sound substitutes for petroleum-based plastics, and Cereplast Sustainables™ resins (including the Cereplast Hybrid Resins product line), which replaces up to 90% of the petroleum-based content of traditional plastics with materials from renewable resources. Click here to view the SEC filings for CERP.
Last 5 Trading Sessions:
Bottom Line: The penny stock of Cereplast went absolute ape-shit off the 8-K filing and is now firmly placed on the list of OTC stocks to watch after ending Tuesday as the 9th most actively traded. With the bounce pattern initiated after Friday’s visit to under .01, CERP stock should see a bumpy road towards the 50 Day, .0572, and levels where insiders decided to grab shares, .098, 130% and 295% potential upsides from its current price.
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