Tuesday, November 23, 2010

Real Estate and Gas and Oil Exploration Penny Stock

This report includes two penny stocks, one of these penny stocks is a real estate processing company that has an EPS greater than its share price. The other penny stock is a natural gas and oil exploration company with significant growth opportunities due to the increase in commodity prices.
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DJSP Enterprises (DJSP)
Current price: $0.44
52 week range: 0.33-13.65

DJSP is a real estate processing penny stock which focuses on processing services for the real estate industry in Florida. Their services range from processing mortgage defaults to title searches. The company was incorporated in 2008. DJSP's stock reached a high of $13.65 per share before free falling to its current price of $0.33.

It all began in May of 2010 when DJSP lowered earnings guidance for 2010. Previous estimates were $53 million in net income; this figure was lowered to $32 - $34 million. In July DJSP announced that a class action lawsuit was filed for investors against the company claiming that DJSP mislead investors and failed to disclose adverse facts know regarding financial results. In result stocks were trading at artificially inflated prices. By the end of July DJSP suspended its guidance reporting and any guidance it had provided for the year. This led DJSP's stock price to reach penny stock levels.

Although DJSP was trading at inflated prices, it is possible the stock is trading at deflated prices now. Because investors tend to overreact to news DJSP could be under priced.

Although revenue and net income have decreased drastically, net income for the 2Q was over $5 million EPS of $0.28 per share which comes out to $1.12 EPS per year which would put the P/E at 0.39! This penny stock is facing adversity and is slashing positions, replacing management and board members are leaving. But I feel that at a point the company will remain profitable and be able to recover some of the losses its share price lost.

Tengasco (TGC)
Current price: $0.49
52 week range: 0.40 - 0.58

Tengasco is a natural gas and oil exploration penny stock with areas of exploration in Kansas and Tennessee. At year end of 2009 Tengasco operated 184 oil producing wells in central Kansas. This penny stock also owns 65 miles of pipeline with 17 producing gas wells in the Swan Creek Field.

Recently Tengasco announced third quarter financial results for 2010. TGC reported a 27% growth in revenue from 2Q. The significant increase was mainly due to a 13% increase in oil prices and a 16% increase in oil sales volume.

The company was able to increase sales volume and oil exploration due to increased cash flow compared to previous years. This is something that should continue into the future.

This penny stock should continue to see growth in revenue with the weakening US dollar and increasing prices for oil. The 3Q prices for oil has increased significantly from Q2. I am anticipating another positive report.

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