Gediminas Jasionis

Everock (PINK:EVRN) Up for a Crazy Ride?

by Gediminas Jasionis September 8, 2010
EVRN_chart.pngThis morning, Everock (PINK:EVRN, EVRN message board) was recommended by a stock promotion newsletter after a period of built up tension. The stock could go wild for the day, but a quick analysis shows questionable further potential.

When a stock is selected by a newsletter service the price usually goes up on the first day. It happened with this particular promoter's previous pick SLMU and their other referenced stocks as well. Since the service suddenly increases demand the price can go up an incredible amount over a short time.

Coincidentally, along with the promoter picking the company, Everock has also published a press release with an update on its operations, stating that the company is launching an aggressive marketing campaign.

Everock operates as a distributor of natural garment products. Financially, the company is facing hard times: the balance sheet is heavily leveraged and there were no sales over the nine-month period ended this March. The newest press release, however, talks about an increase in the sales of their Nature's Peak product line. No proof has been provided though.

As we have disclosed a couple times in the past, the company is known for paying to promoters. The price is on a strong downtrend and there are no fundamental reasons for it to behave otherwise, so any appreciation will be short lived.

natures_peak_logo.jpgThe promoter did not provide any background information on why this stock should be among the winners.

FINRA warns to do your own due diligence on the considered investments before putting your money in. Stock picks given at the last minute remind of the boiler room operation, which can harm the unprepared.

This promoter operates a gathered through its website's system mailing list and sends out periodical messages with trading recommendations. The business model involves getting compensations from various public companies for investor awareness services. Basically, it's a marketing company, which offers free stock picks service and which is there to build up targeted audience database.

Disclaimer on the promoter's website states they do not accept free trading shares from the covered companies, which means Epic Stock does not cause a pump-and-dump scenarios. However, they do trade the shares on the market.

Most often, the recommended stocks are one-sided described as undiscovered profit makers holding huge potential, but somehow overlooked by the vast investor community. In many cases this is not true. However, by operating the mailing lists promoters are able to create short-term price surges on the excitement of novice traders.

SLMU_chart.pngTake a look at what happened to some of their latest stock picks. The most recent one, Salamon Group Inc. (OTC:SLMU), went up over 140% out of the blue. But as the trading volume quickly faded away, some people might have been stuck with shares they can't get rid of without making huge losses.

As this stock traded a similar pattern in the past, it can be assumed that a slow decline is to follow from here.

Older picks clearly show a pattern of lightning fast appreciation and following not a bit slower drops. Scientigo, Inc. (PINK:SCNG), Young Broadcasting Inc. (PINK:YBTVQ), Mistral Ventures Inc (PINK:MILV), Stratton Holdings, Inc. (PINK:STHG) all presented only short term gains and thus hold excess risk of loss if the turnaround is missed.

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