Red Hot Penny Stock

Red Hot Penny Stock: West Point grad leaves Wall Street dumbfounded after he makes dot-com-era business model work
A Taipan Financial News Research Alert
by Andrew Mickey, Editor, BreakAway Investor
March 2, 2007

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"Early investors could reap 262% thanks to his staggering success"

The late 1990s were a great time to be an investor. We were all geniuses. After all, who wasn't making money? Every stock, no matter how ridiculous, did nothing but go up. One poster child for the dot-com bubble, both in its upward and downward trajectory, was CMGI (CMGI:NASDAQ). Over the years that followed, CMGI has grown into a mildly successful supply chain management firm. But it was its venture capital business that sent its stock soaring seven years ago.

CMGI was just ahead of its time. As a venture capitalist, it was charged with uncovering, investing in and developing new technologies. And when it brought those technologies to market, that's when the big payoff would come. CMGI was supposed to act as an incubator for new technologies and provide them with the financing and marketing expertise that would make them successful products. But the big payday never came. CMGI failed to take off -- and Wall Street made clear how it felt. CMGI shares plummeted from an all-time high of more than $160 down to less than $2 per share.

Red Hot Penny Stock: Wall Street's Completely Dumbfounded

That's why Texas-based Newmarket Technology (NMKT:OTC BB) is making waves in the business world. Many are left wondering how it was able to successfully use an incubator business model to create such tremendous growth in revenues.

Here's the deal. Newmarket isn't your average stock. In fact, it's a highly complicated business model. You see, Newmarket is a true incubator. It's growing a multitude of businesses and spinning them off. Newmarket shareholders receive additional shares of the new companies when they are spun off. Essentially, it's like receiving regular dividends. In this case, the dividends are in the form of shares of the newly created subsidiaries.

So far, Newmarket has successfully spun off Newmarket China (NMCH:OTC BB) and Diamond I (DMOI:OTC BB) into stand-alone companies. It has also spun off its Latin American operations by selling them to Paragon Financial (PGNF:Pink Sheets).

Just around the corner, Newmarket is going to spin off its VoIP subsidiary. And even though Newmarket has proven its growth potential in China and Latin America, the VoIP segment is probably the most exciting. The VoIP division is headed up by former Qwest Communications COO Peter Geddis. If you're a serious investor, Geddis' association with Qwest should be setting off alarm signals.

Qwest is a Baby Bell that has been through one of the greatest accounting scandals in history. At the time, the scandal rivaled those at Worldcom, Global Crossing and Enron. But it's nothing to worry about. Geddis left Qwest long before any of the fraud and abuse started. The incubator business model scares away many investors and allows Newmarket to quietly grow into a technology powerhouse. And granted, it is a bit complicated, but there are so many benefits to it that Newmarket has only begun to take advantage of. 

Red Hot Penny Stock: But It Works, Plain and Simple

Newmarket has a long track record of meeting its goals. Since the company really got its growth rolling, it has successfully met every goal for increasing revenues each time. The systems integrator and incubator has a history of big promises, but always delivers. At the end of 2004, the company boasted it would generate $50 million in revenues in 2005. Wall Street laughed. But Newmarket delivered.

At the start of 2006, Newmarket claimed it was going to rake in more $70 million in 2006. Yet again, it was another big goal that Newmarket delivered. On January 18, Newmarket made its boldest claim yet. It called for a rebound of growth in 2007 with revenues of $120 million and it expects to reach $500 million in revenues by 2010. I realize these are some pretty big goals, but Newmarket has an excellent track record.

Right now, the company's stock price doesn't reflect the potential of this achievement. If the company is able to reach its $500 million goal, you're going to be holding an $8 stock. As discriminating investors, we need to look at the worst-case scenario. After all, what if Newmarket completely stumbles and only books $250 million in revenues in 2010? Well, we're looking at a stock in the $2 to $3 range.

So even when looking at the worst-case scenario, the stock still has the realistic potential to generate 52% annualized returns. And there's no way the S&P 500 is going to keep up with that.

Red Hot Penny Stock: Making the List

Newmarket has successfully joined a pretty exclusive club. Each year Big Four accounting firm Deloitte & Tousche publishes multiple lists of the fastest-growing companies in the world. The lists give a great picture of how Newmarket stacks up against other technology companies around the world.

And it does very well. Since 2001, Newmarket has grown its revenues from less than $1 million to more than $65 million in 2006. Between 2001 and 2005, Newmarket grew 31,633%.

It's growth like this that caught the attention of researchers at Deloitte. Newmarket has been so successful at developing and marketing systems integration technology that it reached No. 5 on the list of the 500 fastest-growing tech companies in North America. The company also ranked No. 1 among all businesses in Texas.

Clearly, Newmarket has been able to turn the much-maligned incubator business model into an astounding success. And now it's going to start spinning off many of its businesses that it has spent the last few years getting off the ground.

Red Hot Penny Stock: Not One to Bet Against

Newmarket's CEO, Philip Verges, is not one to bet against. Not only has he grown Newmarket into a multimillion-dollar enterprise in less than five years since completing his service requirement with the U.S. Army, but he's a firm believer in the future of his company. True belief from top management is not always there in the world of penny stocks. There are a lot of unscrupulous people trying to take advantage of unsuspecting investors. That's not the case with Newmarket.

Just look at the top Newmarket stockholders. Topping the list is Verges. In fact, he currently owns 63 million shares of Newmarket stock, or 38.3% of all outstanding stock -- by far and away the largest shareholder. With a massive holding like that, you can bet his interests are right in line with yours.

Red Hot Penny Stock: Action to take

Buy shares of Newmarket Technology (NMKT:OTC BB) under 45 cents per share. This small Texas company has been making a killing helping major businesses around the world function. It has become a key partner to customers throughout high-growth regions including Latin America and China. Shares won't be hanging around under a dollar for too much longer.

Keep in mind that this is a penny stock: As such it is likely to move dramatically on inorganic volume and demand spikes.

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Copyright 2007, The Taipan Group, LLC and Dynamic Market Alert, 808 St. Paul St., Baltimore, MD 21201
All rights reserved. No part of this report may be reproduced or placed on any electronic medium without written permission from the publisher. Information contained herein is obtained from sources believed to be reliable, but its accuracy cannot be guaranteed.

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