What a difference a year makes.
The U.S. economy appears to be on solid footing in 2021, a sharp contrast to the shaky conditions of yesteryear. Americans are embracing reopened stores, restaurants, and entertainment venues. Add that to the ongoing propensity for online shopping and the consumer is once again alive and well.
Friday’s June retail report showed a 0.6% month-over-month increase in retail spending. This may not sound like much of a jump, but it is when you consider personal spending accounts for roughly two-thirds of domestic economic activity.
Meanwhile, the economy is getting support from its other key cogs. Businesses are getting more comfortable with increased levels of investment in anticipation of further growth ahead. And of course, the Biden Administration hasn’t been shy about loosening the government purse strings to support a revival in small business activity, education, infrastructure, and other vital sectors.
Together these forces continue to drive major U.S. stock indices to record levels. Ditto for the OTC markets. The OTC Composite (OTCQX) took a breather last week but is still trading near an all-time high above 1,600.
It is in the OTC markets where investors will find more than 12,000 stocks across all economic sectors. These companies are generally smaller in stature but hold the potential for some mega-sized growth.
As usual, there were several intriguing OTC stocks generating a lot of buzz across social media last week.
Four names, in particular, caught our attention—and merit a spot on the watch list heading into the new trading week. They are International Consolidated Companies (OTCPink: INCC), Jones Soda Company (OTCQB: JSDA), Masterbeat Corp. (OTCPink: MSTO), and VirExit Technologies (OTCPink: VXIT).
OTC STOCKS TO WATCH #1 INCC
INCC is an OTC pink sheets stock with a $21.7 million market cap. The Florida-based company acquires and develops businesses in the medical marijuana market—businesses that seek more efficient production technology for marijuana growers and smarter delivery methods for patients.
We wrote about this cannabis play two months ago. INCC was on fire because of a potential deal with hemp cigarette maker and packager Hempacco (OTCMKTS: GGII). Hempacco tweeted that no such agreement was in place. Antonio Uccello, CEO of INCC, responded by saying the company is “working with several cannabis cigarette manufacturers”. This exchange ignited a run in INCC to a record $0.0088.
Nothing further developed on this front and INCC trended back towards to $0.001 level. However, the comments on social media continued. And investors that stayed patient were rewarded with another spike late last week, albeit for unexpected reasons.
On July 15th, INCC announced an agreement to acquire SoundTech AI for $150 million worth of preferred X stock. The move marked a clear departure from the company’s cannabis focus.
SoundTech owns a proprietary software that combines quantum computing and artificial intelligence (AI) to create a ‘Next Generation 360 Immersive Audio Experience’. Its flagship product is Holographic Sound Field (HSF) which provides enhanced audio and 3D sound for recorded music, films, live concerts, and gaming.
The patented technology can be streamed to any device including headphones, earbuds, speakers, gaming consoles, home theaters, and even live events. It is expected to launch in the first quarter of 2022. SoundTech’s intellectual property (IP) portfolio also includes six pending patents as well as 26 trademarks.
Mr. Uccello commented:
“As tech-entrepreneurs, our team was so impressed by the SoundTech AI’s Disruptive Audio Technology and the company’s accomplished tech, marketing, and creative management team, we immediately jumped in to this culturally transformational venture! Our management and board were blown away by what we heard. Ground-breaking tech and the ability to hear on any device just like the master recording is a win! We look forward to working with SoundTech AI to efficiently deploy investment capital to become the recognized market leader in the rapidly growing enhanced audio market.”
The deal, which is expected to close by the end of this month, was music to investors’ ears.
INCC more than quadrupled to $0.0049 on Thursday and ran as high as $0.0072 on Friday before profit-taking set and the stock closed the week at $0.0031.
OTC STOCKS TO WATCH #2 JSDA
Back in April 2007, JSDA was a $30-plus stock. The fizz then quickly went out of the Seattle-based soda maker and it has been trading in penny stock territory since 2008.
JSDA has had a few runs in recent years but has fallen short of reclaiming the coveted $1.00 level. Earlier this year it ran as high as $0.78 ahead of fiscal 2020 results. It was aided by a band of social media-driven investors that were clearly drinking the Kool-Aid.
The JSDA chatter was elevated again last week. That’s because the maker of cane sugar-based Jones Soda brands announced a surprising move into the cannabis sector.
On July 14th, JSDA entered into a non-binding term sheet with SOL Global Investments Corp. (SOL) and Pinestar Gold Inc. It issued $2 million of convertible debt to SOL to fund the expansion of the business to cannabis-infused beverages and edibles.
Mark Murray, President and CEO of JSDA said:
“We believe that Cannabis-infused beverages and edibles are a perfect fit for the iconic personality of the Jones brand, and that the proposed transactions will lay the groundwork for a strategic transformation of the Company to an additional business line that we feel builds on our current business model. We are also confident that SOL, along with certain large shareholders of Pinestar will provide Jones with the knowledge, expertise and resources necessary to help us deliver on our growth plans within the cannabis sector.”
The moves makes sense for a company that has made some inroads in the craft soda market but has struggled to derive growth from a beverage industry that continues to move towards healthy alternatives. Annual sales have trended lower in recent years while marketing expenses have risen. Last year JSDA managed 3% sales growth to $11.9 million but the net loss worsened to $3 million.
Whether the strategic shift drives stronger financial performances remains to be seen. It seems plausible that the cannabis business could become the main growth engine for the company with premium soda playing second fiddle.
For now, investors appear energized by the bold move. On Thursday, JSDA shot up 46%. Trading volume was more than 20-times the 90-day moving average.
With a market cap of $40 million and price tag still under a buck, this newfound cannabis play may be worth a shot.
OTC STOCKS TO WATCH #3 MSTO
MSTO is a pink sheet nano cap stock trading under a penny.
In March 2021, we highlighted the tangible assets company as a tiny but mighty stock with a ton of momentum. It had just announced the integration of Amazon and eBay into its JTEC Autoworld online automotive platform. In response, MSTO climbed above $0.003 for the first time since 2019 in very heavy volume.
Volume picked up again last week thanks to a pair of news items.
First, MSTO announced that its SBQ Holdings subsidiary purchased two properties in Santa Rosa Beach, Florida. It now owns three pieces of land in Santa Rosa Beach where it plans to build 5,000 square foot beach vacation homes. The bayside community on the Florida panhandle is located about halfway between Pensacola and Panama City. It also owns one property in nearby Navarre, Florida.
The four-story homes are expected to contain 9 bedrooms, 9 bathrooms, and sleep up to 32 people. Earlier this year, SBQ divested its Verano Palace beach vacation property which it bought in 2019 for $1.4 million recording a $300,000 gain.
Two days later MSTO announced that SBQ had already broken ground on the first vacation rental property in the region. Construction is underway at one of the Santa Rosa Beach parcels and total costs including land are expected to be $1.6 million to $1.8 million. Comparable properties in the area are said to be going for upwards of $3.2 million and generating approximately $300,000 in annual rental revenues.
If SBQ can generate similar revenue and profits from the eventual sale of the new properties, overall company revenue may be set to reach new levels. And if that’s the case, look for MSTO to build some nice long-term gains for shareholders.
OTC STOCKS TO WATCH #4 VXIT
We’ve written about VXIT on a couple of other occasions. On May 8th, we highlighted the pullback in the antiviral products specialist as a potential recharge for another run. Insider Financial subscribers that jumped in here enjoyed a 15% run over the next couple of weeks.
VXIT has since dipped back below the $0.02 level on relatively benign volume. Our two cents is that the stock is back to where it was before it went on a remarkable run to $0.12 in February 2021.
Momentum appears to be building again for VXIT as does the chatter across iHub, Reddit, and Stocktwits.
Trading volume picked up on Thursday after VXIT announced that it will appear in a special section of USA Today. The company’s VirExit, The VLife, and The SaferPlace Market brands will be mentioned in both the print and digital versions of USA Today’s ‘America Reopened’ section.
VLife (www.thevlife.net), VirExit’s new subscription-based portal, is expected to launch this week in conjunction with the USA Today piece. The website will feature proprietary video blogs, guest contributors, and other information about productivity, wellness, health, and safety.
Later this quarter, VirExit plans to launch the third and final piece of its “three-pronged approach to the future” called VSure.
The pink sheet company is a unique play on consumer trends that have been magnified since the start of the pandemic—personal health, safety, and wellness. Its focus is creating sales and marketing platforms that bring together buyers and sellers of related products and services.
With the USA Today promotion and the launch of the VLife just days away, look for the momentum in VXIT to remain healthy.
As we keep saying, there are always opportunities in the markets and it’s our job to find winning stocks before they run for our subscribers.
If you like any of these 4 OTC stocks, our best advice is to be patient and throw bids in below the market. Buying dips and selling rips as swing trades remains the best strategy.
It’s also important to look for stocks that have yet to run. There are plenty of opportunities out there and we screen hundreds of penny stocks each week looking for the best alerts for our subscribers.
Remember, all it takes is one or two to become a winner and you’ve crushed the market indices for the year.
As always, good luck to all (except the shorts)!
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Disclosure: We have no position in any of the securities mentioned. We wrote this article ourselves and it expresses our own opinions. We are not receiving compensation for it. We have no business relationship with any company whose stock is mentioned in this article. Insider Financial is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This article is not a solicitation or recommendation to buy, sell, or hold securities. This article is meant for informational and educational purposes only and does not provide investment advice.