Breakout Buying Lifts Cord Blood America, Inc. (OTC:CBAI) Out of the Dark
In the 21st century, investing in the future may mean a financial action or a biological one, namely saving up stem cells to serve the future health of children. The promise of stem cells and the potentially stable income from preserving biological material for decades is the chosen business model of Cord Blood America, Inc. (OTC:CBAI), a company that recently shot up on record volumes as investors seem to be crowding in to buy at record-low prices hovering around 1 cent.
The company is not currently promoted, and lacks recent press releases, which brings to mind the idea that it is considered underpriced. The underlying assets show relatively good financial health for a penny stock company:
- $369,186 cash
- $1.1 million current assets, $7.3 million total assets
- $3.6 million total current liabilities
- $1.5 million revenues
- $1 million net loss
As it is easily seen, despite the generally stable revenues of a company that preserves stem cells, CBAI is still highly indebted. It has issued one convertible note for $1,252,000 last summer, with the option to convert to shares at 3 cents, but so far there is no immediate danger of flooding the market. CBAI has nearly 250 million shares outstanding, and a market cap of $1.29 million, a reasonable price for a small cap company.
In the past, CBAI started trading around $1 and lacking any large-scale paid promotions, went on to slide gradually to 1 cent. Other stem cell technology companies are much more aggressive, relying on novel treatments instead of the long-term preservation business of personal stem cells. In the past months, Advanced Cell Technology, Inc. (OTC:ACTC) has been making noise around itself,
ACTC was briefly promoted in 2011, but since then has relied on press releases about upcoming trials and treatments for adult-derived stem cells. The stock went up sharply at the beginning of the year, but has slid down in the past weeks as the press releases became old.
Biotechnologies are a hit among small cap companies, but their future is uncertain beyond the hype of future promises. Most of the companies are indebted and accumulating losses, and their tickers rise on bargain buying at extremely low prices. In the case of CBAI, it is best to estimate your own preferred level of risk before joining the record buying spree. The ticker lost 13% on Wednesday’s trading, ending at $0.0052.