Growlife, Inc. (OTC:PHOT) Spikes on New Stock Guru Mail

The promise of spring has raised the stock price of small cap companies related to the medical marijuana industry. Among the companies that do not offer the substance directly is Growlife, Inc. (OTC:PHOT), which benefited from the rising tide with a sharp increase in price and volume.

The reason for the recent renewed interest in PHOT is a mix between a paid promotion from a few days back and a series of press releases explaining the marketing of new products. The last time we left the stock at the end of October, it was up on pumps that dealt with the whole medical marijuana industry.

The latest news from PHOT are an announcement for a new indoor-growing greenhouse system targeted at the medical marijuana market. PHOT arranged a strategic partnership with private company GrowOp. The financial resources for PHOT to continue its intended expansion are as follows:

• $ 475,870 in revenues, compared to $ 215,654 for Q3 of 2011

• $ 164,181 cash

• $1,689,638 total liabilities

• $374,496 operating loss

Heavily debt-financed, Growlife will face a significant challenge coming into stable profitability, even with the general market enthusiasm. Indoor greenhouse systems are ubiquitous and easily found from other sources, so exclusive marketing success may be a problem.

The current promotion for PHOT is by the Stock Guru, with a budget of $8,500. The promotional mailing mostly touts the greenhouse company for the expansion into several new departments, including consulting. But at a price of four cents per share, PHOT is also a short-term, relatively accessible bet that may have little to do with the company’s longer-term prospects.

The Stock Guru is a well-known paid promoter with an average compensation of $10,000, aiding larger pumps or touting its own picks to improve its record. Besides a past history with PHOT in December, other picks include Firemans Contractors, Inc. (OTC:FRCN) which spiked to double-zeroes in October but retreated to triple-zero, losing more than 90% of its price.

While the next several days may be good for marijuana-handling penny stock companies, please estimate your own level of risk before buying into a promising ticker. PHOT has been in on and off promotions in the past couple of months, and if the messages go silent, the stock may suffer and become illiquid quickly.