Used Cars Give SMA Alliance, Inc. (PINK:SMAA) A Ride

Usually penny stocks would sink after a promotion, but in the case of web advertiser SMA Alliance, Inc. (PINK:SMAA), the December pump has triggered a longer-term climb, and the ticker has grown seven times since the beginning of the year. The ticker has been supported by extremely healthy volumes in the past three days, adding nearly a third to 13 cents at the end of last week. Also, the past month or so has not seen significant sell-offs.

SMAA is currently climbing outside the framework of a promotion, and the last PR message seems to be from the end of February. The pink sheet does not file with the SEC, but the latest OTC documents reveal the specialized web advertising business left the company with the following resources:

• $120,980 gross profit for period July-September 2012

• $1.5 million total income

• $79,047 total bank accounts

• $8.4 million total assets, including $5 million software valuation

• $7.79 million total liabilities

The company combines specialized internet advertising with real-life used car sales, thus staying above the water and having enough working capital to continue its business. Its net loss is $188,000, due to a series of lesser expenses, but its business model seems extremely viable. However, all this information may be relevant in the longer term, and a stock starting at a few cents just a month ago may be prone to higher volatility.

The web advertising of SMAA may indeed expand, as promised by a recently announced partnership with Classifiedride.com, a specialized portal for primarily automotive sales. The press release in a well-visited news website managed to attract enough investors and may be a strong reason for the rise of SMAA in March.

Previously, the company was pumped in mid-December last year, for a relatively small $3,500 compensation. SMAA was advertised as a worthy but underpriced ticker and PennyPlayOfTheDay.com advised for buying the valley. This pumper specializes in relatively small promotional campaigns with a low budget, sometimes supplementing larger efforts to popularize a penny stock. Pioneer Exploration, Inc. (OTC:PIEX) has gone down significantly since it was mentioned in February, losing 50% of its price.

While some small cap companies may look like a reasonably well-padded longer-term bet, it is best to decide your own acceptable losses before joining the trend for SMAA, or choosing another promoted stock.