How are Corporate Earnings and Stock Earnings Estimates indicative of Good Penny Stocks?

Corporate earnings have witnessed tremendous growth potential in the technology sector over almost the whole of the last decade. But if we consider penny stocks, there are restrictions on this growth owing to the fact that their areas are restricted in small alcove – sectors from where expansion into larger corporations is not relatively easy.

Penny Stock Detectives is an expert in penny stocks market. Learn basics of Investing in Hot Penny Stocks and Small Cap Stocks and get Daily Penny Stocks Alerts through our FREE Newsletter at

Harmonic Inc. (NASDAQ/HLIT) is one technology stock that aims to aid service providers in delivering stronger branded and better differentiated video products than their peers within this industry.  Presently, video infrastructure products are quite popular in the market and there is stiff competition amongst their satellite, cable, and the Internet dealers.

As per the Press Release of Harmonic Inc., October 23, 2012, the company’s third quarter results ending September 28, 2012 were better with revenues of $136.0 million as compared to those of the second quarter of $132.0 million, but still lower than what were in the same quarter last year ($138.0 million). The non-GAAP corporate earnings were $8.1 million, which were also lower when compared with $12.0 million that were reported during the same quarter of 2011. Despite the same, the company feels confident that it stands strong in competition with similar firms that deal in similar products. With enough market share gained both in the international as well as the domestic markets, the product developed by Harmonic has been met with favorably by consumers. In the month of September, its stock was progressing well and hit resistance at its 200-day moving average. With the current tight trading range expected to continue till there is improvement in its corporate earnings, the economy has certainly done its bit
to trouble this particular technology stock as it has put similar pressure on its competitors. It is advisable to wait for the favorable time when there is a noteworthy uptrend in its corporate earnings. As the product offered by the company is quite distinctive, it would be worthwhile to place it on prime focus and act when the time is apt.

Still, it is to be expected that technology stocks could fare well in the long term over the following decade. Of course, the stock in question should be researched carefully and only after proper study that it has the potential for growth in its corporate earnings, should one venture into investing here.

Versar, Inc. (NYSE/VSR) is a penny stock infrastructure and business – managing engineering company that caters to the following requirements of its clients:
1. Complying with the environmental regulations
2. Overseeing construction
3. Conserving the natural resources
4. Doing the engineering and designing work
5. Prevention of pollution
6. Restoring the contaminated sites

Its major customers are the U.S. Department of Defense and the United States Environmental Protection Agency while its defense - subsidiary Geomet Technologies manufactures biohazard suits that are required by organizations during periods of emergencies. This stock has a book value of $3.72 and a market cap of $33.0 million. With no long term debt, a forward price-to-earnings ratio of 8.92 and $5.1 million in cash, as per Versar press release, PRNewswire, November 8, 2012, Versar announced that revenue for the first quarter of fiscal 2013, ended September 28, 2012, slipped 29% year-over-year to $23.6 million. Net income for the period was up three percent at $845,000, or $0.09 per share. There was funded backlog of nearly $106.0 million, which was up by 24% compared with the same ended quarter last year and by 11.8% in comparison with the $93.0 million in backlog at the end of fiscal year 2012. Further, the company has reported integration of Charron Consulting for a U.S. focused project. The stock’s share price has rebounded off from the earlier lows in the year and in recent times broke near $3.60; through a two-year resistance level.

Despite weak revenue for the first quarter, the share price has held up owing to its robust backlog and sound outlook and the stock remains bullish as it sits at its 50-day M.A. and continues trading above its 200-day moving average. As of October 1, 2012, the penny stock’s backlog reached $122.0 million, due to the task orders under a new contract with the U.S. Army Corps of Engineers for up to $170.0 million for personal services in Afghanistan. With a strong balance sheet and free cash flow generation, a cash position of $10.6 million and working capital of $23 million, the company boasts of a commanding position that can draw organic growth on the basis of its ninth consecutive quarter of improved margins and one of the highest funded backlog amounts in its 43-year history. This is another penny stock worth watching.

Many penny stocks are speculative but those with strong corporate earnings growth and stock earnings estimates need to be observed carefully. After all, predictions could go wrong. But with no earning growth predicted by experts in the field, it is necessary to exercise extreme caution. Those that show the potential for future earnings, with at least five years of good growth in earnings and that look to be solid can be considered for the long term.