Few things can be as reassuring to a penny stocks investor as a deal struck by one of their investments and an established heavyweight trading on the NYSE. For investors in Positron Corp. (OTCBB: POSC) Thursday was a good day as the company announced they had signed an agreement with Covidien (NYSE: COV) that will better assist the nano-cap company with the development of technology to automate the compounding of radiopharmaceuticals.
The trading volume of POSC shares shot up to 6.48 million on Thursday followed by 2.59 million on Friday, well above the three-month average of 1.66 million. While a strategic alliance with Covidien may certainly have aided in the activity it’s not as if Positron isn’t bringing something to the table.
POSC is recognized as an authority in automation as well as radiopharmaceuticals and with Covidien’s technical assistance the company has an opportunity to become the leader in the development of technology to automate the compounding of radiopharmaceuticals. Such developments could lead to greater worker safety, cost savings and better customer service, all benefits that could bring positive returns for investors.
Positron already has an impressive proprietary product line focusing on Nuclear Cardiology, providing imaging solutions as well as radiopharmaceutical distribution. Their products include the Attrius™, a PET imaging device; the Pulse®, a SPECT imaging device; the Nuclear Pharm-Assist®, an automated radiopharmaceutical distribution device; and the Tech-Assist™, a radiopharmaceutical injection shield. POSC’s relationship with Covidien will concentrate on the automated radiopharmaceutical distribution device but the company continues to seek new ways to grow with each of their products.
Of course there are the skeptics who aren’t quite ready to bet on POSC and some investors were concerned by the relatively brief press release issued by Positron that announced the agreement. Special attention has been paid to the phrase “strategic alliance,” noting that it carries a little less weight than the word “partnership.” Whether that’s something of real concern hasn’t been determined but it’s on the minds of some.
Perhaps even more perplexing to investors, in regards to the press release, was the lack of a comment from POSC Chairman of the Board Patrick Rooney. As a matter of fact Rooney wasn’t even mentioned in the release and if the strategic alliance with Covidien was really a game-changer then one would think he would have had something to say. Instead it was COO John Zehner who offered up a rather vague quote, “This agreement provides Positron with various advantages and additional resources. We are very excited to collaborate with Covidien on this project.”
While Thursday’s news may not have convinced investors it isn’t the only news the company has been making; earlier this month they announced the opening of a nearly 10,000 square foot cGMP ready facility in Indiana for the manufacturing of both radioactive and non-radioactive pharmaceutical products and devices.
The move is seen as a positive step toward expanding into the consumables market and could provide the company with a number of advantages that would spark growth in the company’s product line. Zehner stated that while the plan is to focus on “small batch, radioactive PET products” the facility was built with expansion in mind and will allow them to easily move into new markets.
There are a number of factors that have kept investors interested in POSC as the payoff could be impressive but there are those out there who remain guarded and will await the company’s earnings report which has now been scheduled for Monday.
Most trading strategies have not performed well for those looking to trade POSC shares. Currently, most short term indicators are red with the exceptions of the 20 Day Bollinger Bands (Hold) and the 7 Day Average Directional Indicator (Buy). Both medium term and long term indicators are mostly red as well. Of course, with the volatility of the micro cap (52 week high of $0.30 and a low of $0.02) further clarification of upcoming events in news or numbers could fundamentally alter the analysis of POSC in either direction.
Currently, POSC has a 200 day moving average of $0.084 and a 50 day moving average of $0.087. Also worthy of note is the tightness of the Bollinger Bands which can be seen in the chart below:
POSC is a nano-cap penny stock traded on the over-the-counter bulletin board. Penny stocks are shares in public companies which trade below $5 per share. “Nano-cap” refers to the size of the company’s market capitalization being below $50 million.