Tuesday, January 17, 2012

American Power Corporation (AMPW) Remains Powerless To Earn Money

Let's pull yet another old penny stock teaser out of the dead letter file.  Myers Energy & Gold Report sent me something in January 2011 about how American Power Corporation (AMPW) was going to be just about the greatest thing in the coal sector since sliced bread.  One year has passed.  That's enough time to learn something.

The company has three years of increasingly negative net income, retained earnings, and free cash flow.  The corporate website sure looks pretty, with its flash intro and all, but I really need to see some confirmed resource discoveries and not just estimates from preliminary exploration.  The executive team looks to be heavy on investment banking experience and light on experience running actual coal mining projects.  One thing they're doing right is developing a project in an area with good rail and power infrastructure.  Time will tell whether their coal project in Montana actually produces anything, but that doesn't necessarily mean this particular company will be the one producing it.

Read their financial statements to find out whether they have enough capital to operate for much longer.  Go ahead, read the stuff.  I dare you.  I can't be the only one to do any work around here.  Oh, what's that, you don't like to do work?  Fine, I'll do it anyway.  Their 10-K dated Jan. 5, 2012 says this under MD&A:  "We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months."  Alrighty, then!

When the mailer came out in January 2011, AMPW was just over a buck.  I guess you could say it "soared" to $2.14 on Jan. 27, 2011 when suckers bought in that month.  The stock then promptly collapsed and kept sliding to trade at $0.17 today.  Great job, everybody!  Well, actually, I should say poor job by everybody but I had to be sarcastic first.

Well kids, what did we learn today?  We all should have learned not to buy penny stocks touted by pretty-looking mailed brochures.  Some investors will never learn.  That's why I'm here, getting in Mr. Market's face day after day as my life's work.

Full disclosure:  No position in AMPW, ever.