By: Dylan Sikes - AllPennyStocks.com News

Monday, October 28, 2013

The economic uncertainty in the United States has nearly all economists and investors speculating that the Federal Reserve will not slow its massive monetary easing plan. QE3, as the policy is known, is meant to prop up the slow growth of the economy and is largely supportive of Wall Street. Ultimately, the program supports corporate growth and its continuation is a reminder to analysts to pay attention to earnings and revenue growth as a barometer of the success of monetary easing. Of course, that means growth through genuine expansion, not just corporate cost-cutting measures, such as terminated staff to bolster profits. Juniors are measured by the same stick; investors want to see bona fide growth. Capstone Companies, Inc. (OTCQB:CAPC), a designer and manufacturer of specialty power failure lighting solutions and innovator of consumer safety and security products, is regularly growing its sales channels, which is translating to increased revenue. The company makes a full line of lighting products, including, but not limited to, book lights, motion sensor lights, task lights and a new 2-in-1 light-up wall plate. Capstone’s products are sold at leading retailers such as Walmart, Sam’s club, Costco, Office Depot, The Home Depot, Lowes and Target.

Sales for the three months ended June 30, 2103 were $1.03 million, up 21 percent from $848,990 in the year prior quarter. The downside is that net loss widened as well, which should be the focus of investors going forward to see if the company can swing into the black, although there is a school of thought that if the company isn’t losing money, than it’s not trying hard enough to expand. Still, though, at AllPennyStocks.com, we want to see a company moving towards profitability. For the quarter, net loss rose to $417,370, versus $360,579 in the second quarter of 2012. With 657.76 million shares outstanding, the loss was negligible on a per share basis in either quarter.

Last week, Deerfield Beach, Florida-based Capstone estimated its third quarter revenue was $5.7 million, up 21 percent from $4.7 million in the third quarter of 2012. For the first nine months of the year, revenue was $7.3 million, besting the year prior period by 25 percent. The official report is expected to be released on November 12.

On Monday, Capstone said that it sees the fourth quarter getting off to a strong start. Driven by improved backlog levels entering the quarter and reorders from major retailers ahead of the holiday season, net sales for October are projected to be in the range of $3.4 million to $3.6 million. This is a substantial improvement from sales of $2.4 million in October 2012.

Stating that the company’s products are gaining momentum, Stewart Wallach, CEO of Capstone Companies, commented in a statement today, “It is very encouraging to see this level of orders coming off record third quarter 2013 revenue levels. We are now anticipating another revenue record in the fourth quarter as our seasonal direct imports, combined with our domestic distribution program, are driving significant top line growth."

Trading at 1.2 cents, Capstone has a market capitalization of $7.89 million. It would be fair to say that its revenue/valuation is low, but that contention will be better supported when the company moves into profitability. Sales are increasing and Capstone certainly seems to have the sales channels to make it happen. Shares have seen a nice jump in value in October, rising from $0.007 to current levels, including hitting a high of 1.8 cents on October 17. So far in 2013, shares are ahead 33.3 percent. Proper due diligence is, as always, encouraged.

Copyright © 2013 AllPennyStocks.com. All rights reserved. Republication or redistribution of AllPennyStocks.com's content is expressly prohibited without the prior written consent of AllPennyStocks.com. AllPennyStocks.com shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.