TheStreetSweeper issues an alert on Command Security (MOC), a security stock that blasted off Monday morning on misunderstood hype.
Here are five top reasons TheStreetSweeper believes this stock is poised to kill potential investors' portfolios:
*Contract Noise Is Nonsense.
Though the stock is settling down a bit now, shares skyrocketed early June 6 when MOC announced what seemed to be a new contract.
Here's how the stock reacted:
But this stock rally represents a risk to investors who may be tempted to get into the stock. When the stock is flying, it's incredibly risky to get into it. This dog's going to drop. Read on ...
MOC has not won a contract. Instead the company is only eligible to compete for jobs for which 15 security companies will be competing.
*MOC Drains Cash
The company has been running through cash at a rapid rate. The last report shows about $406,000 in available cash. Yet general and administrative expenses run around $4 million per quarter.
In 2014, MOC fooled around and lost a $20.4 million contract. That's a major blot on its track record and bolsters our argument that investors must beware.
*Capital Raise Looms
MOC appears to be under pressure to raise capital, probably in a potentially dilutive stock offering.
* Important Disclosure: The owners of TheStreetSweeper hold a short position in MOC and stand to profit on any future declines in the stock price.
* Editor's Note: As a matter of policy, TheStreetSweeper prohibits members of its editorial team from taking financial positions in the companies that they cover. To contact Sonya Colberg, the author of this story, please send an email to [email protected].