Penny Stocks Success: How Schick And Birch Made It Big

You probably went into penny stocks investment because a friend of yours hit it big time. Or a relative who recently doubled his assets wouldn't stop talking about penny stocks during your last reunion that you just had to check it out.

Are penny stocks a boon or a bane? While penny stocks have created immense wealth for many people, many have also lost it all. What is the secret to skyrocketing versus plummeting? Let's look at two success stories of penny stocks that have graduated to the big-boys market.

Schick Technologies

Schick Technologies (NASDAQ: SCHK) specializes in manufacturing digital dental X-ray equipment. A decade ago, Schick was a struggling company listed on the Pink Sheets. Digital radiography was at its infancy back then but showed a lot of promise.

It was considered a breakthrough in the medical and dental professions because it enabled technicians to view the x-ray on computer displays in real time, unlike conventional x-ray films that needed long hours of chemical baths to develop. Digital x-ray machines also do not expose patients to high doses of radiation as conventional radiography would.

Startup companies like Schick had reason to be fidgety. Will digital radiography eventually realize its potential when it was too much of an added expense to dentists? Or will the dental insurance industry accept digital radiographs for claims processing? The biggest question is will Schick have the muscle to challenge established industry giants such as Kodak?

While questions about the future of the company were many, Schick had a strong business plan and solid executive leadership. Rather than pumping the stock, as many penny stock companies do, Schick focused on improving their product and enhancing productivity.

When revenues decreased significantly in 2000, the company reduced its sales and research staff and implemented tighter credit policies with non-dealer customers. These measures allowed Schick to reduce its debt from $5.6 million to $9000.

With bad debt out the window, Schick slowly expanded to wireless digital sensors and fully integrated digital panoramic radiography devices. Better products enabled Schick to quietly establish reserves of $49 million and $60 million in working capital.

In 2005, Schick merged with Sirona Dental Systems. The following year, Schick changed its ticker symbol to SIRO and became a full-fledged member of the NASDAQ fraternity with a stock price exceeding $40.

Birch Mountain Enterprises

Birch Mountain is a Canadian company that holds mineral rights to nearly 1 million acres of land containing tar sands. While pumping liquid oil is less expensive than converting tar sands to oil, the trend is beginning to change with the recent spike in crude oil prices.

Tar sand mining and extraction technologies have improved, significantly reducing production costs. And because Birch Mountain has fresh, untapped aggregate reserves, it is poised to be the sole aggregate supplier in the region when other quarries run dry in less than 10 years.

Birch Mountain also has a unique advantage when it comes to quicklime, a necessary agent in converting tar sands to usable oil. Birch's nearest competitor is located over 550 miles from the tar sand region, and the reduced transportation costs could save Birch's customers $85 per ton.

While Birch Mountain started trading around twenty cents, it has enjoyed substantial gains, at one time experiencing a 4800% rise in three years! BMD has moved up to the AMEX from being a penny stocks company at the OTCBB. Birch Mountain, with its market capitalization of over half a billion dollars, has come a long way from its humble origins as a formerly unknown penny stocks company.

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