Many of the posts here at the Canadian Penny Stocks blog will give you a few stock ideas and allow you to begin your due diligence yourself.  This is great because no one should be investing their money based on someone elses opinion.  But occasionally we will focus more attention on a specific company and find out why it’s a buy/sell/hold.  Today the Canadian stock pick is MagIndustries Corp (MAA.TO).

Company Background:
MagIndustries Corp. is a Canada-based company. The Company operates in four business units: MagEnergy, MagMinerals, MagMetals and MagForestry. MagMinerals, MagMetals, and MagForestry are all located in the Pointe-Noire area of the Republic of Congo, while MagEnergy’s operations are focused in the Democratic Republic of Congo. MagMinerals owns exclusive rights to the Kouilou Potash Project, the undeveloped potash deposits. MagForestry owns the rights to a 68,000 hectare commercial eucalyptus forestry plantation overlying the Kouilou potash property. The plantation supplies 500,000 ton per year wood chip plant located in the port of Pointe-Noire. MagEnergy is financing and project managing the refurbishment and rehabilitation of the off-line turbines at the Inga hydro-electric facility on the Congo River in the Democratic Republic of Congo. MagMetals plans to produce magnesium and magnesium alloys for the automotive industry.

1 Year Chart:
MAA.TO 1 Year Chart

Why You Should Be Interested:
They are working on signing a deal with Sinohydro, a Chinese company looking to acquire 400 million shares at $0.70/share.  It’s currently trading at $0.56 and could very well move to $1.00 so there’s lots of room to move upwards.

From a technical perspective there is plenty of support in the high $0.40s but has significant resistance at $0.65 which is why a deal signed at $0.70 is so interesting as it would break through that resistance level when shares are purchased by to Sinohydro.  There are no other effective resistance levels until the $2.00 range.

The MOU signed by the two companies requires resolution by the end of October so news will be coming at some point in late October and will drive the stock much higher in a fast way or will cause a large drop.

Has this wet your appetite for conducting some more due diligence in this company?  If so, let me know and I’ll try to have more posts like this.  If not, here are a few more stock picks mentioned at the blog.

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