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Sizzle or Gristle? Hot Stocks Are Curious Bunch

The six NYSE-listed firms looking to list on the Nasdaq are looking in the wrong place. If they want to see their shares sizzle, they might want to try the bulletin board exchange instead.

Nine of the top 10 stocks on Yahoo!'s 52-week "Sizzlers" list trade on the bulletin board, and the average return for the stocks is 3,826%. But just because the returns are impressive doesn't mean the companies themselves are winners.

The bulletin board is an electronic quotation system for unlisted over-the-counter securities. Conservative investors tend to shy away from bulletin board stocks, considering them outposts of the Wild West where almost anything goes.

For example, only one company on the top 10 list, software provider TenFold (TENF), has produced four consecutive quarters of earnings. A number of the stocks on the list -- like top returner Promos (PMOS) -- have been in or near bankruptcy and appear on the list only because of financial shenanigans like reverse acquisitions.

As one might expect from bulletin board stocks, these are not heavily traded stocks, and floats are often held in large percentages by insiders. The average three-month volume for the shares on the list is 75,225, and the average float is 11.37 million. But be careful in unconditionally accepting this number too. By removing the 51.9 million shares of Enterprise Technologies (ETPT), the average float for shares on the list drops to just under 6.9 million shares.

So who is trading in bulletin board stocks, and why? Phil Roth, chief technical market analyst at Miller Tabak, doesn't see professional traders as the force behind the run-up in the highly speculative stocks. "When you get down to the bulletin board, a lot of the trading is done by the public day trader passing stocks and stories back and forth," says Roth. "And in this environment when stocks have advanced for a long time and people have confidence, they will buy anything. A 10-cent stock can go to 50 cents, just for lack of sellers."

Before you get jealous and start tearing through the pink sheets looking for the next Enterprise Technologies, here's a quick review of the financial highlights, lowlights and question marks surrounding the market's 10 most sizzling stocks:

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