In the world of investing, you have the mainstream, traditional portfolio mainstays like mutual funds and blue-chip stocks. And then, you have that little allocation hidden somewhere in the corner that you've reserved for your experiments: your wild cards — your "lottery tickets."
These lottery tickets are more often than not small stocks — microcaps, also known as penny stocks. And they're some of the least understood of all investment vehicles.
Usually, a penny stock is a company with a total market cap of less than $1 billion with shares that trade for under $5.
But they're often even smaller than that...
$200 million market cap, $100 million market cap, even $50 million or less are pretty common in this world.
You may have heard the horror stories and the scams that go hand in hand with this super-speculative form of investing. But this class of security can also bring some of the biggest successes you'll ever experience as an investor.
Below are five such stocks, all of which brought investors what could be life-changing gains over the course of 2018.
The gains were dramatic. But what's even more impressive is the amount of time their shareholders had to sit on the stocks before they cashed out their jaw-dropping windfalls...
A Story of 5 Stocks
1. Oragenics, Inc.
Oragenics (NYSE: OGEN) is a biopharmaceutical company that focuses on the development of antibiotics against infectious diseases and treatments for oral mucositis. It's developing OG716, an antibiotic product candidate that's in nonclinical testing for health-care-associated infections and other homolog antibiotic product candidates. The company is also developing AG013, which is in phase three clinical trial for the treatment of oral mucositis in cancer patients.
Hold Time: Five days
Oragenics had been a pretty quiet stock through most of the year. That is, until news came out in September that the company had received clearance to enroll patients in Belgium into its phase two clinical trial of AG013 for oral mucositis.
Share prices shot up overnight by more than 500% where they traded for one day before they slid back down to reality.
If you'd bought two weeks before the news, and sold at the peak, you would have walked away with gains approaching 800%.
That's where Oragenics traded for the next two months. Then, another press release about the fast-track approval of one of the company's trial drug candidates caused another stir.
Total gains, on that catalyst, were close to 70%. But if you'd bought and held this stock before the first press release stirred the pot in early October, you'd have walked away with a 200% gain by the time the second one had come and gone.
2. Determine, Inc.
Determine (OTC: DTRM) provides software-as-a-service (SaaS), source-to-pay (S2P), and enterprise contract lifecycle management (ECLM) solutions. The company offers Determine Cloud Platform, an open technology infrastructure for application in strategic sourcing, contract management, e-procurement, invoice management, financial management, supplier management, business applications, ECLM, and analytics. It also provides professional services that include system implementations and enhancements and also training. The company serves various industries, such as insurance, pharmaceuticals, health care, retail, transportation, manufacturing, and financial services.
Hold Time: Three days
This stock was beyond quiet in 2018. In fact, for a while, it looked like it was dying.
Shares prices had been creeping downward until a press release in late-November sent a shockwave through the volume and caused stock prices to spike by more than twofold in a single session.
If you'd been holding through most of November, and falling asleep, the reward for your patience would have paid off with a 138% windfall.
3. Dogness (International) Corporation
Dogness (International) Corporation (NASDAQ: DOGZ), through its subsidiaries, designs, manufactures, and sells various types of fashionable products for dogs and cats worldwide. It provides pet leashes, pet collars, pet harnesses, retractable dog leashes, lanyards, dog comfort wrap harnesses, pet muzzles, metal chain traffic leashes, pet belts, pet ropes, and gift suspenders, including various ribbons and belts for use in the badges, name tags, and gift bags. The company offers its products to retail stores, manufacturers, and wholesalers.
Hold time: 16 days
Who doesn't like dogs, right?
Well, shareholders weren't doing happy dances while they watched this stock go nowhere for several months this year.
It was trading in the mid-$3 range during the summer and was gradually, but inevitably, sliding toward the $2 mark. That is, until mid-November when the company published news that it would be opening a U.S. office.
Over the course of the next two weeks, shares of Dogness shot up by 77% from $2 to $3.54, where the climb seems to have leveled off.
Despite the large volume spike going into this rally, the last week or so has remained stable, which indicates that Dogness may be looking at a new floor.
4. Borqs Technologies, Inc.
Borqs Technologies (NASDAQ: BRQS), through its subsidiaries, provides development services, software solutions, and products for Android-based smart-connected devices in China, India, the U.S., and other places internationally. It operates through two segments: mobile virtual network operator services and connected solutions. The company develops wireless smart-connected devices and cloud solutions. And it provides a range of 2G, 3G, and 4G voice and data services for general consumer use and internet-of-things (IoT) devices and also telecom services, such as voice conferencing.
Hold time: three days
Most of the time, there's a reason behind it. But sometimes, there isn't — at least, not one that we can readily identify.
That's what happened with Borqs Technologies in late November when share value popped from $2.56 to $7.62 in two trading sessions.
Driven by an equally impressive burst of volume, this gave shareholders a gain of almost threefold.
So, what happened? Well, the usual culprit in moments like this is promotional efforts executed behind the scenes.
Analyst recommendations, perhaps executed in a coordinated investor relations effort, could have pushed this stock to these six-month highs.
Unfortunately, when this sort of growth comes from a media blitz, the usual result isn't sustainable.
Although new shareholders have been enjoying the ride, the best course of action, for now, is to cut and walk away.
5. Blink Charging Co.
Blink Charging Co. (NASDAQ: BLNK) owns, operates, and provides electric vehicle (EV) charging equipment and networked EV charging services. The company offers residential and commercial EV charging equipment that enable EV drivers to recharge at various location types. It provides Blink Network, which is a cloud-based software that operates, maintains, and tracks various Blink EV charging stations and associated charging data. It also provides property owners, managers, and parking companies with cloud-based services that enable the remote monitoring and management of EV charging stations and payment processing. Besides that, the company provides EV charging hardware, site recommendations, and maintenance services.
Hold Time: 22 days
You could have bought this stock for $1.48 on May 4, 2018.
Within two weeks, those same shares would have been worth $8.01 a pop.
Why? Simple. Because last May, news that the company had entered a partnership with Whole Foods to open electric vehicle charging stations at some of the company's 470 locations made waves through the investing community. And that was thanks to the obvious connection with another big name: Tesla.
Sure, the rally didn't last forever. In fact, within a month of the announcement, shares had fallen by more than $2 — although, they were still trading for close to four times where they were before the mania begun.
Five stocks, five stories, and five sets of investors walking away with double- and triple-digit gains within a space of time that ranges from a few days to three weeks.
In each of the examples, a catalyst took hold to do two things: boost trading volume and, with it, share price.
In all but one of the examples, the catalyst came in the form of a press release that immediately preceded the bullish trading pattern. And that made the driving factor behind those patterns, and the gains that followed, highly visible to anybody who follows the financial news.
The one outlier remains a mystery. But it also illustrates the uncertainties often associated with microcap stock trading. In this case, a promotional campaign was the likely cause.
Even so, in a majority of cases, it's not only possible but also realistic to nail these trades before the gains take hold. It takes vigilance and a certain insensitivity to risk. But that goes hand in hand with most forms of speculative investment.
Wealth Daily is committed to assisting you in finding and acting on these types of opportunities. So much of the battle in gaining access has already been won.