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’, more often than not, are small stocks – microcaps, commonly known as Penny Stocks – and they’re some of the least understood of all investment vehicles.
Typically, a Penny Stock is a company with a total market cap of less than $1 billion, with shares that trade for under $5.
But usually, they’re even smaller than that.
$200 million market cap, $100 million market cap, even $50 million or less is fairly common in this world.
And though you may have heard the horror stories and the scams that go hand in hand with this super-speculative form of investing, this class of security can also bring some of the biggest successes you’ll ever experience as an investor.
Below, are five suck stocks, all of which brought investors potentially life-changing gains over the course of 2018.
The gains are dramatic, but what’s even more impressive is the amount of time their shareholders had to sit on the stock before cashing out their jaw-dropping windfalls.
A Story of Five Stocks
Oragenics, Inc. (Nasdaq: OGEN)
Oragenics, Inc. is a biopharmaceutical focuses on developing antibiotics against infectious diseases and treatments for oral mucositis. It is developing OG716, an antibiotic product candidate, which is in nonclinical testing for healthcare-associated infections, as well as other homolog antibiotic product candidates. The company is also developing AG013, which is in Phase II clinical trial for the treatment of oral mucositis in cancer patients.
Hold Time: 5 days
Oragenics was a pretty quist stock through most of the year, until news came out in September that the company had received clearance to enroll patients in Belgium into Its Phase 2 clinical trial of AG013 for Oral Mucositis.
Share prices shot up overnight by more than 500%, where they traded for one day before sliding 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, before another press release, concerning 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 had bought and held this stock before the first press release stirred the pot in early October, you would have walked away with a 200% gains by the time the second one had come and gone.
Determine, Inc. (Nasdaq: DTRM)
Determine, Inc. provides software-as-a-service source-to-pay 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, including system implementations and enhancements, and training. The company serves various industries, such as insurance, pharmaceuticals, healthcare, retail, transportation, manufacturing, and financial services.
Hold Time: 3 days
This stock was beyond quiet… In fact, for a while, it looked like it was dying.
Shares prices were slowly creeping downwards until a press release in late November sent a shockwave through the volume, spiking prices more than two-fold in a single session, on record trading.
If you had been holding through most of November, and slowly falling asleep, the reward for your patience would have paid off in a 138% windfall when all was said and done.
Dogness (International) Corporation (Nasdaq: DOGZ)
Dogness (International) Corporation, 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, and retractable dog leashes, as well as lanyards; dog comfort wrap harnesses, pet muzzles, metal chain traffic leashes, pet belt and ropes, etc.; 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 were certainly not doing happy dances watching this stock go nowhere for the last several months.
It was trading in the mid $3 range during the summer, and gradually but inevitably sliding towards the $2 mark until suddenly, in mid November, the company published news that it was opening a US office.
Over the course of the next two weeks, shares of Dogness shot up almost 80%, 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, indicating that Dogness may be looking at a new floor.
Borqs Technologies, Inc. (Nasdaq: BRQS)
Borqs Technologies, Inc., through its subsidiaries, provides development services, software solutions, and products for Android-based smart connected devices in China, India, the United States, and 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 provides a range of 2G/3G/4G voice and data services for general consumer usage and Internet-of-things devices, as well as telecom services, such as voice conferencing.
Hold time: 3 days
Most of the time, there’s a reason behind it. Sometimes, however, there isn’t… At least not one which 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 just two trading sessions.
Driven by an equally impressive burst of volume, this gave shareholders a gain of almost three-fold.
So… What happened? Well, the usual culprit during 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 6 month highs.
Unfortunately, when this sort of growth comes off of a media blitz, the usual result is not sustainable.
While new shareholders have probably been enjoying the ride, the best course of action for now is to cut and walk away.
Blink Charging Co. (Nasdaq: BLNK)
Blink Charging Co. 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 also provides Blink Network, a cloud-based software that operates, maintains, and tracks various Blink EV charging stations and associated charging data, as well as 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. In addition, 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 of 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, thanks to the obvious connection with another big name: Tesla Motors.
Sure, the rally didn’t last forever. In fact, within a month of the announcement, shares had fallen more than $2 – though still trading for close to 4 times where they were before the mania had begun.
The Take Away
Five stocks. Five stories. Five sets of investors walking away with double and triple digit gains in a space of time ranging from a couple 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 1 of the examples, the catalyst came in the form of a press release which immediately preceded the bullish trading pattern, making the driving factor behind those patterns, and the gains which followed, highly visible to anybody who follows the financial news.
The one outlier remains a mystery, but also illustrates the uncertainties often associated with microcap stock trading. In this case, a promotional campaign was the likely cause.
Nevertheless, in a majority of cases, it’s not just possible, but 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 finding and acting on these types of opportunities – so much of the battle in gaining access has already been won.