The small cap wrap

This week we play small ball with some penny stocks and explore two smaller cap stocks on Stake, all while dishing out kudos for the week’s best trades of shares priced under $1.

So grab a piccolo and enjoy a concise look at the week that was.

5 penny stocks* that once weren’t

1. Ultra Petroleum (UPL) (-12.2% week)
2. Pier 1 Imports (PIR) (-10.87%)
3. Synergy Pharmaceuticals (SGYP) (-21.95%)
4. Advaxis (ADXS) (+2.7%)
5. Babcock & Wilcox Enterprises (BW) (+29.55%)

*Under $1 in price now

It’s all relative

The real appeal for most investors or traders with small caps is to get exposure to growth opportunities. To find the next big thing. For others, its buying the turnaround story in a fallen giant.

Either way, it’s important to realise that small can mean big somewhere else. A little bit like your favourite 6”10 NBA centre.

When it comes to investing in small caps in the US, it’s like trading large caps in other markets. In the US, a small cap stock is generally considered any stock with a market capitalization between $300m to $2bn (USD). This means a small cap in the US could nearly find its way into the ASX’s top 100. For perspective, one of Australia’s biggest retailers, JB Hifi (USD$1.87bn) would be considered small if it was trading in the States.

Here are two small caps popping up on the Stake radar courtesy of your trading.

If the shoe fits: Crocs (CROX) +112.85% year

Yep, the shoe company. You know the ones you don’t let your neighbours see you wearing. Those ones made (in)famous in the movie The Dictator for being the “shoes worn by people who have given up all hope of living.”

But when it comes to its share price, Crocs is alive and kicking. Having hit the skids in 2008, the company’s stock was briefly a micro-cap when it was trading at less than $1.20. All this after trading at $66 a year earlier. Now trading at $27.67, CROX returned a whopping 112.85% for the last 12 months and over the last 2 years is up nearly 4-fold.

So how did the most uncool shoe company in the world turn things around? By embracing it. Crocs ultimately became the coolest uncool fashion accessory of 2018.

All this happened courtesy of partnerships with icons of the NY fashion scene Alife, collaborating on a $600 pair of luxury Crocs and taking to Europe’s fashion runways with high-end British designer Christopher Kane. Even well known rapper Post Malone got in on the action with the his own Crocs collaboration which sold out in 2 minutes!

No doubt those traders who embraced the uncool and were prepared to wear CROX in their portfolio are looking very dapper right now!

Meet me in the middle: MeetMe (MEET) +127.00% year

Meet Me launched in 2005 as a company called myYearbook by siblings, Dave and Catherine Cook, when they were still high school students. Initially founded with the intention of giving users the ability to have fun and flirt with friends, the company now connects millions of people around the world through live video streams, virtual gifts, chat and photos on its range of mobile apps.

In pursuit of growth, in 2012 took up nuptials with the Latin social platform Quepasa (which was listed on the NYSE at the time) and in 2017 it got back to its flirting ways, with the purchase of the German dating app LOVOO.

Although it doesn’t sound different to any other social media company, MEET has focused its energy on charging customers for in-app purchases of virtual gifts and subscription fees rather than relying on advertising revenue. It’s clearly caught the eye of some Stake traders, with an uptick in activity in the last 3 months. With MEET’s 30% share price increase (from $4.50 to just under $6) over that time, we guess its a case of LOVOO at first trade….

Top buy | Weatherford International (WFT) +29.57%

This trader weathered the storm on WFT, an oil services company with a cracker trade, booking a stellar 68% return in just over 1 week. Striking pay dirt with an entry of $0.54 (on Thursday 24 January) and the stock now trading above $0.90, the sun is clearly shining on this Stake customer.

Top sell | Synergy Pharmaceuticals (SGYP) -25.58%

Recently SGYP was a best buy of the week. However, the tide has turned for this pharma stock, as it finds itself on the other side of the counter dishing out the medicine. Well done to the Stake trader who didn’t wait for the market to deliver the pain, selling on 30th January at $0.43 and saving themselves some coin as the stock found its way down to $0.31. All in all, exactly what the doctor ordered…an extra 27.90% of capital preserved.

4 stocks rising like the Vince Lombardi trophy

1. Zynerba Pharmaceuticals(+53.58%)
2. Eldorado Gold Corporation (+47.96%)
3. VelocityShares 3x Inverse Natural Gas (+36.67%)
4. Weatherford International(+29.57%)

4 stocks going down like trailing commissions

1. AC IMMUNE SA (-63.35%)
2. Cimpress N.V. (-31.58%)
3. Dynagas LNG Partners LP (-31.09%)
4. Velocity Shares 3x Natural Gas (-30.35%)