Just take a look at some of the movers that rock the market in the past 12 months.
HARVEST - from 8c to a high of RM2.14, which skyrocketed by an unbelievable 2,675%. An investment of RM1,000 at 8c would give you a return of RM26,750. The stock had since dropped and last traded at 45c.
NICORP - from 6c to a high of 75c, a significant 1,250% increased in less than a month. The stock is last traded at 31c.
Recently, there is a new counter (INGENS) that hits the spotlight. The mother share rallied from 12.5c to a high of 51c in just 2 weeks. The Group also did a Rights Issue exercise.
"RENOUNCEABLE RIGHTS ISSUE OF UP TO 291,175,040 NEW ORDINARY SHARES OF RM0.10 EACH IN INGENUITY SOLUTIONS BERHAD ("ISB SHARES") ("RIGHTS SHARES") ON THE BASIS OF TWO (2) RIGHTS SHARES FOR EVERY ONE (1) EXISTING ISB SHARE TOGETHER WITH UP TO 218,381,280 FREE DETACHABLE WARRANTS ("WARRANTS") ON THE BASIS OF THREE (3) WARRANTS FOR EVERY FOUR (4) RIGHTS SHARES HELD AS AT 5.00 P.M. ON 23 JUNE 2011, AT AN ISSUE PRICE OF RM0.10 PER RIGHTS SHARE".
A total of 218.38 million FREE Warrants was listed on 22nd July 2012. Investors who subscribe to the Rights Issue are making substancial gains and laughing their way to the bank. The warrants traded at a high of 24.5c and last traded at 16c at friday's close 24th August. It is trading at a huge discount to the current price of the mother share at 44.5c. The conversion price is pegged at 10c. The total price for conversion is 26c, which is still cheaper than buying the mother share at its current price. So, should investors rush to buy the warrants ?. If you have faith that the mother share will hold around this price or will not drop below your conversion price by the time you exercise your shares, then it could be worth a bet. Do take caution and consideration that the exercise period (the time you submit until the time your share is listed) might take weeks to complete. Please check with your financial adviser/share registrar for advice on warrant exercise procedures.
Will INGENS will be another HARVEST or NICORP (with 1000+% gain) ?. What is the main reason for this run ?. Is there a solid growth story for the business towards the longer term?. Will the share price be able to sustain or move higher from this level ?.
If I can still recall, the rally started from a rumour that our Prime Minister's son is taking a 10% stake in the company. Of course this is not a substanciated fact but it does help to push up the share to a certain extent.
Looking at the latest financials, the Group posted an impressive 1st quarter revenue of RM129.85 million, representing an improvement of RM127.02 million to the corresponding period in the preceeding year. The increase is mainly attributed to new ICT distribution business (Vistavision Resources Sdn Bhd) that the company acquired recently.With this increase in revenue, the Group registered a pre-tax profit of RM3.7 million as compared to a net loss of RM0.36 million in the previous quarter. The ICT distibution business accounts for RM1.83 million of the profit and the balance from Enterprise Systems. The Group should be looking forward to a more sustainable revenue model in the Group's ICT distribution business which would boost up the bottom line favorably.
The Group also set an internal target to achieved a sales turnover of RM800 million with a profit of RM12.5 million for the new financial year ending 31st March 2013 and the management team believes (no certainty and not reviewed by external auditors) that it can be achieved based on the 1 quarter's result assumption.
Is it game over yet for INGENS ? Some says "YES" and some says "The game had JUST STARTED". Everyone's trading style and apetite for risk and rewards is different. That's what keeps the market alive and interesting. As for my views, i'm not recommending investing long term in this kind of stocks as it can be very speculative and risky. The odds for picking the long term winners aren't great. I like to view them as a trading vehicle with lots of volatility and lots of upside when the trade is timed right and if timed wrongly, you could be losing a chunk of your savings.
With such amazing % gains in penny stocks, you don’t even have to catch the entire move at the lowest price to make outsized returns when trading.