Chris Lau, Kapitall: As markets reach new heights, speculators sometimes confuse themselves as investors. Stocks that are highly speculative gain more interest, and can lead to big profits. Companies that might be considered speculative are those that have a market capitalization of under $100 million. They may or may not also have a share price of under $2. Typically, these companies tend to at a share price below $2 on low average daily volume, then suddenly rally to new highs on above-average volume. (Related lists: Dividend Stocks Under $10 Undervalued by EPS Trends with Low P/S)
Company Wins Remaining Listed
OCZ Technology (OCZ) is a maker of solid storage devices (or SSDs). The company is late on filing its period reports with the Securities and Exchange Commission. The NASDAQ Listing Qualifications Panel indicated that OCZ now has until September 16, 2013 to file.
OCZ got into trouble when it tried to expand its business too quickly into the enterprise space, while pushing sales in the consumer space by offering aggressive rebates. The number of products and the rebates offered were maligned, that OCZ was competing with itself. Cash flows deteriorated, and OCZ received financing to continue its operations. OCZ traded at $1.36 recently as investors fled from the uncertainty.A combination of remaining listed on the Nasdaq market, and the launch of new products might help OCZ shares. The company announced the Vertex 450 SATA III SSD Series, which uses OCZ’s own proprietary Indilinx Barefoot 3 M10 Series controller. OCZ remains a highly speculative investment, but investor thirst for risk might help push shares higher in the near term: 200% Winner Ballard Power (BLDP) continued its ascent by returning 200% in 2013 alone. The maker and designer of fuel cell stacks and modules closed recently at $1.83, well above the $0.80 share price in April. The company said it expects 27 of European fuel cell busses will be powered by Ballard’s fuel cells. In partnership with Van Hool NV, the fourth largest bus OEM, this bus fleet will be the second largest in the world. In the first quarter, Ballard generated most of its revenue from engineering services ($2.6 million). Sales declined by 22% from the previous year (Q1/2012), but total revenue grew $12.3 million to 22% ( Source: Ballard):
Conclusion It is doubtful that the rally in either company will hold, but when markets are ignoring risk, anything is possible. Ballard is trading on positive sentiment, while the negative sentiment for OCZ is reversing. Should “risk-on” ever return to markets, investors should expect these two companies to fall. Until then, look for these companies to be on the most-actively traded list.
Written by Kapitall Contributor, Chris Lau