Before diving into the hot stock of the week, it’s important to understand more about this particular type of investment: nano caps. For those who are new to this area of the market, nano caps refer to companies that are valued under $50 million.
Typically, that low value makes the initial investment into such a company much less costly. That’s how nano caps picked up the nickname of “penny stocks.”
Because these companies are smaller, revenue levels typically reflect the company’s size, and profit shares are rarely impressive. Instead, the key to making money with nano caps is to buy the right stock before it sees a nice rise in value.
Any time your plan is to make money by buying low and selling high, you’re playing a very high-risk game. Long-term investment strategies rely on a steady increase in stock and/or profit sharing values in order to make your money work. When playing with nano caps, most companies will only see very short-term value jumps, so it requires a very active and watchful approach to make money.
Many liken this form of trading to gambling, as you’ll see a large number of wins and losses along the way. So, with that lesson out of the way, let’s take a look at the hot stock tip. If it isn’t obvious, we’ll be discussing a nano cap that is performing exceptionally well.
Skypeople
Skypeople has been a big name among aggressive traders this year. It is currently valued at $40 million, but it has seen a value climb of over 550 percent in just 3 months. The company started the year at just $1 per share and is now valued close to $10 per share.
The surge first started when the company announced it would be selling a 51 percent stake in a subsidiary to a group called Shaanxi New Silk Road Kiwifruit Group. It is backed by the Chinese government, making the deal unlikely to see regulatory interference, and the subsidiary is valued by some at as much as $100 million.
The value of Skypeople has less to do with its fruit juice product than this subsidiary transaction. It’s also worth noting that the company has not seen a linear path to this huge rise in value.
Like many nano caps, Skypeople has risen and fallen dramatically on a near daily basis. In fact, it does not reliably earn nine figures in revenue every year. Anyone interested in riding this roller coaster should understand that it is not a long term investment, and profit shares are not an opportunity for making good money.
Instead, successfully trading Skypeople relies on watching the daily swing closely to buy low and sell high. Keep in mind, this is the same interest as many other investors. Roughly 15 percent of all of the company’s stock is owned by similar short sellers, so competition for large profit is stiff.
Chinese Nano Caps
Skypeople is the hot stock of the week, but Chinese nano caps are an interesting market unto themselves. Much like American nano caps, there is a real chance to make very quick turnarounds in investments.
Unlike American nano caps, the Chinese markets represent some unique additional risks. Reports are wildly varied, but there have been numerous claims of fraud among the Chinese companies of this value range.
Many shell companies have sold stock to raise revenue, with no intention of ever providing a return. These companies specifically target foreign investors, which helps them avoid certain levels of scrutiny from Chinese regulators.
In fact, the Chinese government has received harsh criticisms internationally for failing to protect foreign investors. Americans in particular have been victimized by fraudulent companies with absolutely no action taken by China.
If this hasn’t painted the picture clearly enough, do not look into Chinese nano caps lightly. While you can make a lot of money, you should do heavy research before moving any money. Nano cap investing is already one of the highest risk strategies. The complications of the Chinese market and almost epidemic levels of fraud add to that risk astronomically. You have been warned.
Regards,
Ethan Warrick
Editor
Wealth Authority
