Three Micro Caps Ready to Pop
Micro caps, or petite companies valued at less than $300 million, are becoming all the rage among investors – and I love that. These companies are the underdogs of the investing world that, if played right, can make you filthy rich once they burst forth their true potential.
That’s why I want to start you off with Surgalign Holdings Inc (SRGA). On August 6, 2021, the spine-related micro-cap medical technology company, reported Q2/2021 results that included total global revenue of $24.8 million, which represented a 21% increase over the same period a year ago. Earnings for the quarter were a $0.09 loss, which was considerably better than estimates that called for a $0.12 loss for the period.
Those aren’t bad numbers, but on the same day shares sold off as much as 18.5% in a single session. Since then, though, the stock has rebounded to the upside, filling that initial gap, and then some.
Shares have gained 38.63% since the intraday August 6th lows.
At the current price of $1.24, the stock just broke above its 50-day moving average. That’s a green light for a lot of traders and it’s caught my attention.
At this point, the next support/resistance is at $1.55 and then at approximately $1.90. If it can break through both of those, I could see this stock trading up $2.75, or more, by the end of the year.
If shares of SRGA close above its 50-day moving average (currently at $1.19) I like buying the SGRA January 21, 2022 $2.50 Call (SGRA220121C00002500) for $0.30 or less. I’m targeting a simple double with this trade, and I’ll be happy to close the position for a 100% (or more) profit.
Next up, I’m watching another micro-cap stock, Pharmacyte Biotech Inc (PMCB). The company focuses on developing and commercializing cellular therapies for cancer and diabetes in the United States.
On August 16, 2021, Kenneth L. Waggoner, the Chief Executive Officer of PharmaCyte announced it had become a “Nasdaq-listed company”.
That was enough news to get the internet buzzing, and on August 18, 2021, shares jumped as much as 191.81%, from $3.42 on August 17th, to as much as $9.98 in the very next session,
I’m rarely a fan of these kinds of single day price explosions, and in this case, neither was the market. Shares lost as much as 66.43% in the very next session, closing at $3.48 on August 19th.
Now, though, with the stock having pulled-back, we could see Reddit traders, once again, turn their attention to PMCB in an attempt to create another fast move to the upside.
If shares of PCMB close below $3.00, this week, I like buying the stock (as there are no options available). I’d look to sell the entire position for a 50% (or more) profit.
Heads up. This is a very speculative idea. Make sure you limit your exposure to no more 2% of you risk capital to this idea.
I’m also watching LexinFintech Holdings, Inc. (LX), a Chinese micro-cap stocks currently trading $6.95,
The company “operates as an online consumption and consumer finance platform for young professionals in the People’s Republic of China”.
It’s scheduled to report earnings on Wednesday (before the open), it has a recent history of beating earnings estimates, it has increasing revenue numbers, it has been knocked-down considerably over the last couple months as the Chinese Central Government (CCG) has cracked down US-listed Chinese companies, in an attempt to flex its (the CCG) muscle on the world stage.
That presents us with a potentially highly profitable short-term opportunity.
If LX continues this trend, and beats earnings, we could see a huge pop to the upside as bargain-hunting traders and Reddit-traders swoop in to make a fast profit.
I like buying the LX September 17, 2021 $7.50 Call (LX210917C00007500) options for $0.60 or less. I like selling the LX210917C00007500 position for a 100% profit.
Until next time,