I introduced a new segment to my morning show, “The Long and the Short of it” on Money Morning Live. I’m excited about this segment because each day, when possible, I’ll be featuring trading ideas of my favorite big-win trading strategies.
These are stocks that are about to be listed on a major exchange, like the NASDAQ or the NYSE, but right now are trading in the over-the-counter markets.
Just how big of an opportunity is this? Think of it this way.
Imagine you’re a small company that’s been in business for a year or two and have just figured out the best way to connect the right product to the right customer. Suppose you also feel there’s a broad demand for your product as evidenced by your rapidly growing sales.
Now further suppose your product is only sold online on your website, and through any one of a dozen regional stores that carry it. Those stores are where most of your sales are coming from right now, but you have something big on the way: a deal with Walmart.
Imagine the impact that would have on your product if it got picked up by Walmart and was sold in all of its stores worldwide. Big change, right?
Now there are all kinds of things that could go wrong in that scenario. Your little company might not be able to deliver enough product for the demand.
You might have to take on loans to produce enough new inventory. And you might not end up selling all that you produce.
A mismanaged opportunity for growth can destroy a company. Then again, it can also propel a company into the world of massive profits.
So which will it be for CW Petroleum (OTCQB:CWPE)?
For the past year this stock has traded less than 1,000 shares per day on average. The price has seesawed mainly between 30 cents and 70 cents.
That’s a dangerous stock all by itself. Not safely tradeable.
But we’ve seen a change in just in the last week, because the average volume has multiplied. It’s still small, but it will grow. This has to do with the fact that this company just filed an S-1 with the SEC.
That means the company is about to launch an Initial Public Offering on a major exchange. In this case, it will be the NASDAQ.
Do you think this might have an impact on the volume of shares being traded? There is no doubt that it will.
This stock is about to be uplisted to the big leagues of the stock trading world and if investors show a demand for this stock it will move. However, if they don’t, the price could fall dramatically. It could become worthless, falling by 100%.
But here is why I call this a big-win strategy. Because no matter how bad things get, there is a limit to how low this stock can go. It can only go to zero.
On the other hand, it could rise much more than 100%. If there is enough demand for this stock, it could double, triple, quadruple or more. It’s an asymmetric opportunity here. The potential gains are much bigger than the potential loss.
That’s why you’ll want to tune in as I share opportunities like this going forward.
Welcome back from your weekend and check us out on money morning live.
Quantitative Specialist, Penny Hawk
June 06 2022