Monday, 16 November 2020

Trade Alert: Recent Tight-Float IPO On Verge Of A Major Run

Jupiter Wellness (JUPW)
Current Price: $4.20
Target Price: $7.50
Upside Potential: 79%
Market Cap: $33 million
Shares Outstanding: 7.8 million
Float: 1.5 million

We are putting out a trade alert on Jupiter Wellness (JUPW). The stock moved up 5% to $4.20 on Monday and proceeded to move up another 7% to $4.50 in after hours trading. JUPW was a recent IPO that has been extremely thinly traded. Considering its tight float and thin trading, any kind of volume spike could lead it to have a massive run. It closed its IPO financing just a couple of weeks ago, raising $7 million at $7.50. That makes anything in the $4's a steal as the institutional investors behind the deal will likely want to see it push above the $7.50 raise. Given that there is only 1.5 million shares in the float, this would be relatively easy to do. We are up to 941 followers despite not giving out a lot of alerts, a fact that we think is indicative of a successful, diligent and prudent stock picking history. If you like our picks you can follow our blog by clicking the follow button on the top of the left hand panel as well as follow our Small Caps, Big Gains blog where we put up our Canadian picks. You can also follow us on Twitter @StockTradePicks which has over 4,700 followers.

JUPW is a CBD wellness company. Given that the Democrats now have control over the White House pending finalized election results, the cannabis sector could become bullish on expectations of favorable legislation. JUPW has some decent numbers for a startup. It's one thing for a company to have a small float, but an endless need for cash would cause painful dilution. JUPW is not in that situation:

 


JUPW achieved $178,000 in revenue with a net loss of $607,000 in Q3. That's impressive revenue growth of 3,400% from startup status in 2019. As the net loss was $607,000, that $7 million the company just raised is going to last it for a while. Especially on this revenue growth path where gross margin will offset more and more of the operating costs. The company could possibly attain positive operating cash flows before it burns through the $7 million IPO and might not need to raise again. The market was impressed with these financial results given that the stock moved up after hours on Monday immediately after their release. This could be a catalyst for a major run on Tuesday and the rest of the week.

Disclosure: We are long JUPW


What's next for microcap stocks? TradeMiner identifies seasonal trends and market cycles, the Penny Stock Prophet and Microcap Millionaires finds the next big small cap plays in various industries while Addicted to Profits makes trades from a Canadian perspective.

There are also some good books available on microcap stocks and day trading such as:

Mastering Microcaps: Strategies, Trends, and Stock Selection (Bloomberg Professional Library)

The Little Black Book of Microcap Investing: Beat the Market with NASDAQ/AMEX Microcap Stocks, OTCBB Penny Stocks, and Pink Sheet Stocks

Microcap Magic: Why The Biggest Returns Are In Stocks You've Never Heard Of

How to Day Trade for a Living: A Beginner’s Guide to Trading Tools and Tactics, Money Management, Discipline and Trading Psychology

How to Day Trade: A Detailed Guide to Day Trading Strategies, Risk Management, and Trader Psychology

A Beginner's Guide to Day Trading Online (2nd edition)

Stock Investing for Beginners: Marijuana Stocks


Here are some other good stock market resources. This includes technical analysis and day trading, dividend stock investing, gold and commodities, sector rotation, options trading and microcap trading strategies:

The dividend stock report from dividendstocksonline.com

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