Smaller companies can be a lot more volatile than our top Footsie ones, but while that can sometimes give investors palpitations, sharp ups and downs can also provide nice buying opportunities. Here are two that are tumbling today:

Troubled publisher

Johnston Press (LSE: JPR) shares fell 9.5% in morning trading to 12.7p, and are now down a bone-jarring 97% since early March 2014. What’s gone wrong and are we looking at an oversold share that we should be buying?

The publisher has been recording pre-tax losses for several years, and hopes are pinned on the acquisition of the i newspaper in April — but it could be a tough task to get its net debt down to manageable levels. At the interim stage, in which the company spoke of continued “challenging advertising trading conditions,” that debt stood at £137.7m. That’s a significant reduction from the £146.1m level at 2 January, but still a lot for a company with a market capitalisation of only £13m and a six-month adjusted pre-tax profit of just £12.3m.

Johnston is in negotiations with its lenders, and has agreed some changes regarding a currently unused £12.5m facility, but it’s had to postpone a test of its lending covenant, which was due in September, to 31 December.

Forecasts put Johnston shares on a P/E of under one, though net debt that’s more than 10 times the value of the company would seem to account for that very low valuation. The questions now are whether the firm can pull itself out of the mire, which would presumably need a new financing round, and what value would be left for existing shareholders at the end of it?

Those are hard questions to answer and there could be a profit in it, but there’s too much risk for me.

Big profit from small things?

Nanoco (LSE: NANO) had a bad morning too, shedding 8.5% to 58.7p, after the firm deferred the accounting of some licence fee revenue — although it says it doesn’t affect its cash situation.

Nanoco, a maker of cadmium-free quantum dots (which are used for making high quality displays), saw its shares climb on rumours in advance of an agreement with Merck that was announced on 1 August (Merck will market Nanoco’s stuff to its own customer base) but that follows a longer-term decline.

After a 68% share price fall since February 2013, is Nanoco a tempting buy? On the upside, the company is clearly making good things for which there should be strong demand, and it might only need a few more deals to see its prospects improving dramatically — a trading update in August told us of significant commercial and technological advances.

But against that, we still have losses forecast for this year and next, and net cash stood at a modest £14.4m at 31 July (down from £18.3m at 31 January). Revenues for this year (unaudited) are said to be £1.9m, which isn’t insignificant, but it’s less than 2015’s £2m — and that cash pile surely can’t last much longer at the current rate unless revenue is hiked soon or new funding is sought.

Nanoco is clearly a risky investment, but it has the potential to turn into a winner in the relatively short term. I’m cautiously optimistic, though I think the next 12 months could be critical.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.