If you’re looking for a recovery stock in the 2020 market crash, you might want to check out [email protected] Capital (LSE: SYME). While other companies are struggling to stay above water line during the Covid-19 recession, the [email protected] Capital share price is soaring.
Sure, the price is down 18% Thursday at the time of writing, and that would usually be a mark of trouble. But the shares were trading as cheaply as 0.04p as recently as 30 July. Today, at 0.54p, that’s a 13-bagger in as little as three weeks.
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Before I go any further, let me sound a note of caution. Shares trading at such very low prices can be seriously volatile. And they often attract short-term traders trying to get in and out rapidly and pocket some quick profits.
You might even see unscrupulous punters trying to pump up the share price, shouting about how it’s set to take off into the stratosphere. You won’t get any of that here at The Motley Fool, but you should be aware of it.
[email protected] Capital share price spread
Additionally, there’s often a wide buy/sell spread with penny (and sub-penny) stocks. A quick check shows a current bid price of 0.51p and and offer price of 0.56p. That means you’d need to make a 10% profit just to break even, plus enough to cover your broker’s fees. Now, 10% movements might be small compared to the way the [email protected] Capital share price has been gyrating lately, but it’s something you should be aware of.
Anyway, back to [email protected] Capital. And firstly, what does it do? I can’t do better than quote my colleague Edward Sheldon: “[email protected] Capital is an early-stage financial technology (FinTech) company that offers an innovative platform for inventory monetisation. This platform enables businesses to improve their working capital position (generate cash flow) by releasing capital from their inventory.“
I recommend you read the rest of Edward’s explanation if you’re not fully familiar with the way [email protected] Capital works. It does sound like a fascinating business model to me. And as online trading steadily increases, supply chains become better developed, and the necessary inventories build up, I can see the possibilities.
Would I buy?
Now, I’m talking positively about the company here, so would I buy? Right now, no, and that’s for a number of reasons. One is that the company isn’t yet profitable. So there are no real measures we can use to work out a sensible valuation for the [email protected] Capital share price.
That wouldn’t necessarily stop me, mind, and I’ve been known to invest in pre-profit startups before now. At my late stage in my investing life though, I’m less keen on taking risks than in the past.
But the main reason I wouldn’t buy today is that I don’t understand the business well enough. I find it intriguing for sure, but I need to know more than that. So I’m going to do more research. Meanwhile, the [email protected] Capital share price is definitely one for my watchlist.