Wednesday, April 12, 2006

Highly Speculative Stocks On KLSE Now
Their Danger Levels

Don't get me wrong, I do not abhorr specky stocks, they are part and parcel of a normal stockmarket. In fact, they are a necessary evil. However, there is good risk and silly risk. Some of these stocks, I have highlighted before ... you can refer to my blog on January 26, 2006 when I said that some hedge funds took up large placements of stocks in Farm Best, Iris and Fonics. Their prices at the time were RM4.08, RM0.26 and RM0.36 respectively. Farm Best went as high as RM5.80 and has now settled at RM4.90 - not bad at all for the buyers. Fonics is a dog, or rather dog with fleas - it had a sharp run up the week prior to January 26 from RM0.24 to RM0.36 - so the placements to hedge funds was more a sell-down by main owners on hindsight as it never breach RM0.39, and is now trading at RM0.32. The leader of the pack is Iris, probably because it has the largest paid up and the volume placed out would probably be the biggest as well. Iris has risen from RM0.26 to a present day high of RM0.85 on very good volume. All this in a matter of 3 months or less.

There are plenty of these type of high volume specky stocks, some are overdone, some have a bit of merit, some are downright dangerous. When I term a specky stock as highly dangerous, I am talking about the scope of that share correcting massively (i.e. absolutely nothing worthwhile in the company). For example, I do think Iris is overdone but it has some fundamentals and a 50%-60% correction is possible but not much more. However, some other stocks I can forsee a 90% correction based on their "inherent value" and share spread.

The following are some of these highly traded stocks, their price jumps, and the rating of danger - ZERO being neutral, 3 being dangerous but should have more upside, 7 being highly flammable (players must be in and out like a fox), 10 being just plain silly and ridiculous (not worth punting seriously as it could and should fall like a rock soon). Marks out of 10.

The share has zoomed up by more than 300% in just a few weeks. The head keeps talking in the press of a potential foreign buyer. Yeah, sure... where was the buyer when the share was below RM0.20 a few months back.
Danger level: 8/10

Share price was just RM0.20 mid-March 2006 and now it is trading at RM0.54. Volume jumps only recently, may have some petrol left as volume traded looks to be insufficient to help the players to get rid of stocks on hand yet. A couple of laps left, but when its over its back to RM0.20, so beware. Fundamentals, almost non existent.
Danger level: 7/10

MEMS Technology
Traded at RM0.35 during mid-January period, now at RM0.50. At least the company has some fundamentals and have been reporting profits at least. Not too specky. Can go up a bit more.
Danger level: 5/10

This one is sucking in too many retail players, especially the ones who cannot read. Traded forever at RM0.02 to RM0.03 for the longest time. In just 3-4 weeks, its now at RM0.11. The owners are laughing, trust me. To retail players, RM0.11 is very low in price, but please check out the company. Lost between Rm57m-83m EACH YEAR for the past 3 years. Has a massive 2 over billion shares and if it wasn't because the players were "related" to some politico, this thing would not have been listed in the first place. Fundamentals zilch.
Danger level: 13/10

Price traded around RM0.19 during mid-January, now at RM0.31. Volume is good, look like players are gearing for one final move before getting rid of stocks. Fundamentals wise, the stock is worth about RM0.10.
Danger level: 6/10

GHL Systems
Share price mid January RM0.13, spurted over the last 2 weeks to RM0.33. Volume surge just started, so should have some legs in it. Company have some decent fundamentals, OK still.
Danger level: 3/10

Almost the twin brother of Karambunai. Price during mid_january RM0.06, now its at RM0.19. Seems "cheapish" to retail players, but trust me, its now. Bottom can fall out anytime when even the owners don't want to hold the stock. Danger level: 10/10

Furquan Business Org (FBO)
This is hard to judge. Could go either way. Looks OK and main shareholders don't look to be disposing. Share price has beeen occillating between RM0.15 and RM0.22 for the longest time.
Danger level: Not rated.

No comments: