The formula is simple...high demand and low supply leads to increased prices. That simple formula is the basic premise behind trading small float stocks. When there are few shares to go around, any demand for those shares will cause the price of the stock to skyrocket. If you couple a small float with a stock that has a very inexpensive share price, you have a the makings of something magical. Add a little bit of volume to that inexpensive low float stock and you will see an explosion!
How does a 900% gain in one day sound? It may sound ludicrous to some, but this was an actual gain for a small float stock as recently as last week! (see example 1 below)
Here is a small float stock to watch for next week. Walker Financial (OTCBB: WLKF) fits the small float billing perfectly. According to its most recent 10-QSB SEC filing, there were a total of 15,945,220 shares of the registrant's common stock, par value $.0001 per share, outstanding as of August 8, 2006. Of those 15.9 million total shares, 9.8 million shares are in the public tradable float. There have been NO INSIDER SALES of WLKF since December of 2005, and that sale was a measly $1,100 worth of stock. So, we have a stock with a small float and have satisfied ingredient number one. Now let's look at ingredient number two. WLKF has a ridiculously inexpensive share price of only 1.5 cents!
Can you believe that? A share price of only 1.5 cents gives WLKF a market cap of only $239,170! That market cap does not equal 1/4 of WLKF's anticipated yearly revenues! When you consider the fact that most stocks have market caps of 2-5 times their yearly revenues, WLKF has alot of room to grow!
We now have 2 of the ingredients for a stock price explosion for WLKF. The stock has a very small float of only 9.8 million shares. The stock is inexpensive at only 1.5 cents. Now, the only ingredient left to ignite this explosive stock is volume. Add a little volume to WLKF and this stock will catch on fire! It won't take much to get this stock moving. At its current share price, a mere $15,000 will create 1,000,000 shares of volume! Think about this...less than $150,000 in total volume would be enough to trade all shares in the float at WLKF's current price! A few days ago, $58,000 worth of WLKF traded hands and the stock rose 66% intraday. If this stock were to see, say, $500,000 worth of trading volume, the gains could possibly be 200-300%. $500,000 is not a number that is too far fetched. CKYS, a stock that at 2.4 cents is just a shade more expensive than WLKF, has been recently seen trading volume anywhere from $400,000 to $900,000.
To see what is possible for WLKF, look at example 1. Metropane (Pink Sheets: METP) is a stock with a small float like WLKF. In two trading days, this stock rose an amazing 900%! I would also like you to look at examples 2 and 3. These two stocks don't have small floats, but they do have share prices that were similar to WLKF prior to their runs. Both stocks easily achieved 100% gains despite their large floats. When you consider the fact that WLKF's float is anywhere from 7-10 times smaller than the floats for the stocks in examples 2 and 3, you can't help but to get excited!
WLKF has 2 of the 3 ingredients necessary for a price explosion. Take a look at the following examples to see what is possible with small float and low priced stocks. Pay particular attention to example 1 as the stock had a share price and float number that is somewhat similar to that of WLKF.
Example 1: Metropane Inc (Pink Sheets: METP)
Share Price Run: $0.008 - 0.08
Shares Outstanding: ~12,000,000 shares
Shares in Float: ~7,000,000 shares
When I look at Metropane, this is what I envision with Walker Financial. METP has a similar number of shares in the float as WLKF. METP has ~ 7 million shares in the float while WLKF has 9.8 million shares in the float. Over the past week, METP ran from lows of $0.008 to a high of $0.08 for a potential gain of 900%! Most of this gain took place on Monday and the gains lasted throughout the entire day. Similar gains could happen for WLKF with a little volume.
Example 2: Cyberkey Solutions (Pink Sheets: CKYS)
Share Price Run: $0.012 - 0.033
Shares Outstanding: ~580,000,000 shares
Shares in Float: ~180,000,000 shares
Let's take a look at the recent performance of Cyberkey Solutions. Over the past few weeks, this stock has run from $0.012 to a high of $0.033 for a potential gain of 175%. CKYS has an an estimated 580 million shares outstanding and a public tradable float estimated at 180 million shares. The float for CKYS is 10 times greater than the float for WLKF....10x! If you look at the trading volume for CKYS, you can see that it steadily increased and reached ~7X normal trading volume during its biggest spike.
Example 3: Global Diamond Exchange (Pink Sheets: GBDX)
Share Price Run: $0.012 - 0.033
Shares Outstandig: ~350,000,000 shares
Shares in Float: ~75,000,000 shares
Let's take a look at the recent performance of Global Diamond Exchange. Over the past few weeks, this stock has run from $0.015 to a high of $0.032 for a potential gain of 113%. GBDX has an an estimated 350 million shares outstanding and a public tradable float estimated at 75 million shares. The float for GBDX is 7.5 times greater than the float for WLKF....7.5x! If you look at the trading volume for CKYS, you can see that it steadily increased and reached ~7X normal trading volume during its biggest spike.
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