Shares under 10c and $10m Market Cap

[springhill]

Oh come on springhill spare me that...
I am a novice no doubt, I wouldnt be asking question if I wasnt

Your denotes that your HAW question wasnt a serious one
Put ur arrow on it and ul see it implies sarcasm, those stupid funny little guys can change the whole context of what ur saying
I wasnt sure, thats all

 

[hobo-jo]

AAM comes pretty close to meeting those figures, 12c share price, $12m market cap.

Here are a few rough notes I made recently. Don't currently hold, but looking to buy in possibly soon.

AAM
Junior gold explorer about to become producer (expected later this year)
Current market cap around $12m
Expected annual output of 30,000oz pa once producing
Expected cash cost of $600p/oz ($800p/oz total cash cost?)
Have $2.8m in cash reserves
Need approximately $10m to start producing for startup costs

Negatives:
Needs to raise funds (around $10m, maybe less if they use some reserve cash)
Could do this by selling more shares, diluting the current share price
May have trouble finding capital via a loan with credit markets still tight
Gold price in downward channel could send the short term stock price lower

Positives:
Mines located in Australia, so is low risk
Low costs to start producing
If expected production targets are met, debt could be repaid within 12 months
At $800 cost, $1250 sell AAM could be C/F+ by $12m+ per year from year 2
Tightly held stock (low volume) indicates good long term expectations

Current share price: $.12
Expected share price – 18 months: $1+

 

[springhill]

If there are any suggestions put forward in this thread, it would be proper for the person to disclose whether they are holding or not

 

[micasp]

Thanks guys for the advice.
Can you let me know if this idea of mine is flawed.

I will buy into stocks that are trading at less than half a cent, the lower the better actually. Since 0.001 is the lowest movement on ASX, any movement up will be at least a 20% profit. Obviously the price could go down but there will be limited loss. I mean if I buy in 1 million shares at $0.005, it will cost me $5000 so my loss will be $4000 (unless the stock delist and my shares become $0 value). The upside however is unlimited. 1 tick up in my favour is 20%. I think the criteria to my strategy is volatility and liquidity....cos I dont want to be holding the stocks for a few years without movement.

This morning I placed a trade on RSN at $0.002....but I couldnt get the stocks at that price. It closed at $0.003. Arrg....50% profit gone

How does my idea sound? Is it workable...what are other factors I have to consider

the buy list for RSN at 0.002 is around 60 million shares
so your behind that, i had a buy order out for a few weeks on the same stock but changed my mind
lots of people want to buy at 0.002 and lots want to sell at 0.003 for exactly the same reason
no one compromises tho and the result is very low volume of trade, many days with no trades at all

 

[Julia]

I'm interested to know why any of you posting on this thread particularly are looking for shares in this bracket? Anyone?

 

[nathanblack]

i think they are purely interested because a small movement of 0.1c or 0.5c subject to asx rules, can represent a high percentage gain.

eg buy a stock for $0.002 and sell for $0.003(the smallest allowable movement) results in a 50% gain. To gain 50% on more expensive stock eg $40.00, you would require to sell for $60.00 for the same margin.

but as has been pointed out, liquidity is the flaw in this strategy. also i used an extreme example. buying a 5c stock and selling at 5.5c is probably quite achievable volatility/volume/liquidity wise but could probably be done with equal ease and less risk with a stock like qantas. buy qan on a low day for $1.50 and sell for $1.65.

the only thing would be you require great timing to close out qantas in the same trading day but its easily achieved within a few days or week.

 

[Julia]

Thanks for reply, Nathan. I guess I was thinking that if you have X dollars to invest what difference does it make how many shares it buys. I take your point.