I started my career back in 1982 on the floor of the Chicago Board Options Exchange, trading options on big-name stocks – which, back then, were the only stocks that had options to trade.
And I saw and learned a lot.
Like, I learned all the tricks that all the Big Investment Banks play to transform their bustle into billions in trading profits.
I learned how these guys game the system to win – usually by making sure regular, hardworking investors like you end up holding the losing end of all their winning trades.
And I also learned – specifically – where the Big Boys were vulnerable.
You see, even Superman has his Kryptonite.
And when it comes to the gigantic investment banks of Wall Street, that Kryptonite includes penny stocks.
Here in today’s Total Wealth, I’m going to show you why the Big Brokerages are terrified of tiny stocks.
I’ll even “gift” you one to buy today.
It trades at $2.50 a share.
And I’ll finish by telling you about a strategy that can put a flurry on penny stock recommendations on your personal-trading radar.
So let’s get started.
With Stocks, “Cheap” Doesn’t Mean “Trash”
The market mavens call them “penny stocks.” But the “real” term is “micro caps.”
Call ’em what you want, but the fact is that we’re talking about shares of companies with market value of less than $300 million.
These are small firms – companies that are in the formative slice of their lifespan – meaning they’re off the menu for Big Brokerages. The Giant Banks shun cheap stocks because they don’t underwrite them, don’t provide expensive investment banking services to them, and can’t re-sell them to clients.
In other words, they basically don’t make money off them.
But the reality is all the big companies that make the headlines, that dominate the indices and that keeping zooming in value as their share prices soar once started out as the same tiny companies we’re talking about here today.
And what I learned from my years as a trader and professional investor is that there are certain fundamentals and metrics that line up to transform those small companies of today into the big-cap firms of tomorrow.
The company I’m gifting you here today has the multiple catalysts I need to see lining up before I’ll hit the “Go” button.
That means this cheap stock should soar a few hundred percent, possibly, a few thousand percent.
An Innovative Investor
The company is Ault Global Holdings Inc. (NYSE: DPW). Its shares were recently trading at about $2.50 a share.
And I’ll bet you’ve never heard of it until now.
You certainly haven’t heard about the company or its stock on CNBC, The New York Times, or The Wall Street Journal. You haven’t heard about it from any brokerage house or investment bank. And you’ve never heard about it from any analyst because no analysts cover it.
But Ault Global rocks.
With a market value of only $150 million, Alt’s definitely a micro cap stock.
And with $135 million in cash on its balance sheet, you’re buying the actual “business” – the operating company – for about $15 million.
In other words, for almost nothing.
Seriously, that’s crazy.
The Las Vegas-based Ault is a diversified holding firm with rock-solid finances.
Ault’s trailing 52-week revenue is north of $88 million, and, yes, it is profitable. The company’s net profit available to common shareholders is greater than $17 million – a bottom line that reflects 21% profit margin.
If you’re worried about the company carrying a ton of debt, end those fears right now: Sure Ault has debt on its balance sheet – but its only $7 million. And the firm’s levered free cash flow (FCF) – what it can used to pay down debt – is nearly $22 million.
I could go on about the company’s metrics, but that’s enough for now. The rest of the story is what Ault does.
And it does a lot.
It makes and sells power systems to the U.S. military, to aerospace companies, to medical companies, and to cryptocurrency miners. It even has “Digital Farms” that mine cryptos. It’s also in the lending business – advancing credit to companies that want to finance purchases of Ault power systems.
The company even does some investing with its balance-sheet assets: The company recently made a biotech investment.
The Next Step to Micro-Cap Wealth
No company is perfect. But little Ault is aggressive, entrepreneurial and managed well enough to cash in on financials that are outstanding for a company its size.
And it’s well off Wall Street’s radar – meaning we get to it before all the Big Boys will.
It’s a company that’s absolutely worth a look – and taking a stake in.
It’s a cheap little company that could become a pricey big one in the years to come.
So go ahead – and take a bite.
But one thing to remember before you do: don’t over pay.
Although the trading volume on Ault is healthy – averaging roughly 4.4 million shares a day – it’s still worth using a “buy-up-to” strategy on the stock. We’ll set an upper limit of $2.75, which is about 10% above the recent trading price of $2.50 a share.
Make that first move into micro-caps. Grab a stock that Wall Street can’t touch – and is terrified that you’ll discover.
Until next time,
— Shah Gilani
Source: Total Wealth