Ever heard of GW Pharmaceutical?
GW is one of the most successful companies on Aim. It’s a biotech company which first floated in 2001.
For the longest time, the stock did very little. It doubled in value between 2002 and 2004, only to lose around 85% of its value between 2004 and 2010.
And how about this – in that period, between 2004 and 2010, GW grew its revenue almost tenfold. The market wasn’t interested. Go figure!
GW’s main product is called Sativex, a treatment for multiple sclerosis which is based on chemicals found in cannabis plants. Since its foundation, GW has been fighting regulators all over the world to allow its (highly effective) cannabis-based treatments to be used.
So the company’s been fighting regulators since the early days, and making good money since the late 2000s. But the market wasn’t showing any interest.
As the chart below shows, it took years before the market caught up with the GW story. It wasn’t until late 2013 that things really started happening for GW shares.
As you can see, it’s been a wild ride for the GW investors who kept the faith. GW is up 1028% since May of 2013!
What changed around that time? Well May of 2013 happens to be the same month GW jointly listed on the Nasdaq index in New York. It seems like American investors were happier to put a big value on GW’s products than Brits…
Not done yet!
You’ll have noticed that there’s something funny going on in the chart above. What’s happened to GW’s stock recently?
Well yesterday, GW announced the results of a new trial, which was testing whether a cannabis-based drug could be used to help children suffering from severe epilepsy. The trial was a big success, and now the company is taking its late-stage trial findings to America’s Federal Drug Administration for approval.
A happy Monday morning
GW shows just how fickle the markets can be. In its early days the market was way too slow to recognise GW’s potential. It took years to catch on. It must have been tough to keep the faith back then.
And in the last few months, the stock got shredded, as sentiment turned against biotech stocks.
You need a strong stomach to handle these ups and downs. But as GW shows, the rewards can be phenomenal.
Don’t get me wrong, most penny shares don’t do much.
But that’s fine.
When it comes to investing in penny shares, your money is made by finding the occasional five or ten bagger. The “home run” investments more than cover the also rans.