It’s the kind of email I’d enjoy waking up to…
Sender: Investegate Alert Service
Subject: Alert for Photonstar – Proposed roll out of Halcyon IoT platform
From the subject line, you know the news is going to be good. Unlock the phone. Log into Investegate, see how good the news is. Then wait expectantly for the market to open….
How Photonstar made its investors 4X overnight
Photonstar is a tiny Aim-listed lighting technology company, based in Hampshire. It has 110 employees. And, at 7am this morning its shares traded for the sum of half of one penny.
It’s 11am as I type, and the shares are now going for 2.235p. Photonstar investors have made 320% overnight (unfortunately, I’m not one of them).
Photonstar makes LED lighting technology for offices and the likes. LED lighting is great because it’s cheap to run, and it can be precisely controlled by computers. It costs a bit to install though.
What happened today is this: Photonstar announced that a student accommodation provider had signed a “letter of intent”, saying that it was planning to go with Photonstar’s technology. The student accommodation company has sites in 24 cities, where its planning to install 50,000 of Photonics Halcyon devices.
Now, a contract to install 50,000 lightbulbs isn’t a big deal in the grand scheme of things. Big companies make deals like this all the time – and they don’t bother notifying the stock market about it.
But with penny shares, it’s different. There are three reasons why.
First up – as the legendary investor Peter Lynch put it, “big companies have small moves; small companies have big moves.”
Photonstar is tiny – last night it had a market cap of just £1.1m. It only has a few products and a few customers.
All it took was one deal with one customer to make investors 4X their money overnight.
Second, small companies like Photonstar are easier for investors to size up. They don’t have many moving parts. They don’t have complicated corporate strategies, and they’re not as dependent one the overall economy.
Third, small companies like Photonstar are off-limits for big money investors. Professional investors in the city would love to grab some of this action. But they can’t – the Photonstars of this world are just too small for them. With the amount of money big City investors have to spend, they’d need to buy hundreds of Photonstars outright.
That means we have the market to ourselves, dear reader.
We can invest in the kind of companies which email you first thing in the morning to say that they’re now worth 3x what they were the previous night…
The kind of companies it’s simple to understand and fun to invest in…
The type of companies big city investors can’t touch.
I investigate these companies all-day every-day for my Penny Share Letter subscribers. As one of my subscribers Aramide A. wrote,
Firstly I would like to thank you for the wonderful service being offered… These stocks have been massive in terms of uptrend. My only regret is not having enough capital to buy a whole lot more than I did.