It’s not often that you’ll see a stock report a triple-digit gain in a day.
But in the whacky world of micro-caps, it is a definite possibility. As long as the news is big enough — and the market is willing — massive gains can be made.
Take Strategic Elements Ltd [ASX:SOR] for example.
This tiny stock has seen its share price rise from 6.5 cents yesterday to 20.5 cents at time of writing, netting investors a cool 215% gain in one day of trading.
You won’t get that from large-cap stocks!
So, what was the catalyst for such a dramatic result? Well, it all has to do with batteries…
The self-charging solution
First and foremost, SOR is a fairly unique entity. It operates as a pooled development fund, investing in other businesses with shareholder capital to deliver returns.
As such, it doesn’t really operate in one particular sector. It picks and chooses companies to invest in that may yield positive returns. All with a slant towards tech and innovation.
Today, one of those investments — Australian Advanced Materials — made a game-changing announcement. The small outfit has agreed to work with the University of New South Wales and the CSIRO to make a ‘self-charging’ battery.
As the update declares:
‘The Battery cells create electricity from humidity in the air or skin surface to self-charge themselves within minutes. No manual charging or wired power is required.’
According to the update, the battery is an ideal solution for Internet of Things (IoT) devices. Products that rely on bridging the network gap for previously non-internet tools.
Point is, it’s a big market — with many products that rely on batteries. So if this self-charging battery can live up to expectations, it could possibly disrupt a multibillion-dollar market.
Naturally, that kind of potential has sent the share price soaring today. Even if this product is still only in its early stages, the possibility of what it can do is enough to work the market into a frenzy.
What’s next for SOR?
Now, to be clear, these kinds of returns can only be found in stocks like SOR.
Small- and micro-cap stocks are the only place you’ll usually see triple-digit returns. And even then, they’re pretty damn rare.
That’s why today’s result for SOR is a big one. But the hard work isn’t over yet. Now the fund and its key investment need to actually make the battery a reality. A task that will take time, money and plenty of innovation.
In other words, the big challenge is still ahead of SOR. But also the possibility of more big gains.
For shareholders, that means today may just be a taste of what’s to come. They will certainly be hoping so, no doubt.
But at the very least, it’s a good sign of the potential that this tiny micro-cap possesses.
Regards,
Ryan Clarkson-Ledward,
For Money Morning
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