I first wrote about Cub Energy a little over a month ago on October 31st, Halloween as it turns out. And that seems rather fitting because this obscure little Canadian listed penny stock has been quite the monster over the past month. Near the end of that post I said I might revisit KUB if the PPS took off.
Well given that the PPS has nearly doubled I think I've earned a self congratulatory pat on the back. If you want to read that original post here it is:
As it says in the subject line KUB is now approaching its 52 week high. This past Friday the stock touched 5 cents before closing at 4.5 pennies. If it hits 5.5 cents it will have reached that 52 week high, and obviously anything above 5.5 will represent a new high. Here's the 1 year chart.
That's a pretty spectacular jump in a short period of time. Up until mid November shares were available on the ask at 2.5 cents, and anyone lucky enough to get filled at the bid was buying at 2 cents. This past Friday the bid was at both .04 and .045 cents....offering a chance at gains in the neighbourhood of 80 to 100%.
There's a common saying with penny stocks, "greed kills", so I will not begrudge anyone for taking their profits and running. As I write in practically every other blog posting, nobody ever went broke taking profits.
I will however admit to being greedy here and holding on tight. I am currently a shareholder, that is to say I do eat my own cooking. But that also means my opinions are biased so please view them in that light. I will of course explain the reasons why I continue to be bullish on KUB.
The biggest reason is volume, or rather a lack of volume. Since KUB began its climb off that 2 cent low on November 16th there has only been one day with volume of over 2.5 million. That day was November 17th, the first day KUB moved off that 2 cent base, when roughly 15 million shares traded hands. However 15 million isn't a huge number when you consider the amount of money it represents with a stock trading for a couple pennies.
15 million shares trading at 2.5 cents equals $375,000 CDN, which is not insignificant, but we're not talking millions of dollars either. And as I mentioned, since that day to present volumes have not once crested 2.5 million. Even two and a half million is only around $100,000 CDN at 4 or 4.5 cents.
So what has caused KUB.V to lift off that base of .02 to .025 cents and move into the .04 to .05 cent range? I think the reason is quite obvious, its due to the release of their Operational and Financial Results for the 3rd Quarter which came out on November 16th, one day before the volume surged.
The release spoke of an improving cash position and the decrease of royalty rates for natural gas in Ukraine. That news saw a jump in both PPS and volume, but most importantly, since that time the PPS has not returned to that base level of 2 to 2.5 cents.
Regular readers know that I keep an eye out for what I consider to be the "Unholy Trinity" of the markets: Promotion, News and Hype. Cub Energy has not issued one PR since their quarterly update and you'd have to go back to August to find one previous to that. That's a far cry from the typical penny stock news machines where at least one PR per week is the norm.
In terms of promotion I have found zero, nada, nothing, zilch.
I have commented often that some promotion with penny stocks is almost to be expected. However the only item I am able to find which even has a hint of promotion to it is a Streetwise.com report from back in April of this year with some guy named Chen Lin explaining his reasons for being bullish on KUB.V
There is precious little news, no recent promotion that I can find, and certainly no hype. However that isn't surprising given that KUB is still trading between .04 and .05 Canadian cents. Yes that is a big jump in percentage terms when measured against recent lows, but the Market Capitalization here is still not even $12 million in USD. That's a far cry from 2013 when both the MC and share price were 400 to 500% higher than they are currently, with the number of outstanding shares roughly the same as it is now.
Should KUB's share price return to that 20 cent level, I will be keeping a keen eye out for promotion and hype. Its not unusual to see a stock being pumped and promoted after it gains 1,000% or more off its lows. If the PPS does make those kind of gains I will be hopeful that the increase can be sustained, but I will not be naive if I sense the dinner bell ringing calling the herd to the trough.
2 cents to 22 would represent a 1,000% jump off the low.
Again, I have a long position in this stock so view my opinions and commentary in that light. Verify everything I have written and realize that an investment in a penny stock comports significant risks. My tolerance for risk and investment objectives may differ from your own. An investment in KUB could result in the loss of some or all of the money put in play.
Good luck.
Something I forgot to add to my post, one can never be sure of anything in the markets. News, both bad and good, can come out at any time and affect the market. But with that being said if KUB does hit its 52 high at 5.5 cents then a pullback should probably be expected as recent buyers take profits and longer term holders bail.
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