On December 3, 2014 Laura was seeking input on her strategy of selling Cardiff Energy Inc. (CRS TSXV) and buying Nuva Pharmaceuticals Inc. (NPH TSXV). The case for CRS was analyzed on Wednesday. Today the situation at NPH will be scrutinized to see if it would be a good place for Laura’s capital.
The first thing that surfaced in conducting some basic due diligence is that the company changed its name to VANC Pharmaceuticals Inc while maintaining the same ticker symbol. The mission statement of NPH is to create an innovative Canadian generic pharmaceutical and over the counter healthcare products company. That is a fairly ambitious agenda for a company with a total market capitalization of $6.99 million. Another factor that needs to be recognized is that the last financial report posted on the corporate website was dated March of 2014 and showed no revenue for the previous twelve months.
These two issues have to be evaluated when making your investment decision. A survey of the charts will better inform my thoughts on NPH.
The three-year chart portrays a choppy trader that has seen its volume move higher since October of 2014 as the chatter on investor bull boards picked up. The shares hit resistance at $0.225 in November as the RSI indicated the the shares were overbought. They have has since pulled back to near $0.19.
The six-month chart pulls into focus the double top that has formed and the sell signals generated by the MACD and the RSI. The study of NPH points to a speculative stock with thin revenue. The advance since October has been stoked by chatter and seems to be losing momentum. The formation of a double top is also disconcerting as it generally indicates a trend reversal.
When examining both of the stocks presented it seems that you might be chasing high risk stocks without realizing how much risk you are assuming. All investors have an individual profile that drives their decisions on what to buy. The study of CRS and NPH suggests that you may be limiting your exposure to other opportunities in the investment universe that offer lower risk.
Make it a profitable day and happy capitalism!