By posting a share price triple since the opening months of the year on volume that has been significantly increasing along the way, Implant Sciences Corp. (IMSC.PK) has already been labeled as a hot stock to watch, but with the most relevant potential catalysts still yet to materialize, there may be more run left in the tank.
Having swiftly moved to the north side of $1.80 to close out the month of June, after trading for under a buck barely two weeks earlier, Implant Sciences' shares likely fell victim to profit taking and the departure of the swing, momentum and day traders that often cash out their quick profits in order to move on to the next big - and more importantly, quick - score. These guys rarely stick around to see a story play out, rather they're in it for the quick profits, sometimes not even paying attention to the potential catalysts that may still be pending for a particular company. The arrival and departure of such traders also contributes to the volatile trading that many quick-runners experience leading into and just following a price run.
Also relevant are the short sellers who tend to jump in on stocks that have just experienced massive price runs, such as that of Implant Sciences. These short traders also rarely look at pending potential catalysts, rather they play the numbers associated with the theory that 'what goes up, must come down,' as is the case with gravity and the stock market in general. No stock goes up forever and the short players tend to play this phenomena.
However, sometimes a story is strong enough to attract a stronger following and the shorts end up getting stuck without the significant gains that they had previously thought were there for the taking. Spectrum Pharmaceuticals (SPPI) is one such story playing out these days, and Implant Sciences could use the potential positive implications of its pending catalysts to parlay the stock higher in the light of significant short interest.
The recent run to $1.80 has been followed by some volatile trading, both up and down, but may be settling in a new buying range centered around the $1.50 mark. Such a retracement from quickly-achieved highs is healthy for a stock, as it allows for consolidation and renewed accumulation, especially when a company still has catalysts pending as significant as what Implant may have in store.
Through a technology that beats the competition because it does not use any radioactive particles to do its job, Implant Sciences has become a recognized leader in the field of explosive trace detection (ETD) at a time when the threats of terrorism are increasing with each failed attempt to down another airliner or blow up another key landmark, such as New York's Times Square.
Validation of the technology can be seen with the amount of key players that have joined the Implant ranks over the past few months, whether as advisers or de-facto hires, some who have left money positions at competing firms and all who have ties to the U.S. Transportation Security Administration (TSA) or other national-level entities at some point in their careers. The team being put in place has the company positioned to take quick advantage of the potential outcomes of the noted catalysts, should they turn out in favor of Implant Sciences.
Most notably, the TSA is set to announce its decision as to whether Implant's ETD Quantum Sniffer (QS) technology will be approved for use in the security of the US Homeland. Such an approval would immediately open the company up to receive orders from government agencies to provide security for public infrastructure, including airports and air cargo holding points. Come December 3rd of this year, the TSA has mandated that all air cargo destined for the US on passenger airlines is to be screened for explosives.
Should the TSA approve Implant's Quantum Sniffer, the company could well capitalize on this mandate.
The competition currently on the market, from Morpho or the UK's Smith's Detection (SMGZY), for example, does not sport the same 'clear down' capabilities of the QS technology, marking Implant as the most ready and capable to meet the TSA mandate. The 'clear down' is the time that an ETD system 'recalibrates' and is ready to inspect again - in the case of the Sniffer, that time is measured in seconds, while the competition's is measured in minutes or even hours. Given the scale of inspections necessary to meet the TSA's December mandate, Implant Sciences may hold the only technology that could feasibly get the job done, at least in a timely manner.
The large influx of trading volume over the past few weeks could be an indication that investors agree and are taking positions accordingly.
Implant Sciences opened the new week with another well-above-average trading volume day and closed Monday right at the $1.50 mark. Those looking towards the pending catalysts may find that level, or any dips below it, as a nice accumulation point, with the potential to post another round of quick gains, should the TSA decide to approve later this summer.
In the meantime, excitement is not likely to stray too far from Implant Sciences' trading, especially as the time draws nearer to D-Day with the TSA. Keep a continued eye on this one.
Disclosure: I am long IMSC.PK.