Growlife: Missed The Big Move? Catch The Second Big Move

Jan. 07, 2014 8:48 AM ETGrowLife, Inc. (PHOT)108 Comments
Jason Bond profile picture
Jason Bond

(Editors' Note: This article covers a stock trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.)

After soaring 270% from its Nov. 20 close, Growlife Inc. (OTCQB:PHOT) trades near all-time highs. While the market cap of PHOT rips through $100 million, while sporting only $3.61 million in sales, in my mind PHOT looks and feels like an explosive cult stock-a stock which attracts investors with an underlying fire of emotion.

Stick with me on the PHOT brainstorm. Let me quickly explain the PHOT thesis before I give you the set-up.

What is a cult stock?

A cult stock has the telltale characteristic of emotionally grabbing an investor with a populist, trend or fad phenomenon, luring him (her) in, while the underlying business operates in infancy. The hope of the investor is to become part of the movement-a participation in something bigger than himself-and he'll pay to become part of the movement.

Sounds crazy? It's real, and PHOT is one of those stocks.

But, here's the deal with cult stocks:

Don't expect a buy-and-hold strategy to work for you very often. Instead, expect massive volatility, which, in the case of PHOT, can translate to a quick profit (held for minutes, hours, or a couple of days) during the run-up, fueled by crazy volume, "high" expectations, and a pent-up emotional-relief response to an industry once locked-up for decades in a modern-day Dark Age of sanctimonious oppression.

So, now, state legislators across the country are jumping on board to the populist movement, and we can profit from this one-off renaissance of freedom (some say, a new government tax revenue plan, like the lottery scheme).

Well, in any case, the madness of crowds is a compelling reason to hold

This article was written by

Jason Bond profile picture
Jason Bond is an American stock trader, entrepreneur, and small cap expert. Jason teaches small cap swing trading at Jason Bond Picks. He is best known for his 2013 swing trading performance tripling the S&P 500 in the portfolio he manages. Jason’s small cap swing trading ideas are widely published on numerous financial sites and blogs. Prior to teaching small cap swing trading in 2011, Jason taught for the Webster Central School District in NYS from 2001 - 2011. Jason’s trading strategy attempts to capture gains in a stock within one to four days. He uses technical analysis to look for stocks with short-term price momentum. Jason is interested in the fundamental value of stocks but puts emphasis on price trends and patterns.

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