Market’s 56 fastest-moving stocks

Want a share price gain of 681 per cent in four weeks? How about 576 per cent in under four months? Or perhaps you’d settle for 374 per cent in three months? If it sounds too good to be true, just look at the incredible rallies in Mantle Mining Corp, Promesa and African Energy Resources. Or the other 53 stocks on the table below that have gained an average 218 per cent in weeks or months.

The extraordinary bull market in exploration stocks has provided no shortage of opportunities for nimble traders. Having said that, I still prefer investing to trading, and fundamental analysis to technical analysis, although I can see the merits in combining both investing styles. Even so, I always like to keep an eye on the market’s fastest-moving stocks. You never know which ones can go a lot higher – even after strong early gains – or have a lot of fundamental merit driving the price action.

The table below provided by Share Wealth Systems is a list of stocks with the sharpest rallies and strongest momentum. It attempts to record up-trending stocks based singarly on share price action. The data is based on the following criteria:

– Each stock must have a market capitalisation above $20 million.

– The stock must demonstrate liquidity.

– Share price gains must be on reasonable volume – not a big bounce on a few trades.

– Stocks that have rallied due to takeover or other corporate activity are excluded.

– Share price rallies occurred since October.

The list below identifies when the rally started and ended, and the price gain. The aim is to identify stocks that have had powerful short-term uptrends and watch if those trends re-commence.

Obviously, you would not recommend these stocks to your parents. This is high-risk stuff. Except for a few biotechs, all are speculative explorers and many are coming off tiny share price bases, which amplify percentage gains. This list is designed for experienced traders who buy or sell stocks in minutes, hours, days or weeks – not longer term investors. There is no guarantee any stock on this list will keep rising; after big price gains, the risk of sharp falls increases.

Use the list as a starting point to find stocks that have had strong tailwinds, and to narrow your research. Use your preferred charting techniques to identify when these share price trends are resuming or breaking down for stocks on the list. Or do what I do and apply fundamental analysis to some of the more interesting stocks to see if the price matches the prospects.

Remember to use stop-loss levels to minimise losses and protect profits should you buy stocks that resume their uptrends. Also, be aware that much can change between the short time this article is written and published, such is the incredibly volatile nature of some of these stocks.

You must think I’m a lawyer with so many caveats (even worse, I’m an economist by training!). But I can’t emphasise enough that this is a list for day-traders with clear trading plans and discipline.

Disclaimers aside, this is a fascinating list of companies. A few catch the eye. I first looked at Mongolian coal explorer Aspire Mining last year as part of a broader effort to understand the Mongolian resources industry, which is seen as a play on Chinese energy demand.

Other Mongolian explorers, such as Hunnu Coal and Haranga Resources (iron ore) have also shot higher. Both listed last year. Another recent listing, Mongolian coal explorer Xanadu Mines, is slightly above its 60-cent issue price. Aspire has signed impressive strategic partnerships and had new investors join its share register. It is the largest of the specialist Mongolian explorers.

My guess is that hype about Mongolia will steadily build in 2011. Nobody doubts its exploration potential; I question whether Mongolia’s infrastructure can support production of bulk commodities. Traders will not care about such fundamental issues. Those who trade exploration stocks know it pays to follow hot markets. Mongolia is one of them.

There are some interesting initial public offerings of the past few years on the list. Mt Isa Metals has zoomed higher after joining the West African gold rush. Uranium explorer Hot Chili is one of several small explorers raising capital for projects in South America, which is better known for copper. Hot Chili management has done a good job since listing the company.

Who would have thought a year ago that biotech companies would make a list like this? Mesoblast and Prima Biomed fly the flag for a sector that finally rallied in 2010 and could have further to go this year, with so many key biotechs nearing research milestones. Keep an eye on biotechs such as Pharmaxis, ChemGenix Pharmaceuticals, Bionomics, Clinuvel Pharmaceuticals, and QRxPharma; all have interesting research trials or possible regulatory approvals scheduled in 2011.

My other favoured sector this year is energy. Everybody talks about the resources boom, but within that, energy stocks have lagged material companies in the past two years. Expect higher oil and gas prices in 2011 amid burgeoning demand from emerging economies and potential supply constraints as nations, such as Egypt and others in Northern Africa, experience civil unrest due partly to food price inflation.

Watch for the oil price to move sharply higher once it breaks the psychological US$100 a barrel level – and for small energy stocks with strong leverage to the oil price to follow it up. I count nine oil and gas companies on the list. I’ll bet on plenty more the next time this analysis is done.

Fastest Moving Stocks

Source: Share Wealth Systems

–    Tony Featherstone is a former managing editor of BRW and Shares magazines, and a business journalist for almost 20 years. He is not a licensed financial adviser. This column provides general information and ideas on market, sector and company trends, rather than specific financial advice. Readers should not imply stock recommendations from this column. Do further research or consult a licensed financial adviser before acting on information in this column. The author does not own shares in any company mentioned in this article.