Nuvilex (NVLX): The Long Term Picture
As of Friday's close, NVLX is now up 230% since I revived my coverage back in March at $.05. The stock has behaved extremely well- volume has increased on a daily basis consistently over the past two months, hitting a crescendo level of 20 million shares this past Thursday as the stock surged to my short term target price of $.18, and made a subsequent high of $.19 in the early going Friday.
Needless to say, my inbox is now full of inquiries. The market is telling everyone this is a good company, and now everyone wants to know what the long term outlook is.
An interesting question- and one that deserves an answer.
Consider this. Let's suppose you're a fairly typical micro cap investor. You read my first edition on NVLX and say to yourself "this sounds interesting". You decide to watch it for a bit.
As the stock starts to get momentum, you decide to jump in at $.08- you pick up 25,000 shares. This is a total investment of $2,000, and a pretty standard opening dollar amount for most penny stock lovers like myself.
The stock hits $.18 (my short term price target), and you take your profits. In about 6 weeks your $2,000 has turned into $4,500, and you've enjoyed a pretty nice short term 125% return on invested capital. Very exciting.
However, consider the other side of the equation. You've made $2,500 in short term gains. After Mr. Obama gets his cut, you might have $1500 left.
What have you really achieved for yourself? Does the $1500 you made really change your life in any way? Sure, it's fun. Sure, you've made a great trade. But, is there any real significance for you?
After all, it's the dream of every penny stock investor to have one they own at $.10 go to $10. And yes, it does happen. I've seen it.
Let's look at the long term side:
The Quintiles IPO
This past Thursday Quintiles came public in an IPO on the NYSE.
Quintiles Transnational Holdings, Inc (NYSE: Q) raised nearly $1 billion in an IPO that priced at $40- the stock traded to $44 on the opening day.
Quintiles does about $5 billion in annual revenues. The company is a service provider for the biotech industry.
Q designs and executes FDA trials on behalf of every kind of biotech company from the smallest start up to the likes of Pizer.
Have you ever seen and ad on TV suggesting you can be paid to participate in a clinical trial if you have Type II diabetes? It's likely Quintiles is running that ad on behalf of a client.
What does this have to do with Nuvilex (NVLX)? Glad you asked.
I now ask you to let your imagination run wild. Visualize the future. Perhaps it's six months from now- perhaps it's 2 years from now.
Whatever the time frame, Nuvilex has just raised $20 million for a Phase III clinical trial for the encapsulation technology to treat pancreatic cancer.
Nuvilex announces it has retained Quintiles to manage the Phase III trial. Where do you think NVLX will be trading if and when that happens? Certainly many times higher than Friday's close.
Now, let's get into the time machine again, and fast forward another year. Nuvilex (NVLX) announces positive preliminary results from the trial. Where is the stock trading now? Again, many times higher than Friday's close.
Can I promise you this will all happen? Of course not. However, I can assure you NVLX's encapsulation technology showed remarkable results on 17 patients with Pancreatic Cancer in a Phase I-II trial in Germany.
So, there's your quandary. Scalp your $2500 short term gain, or go for something that could literally change your life.
One subscriber- Dennis T- emails me every now and then on NVLX. He informs me he's up $40,000 on his position, but has no interest in selling as he believes the stock is going to $10.
Dennis is the rarest of breeds in today's world, where information flies at light speed. An endangered species. Dennis is a long term investor. If only for Dennis's sake, I hope it does go to $10.
I'm not going to formally forecast NVLX is going to $10. However, I will say this. An effective therapy for Pancreatic Cancer has to be worth $5 to $10 billion. But it doesn't stop there. NVLX's encapsulation technology can be used with many therapies - breast cancer could be huge.
At present, the market says the company is worth $82 million. In the biotech sector, an $82 million valuation is a mere starting point.
You're in at the starting point. I don't know where we finish, but I do know this.
In 1987 I started following Comverse Technologies (CMVT) at $.375. It was the first time I heard the phrase "voice mail" I watched it trade to 1 lousy penny. 12 years later, after one reverse split and 2 forward splits, I watched the stock trade to $140. 10,000 shares ($3750) turned into $3.2 million at the top.
In 1998 I featured a company in the OTC Journal- NetSol International (NTWK). The stock was $1.62 at the time, and went to about $1.
18 months later, NTWK printed at $80 after jumping from the bulletin board to NASDAQ. 4823% ROI in 18 months. $1620 turned into $80,000 at the top.
The moral of the story- it does and can happen, and I've seen it with my own eyes. I did not own CMVT during it's amazing run, but I did own NTWK. I can't say I sold at the top, but it was amazing to watch.
NVLX corrected on Friday for the first time in 4 trading days. It traded down 20% in the early going, but regained steam and closed at $.176- exactly where it closed on Thursday after surging 30% in one day on 20 million shares.
Technicians call yesterday a "stop and reverse". My bet is this stock will resume it's upward climb on Monday- new short term target- $.25. I was right about $.18, and I'm likely to be right about $.25.
Whether Nuvilex (NVLX) is the super star you dream of, or I find another one that ends up being the next huge winner, I believe we are entering a market environment where people can see these kinds of returns out of the micro cap world for the first time since the 90's.
Risk is slowing returning to the stock market, and I hear inklings of institutions dabbling in the micro cap world again. This is very encouraging, and bodes well for you intrepid investors who are active in the sector now.
All I'm asking for is about 3 years of a small cap bull market. Many long term observers are likening the current environment to the early 80's- a golden age of micro caps.
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