World Reach Limited (ASX: WRR) has provided plenty of excitement recently, so much so that it was issued a speeding ticket by the ASX on Monday morning.
So What: The ASX's price query related to unusual activity that took place on Friday which saw the stock surge as much as 37.5% during the day to close at 27 cents, up from 20 cents in the previous session. Notably, the stock extended that rally on Monday, surging as high as 40 cents before closing at 29.5 cents (up 97% for the week).
In response, World Reach, which is a micro-cap focused on communication and technology markets, said that increased trading in the stock commenced around 25 February 2015 – a day after the release of its half-year report. Some of the highlights of that report included improving sales and profit performance, and a "significantly improved balance sheet". This was primarily thanks to a rights issue late last year in which it raised $2.4 million, enabling the company to retire all interest-bearing debt.
Now What: While stocks like World Reach are capable of delivering enormous returns, investors also need to be aware of the considerable risks involved in speculative buys. To use another perfect example, Martin Aircraft Company Ltd (ASX: MJP), which is hoping to commercialise jetpacks, skyrocketed as much as 687.5% in just one week, before losing 65% in the following five-day period.
As such, investors should only ever invest as much as they can comfortably afford to lose when investing in micro-caps. Nonetheless, World Reach could certainly be one for the watchlist for those investors with a greater appetite for risk.
