What to Look For in Each Trade

Hand writing Time to Invest concept with red marker on transparent wipe board.

I sat down with my publisher James Woodburn to talk about clean energy last week.

Suddenly, all the facts and figures I’d absorbed started pouring out of me.

My goodness…there’s a whole lot to be excited about on this topic.

Fat Tail Media has a very exciting development coming down on this front.

It’s hard to think of a more powerful trend over the next five years. Hitch your train to it in as many ways as you can!

However, there was an even more rollicking development for me last Thursday as I sat on the call with Mr Woody Woodburn.

Just as we concluded our ‘official’ chat…I saw something that put a grin on my face…

It was one of those big catalysts I’ve been telling you about lately.

Do you remember I invited you to something called the Medici Event the other week?

As part of that, I gave away a live trade.

It was a stock called DroneShield Ltd [ASX:DRO].

Here’s what I said on Thursday, 3 September…

I’m in the market for big catalysts, big announcements, that can send the stock roaring up. I can’t guarantee it.

Now, let me emphasise that. I cannot guarantee this. But if DroneShield comes out and says that they have won the tender for that contract, which is double the size of the company entirely, that stock has the potential to double in a day.

Now, again, I can’t guarantee that it’s going to happen. But in my view, it’s worth the risk. We can also note that DroneShield recently did a capital raising.

Again, small-caps are risky. They’re usually not profitable and DroneShield isn’t. But DroneShield raised $7 million from sophisticated and institutional investors at 12.5 cents per share.

So that gives us a benchmark for what it should be trading around. If we can get in at a similar price, then that’s a reasonable proposition to me…

…If you can get in from 12.5 cents to about 16 cents. I don’t want you to pay any more than 16 cents on this. In that range, I think that’s a very, very good entry point.

How you can anticipate these types of moves…

On the day of our event the other week, DRO opened at 13 cents.

By Thursday’s open last week, it was still under my ‘buy-up-to price’.

Then they announced a crucial deal with the US Department of Defense at around 11:25am that morning.

Bang! A 36% rise in a day and over 50% for the trade.

See for yourself…

Profit Watch

Source: Google Finance

[Click to open in a new window]

DRO made a further announcement Friday morning for a big order with the Southeast Asia Army.

It’s exactly what I anticipated for the week. I said at the time…

…I love trades when I’ve got multiple different catalysts that can come out. All right? A, it de-risks the trade for me, but it means I’ve got more than one-way of winning.

If the Middle East order never comes, it is perfectly possible that DroneShield releases announcements from, again, the Australian military, the US military, Asian military.

A fine trade…and a good profit in quick time. That’s always nice to see.

The point of today’s Profit Watch is to show you can anticipate these kinds of moves.

You won’t always get it right. That would be asking too much.

But look at the payoff when you do get it right.

Next time you consider buying a stock…ask yourself this following question:

‘Does it have potential to release a big, bullish announcement?’

If you don’t know, make sure you find out!

Best wishes,

Callum Newman Signature

Callum Newman,
Editor, Profit Watch

PS: Profit Watch is a fantastic place to start your investment journey. We talk about the big trends driving the most innovative stocks on the ASX. Learn all about it here.