Shares in battery charger and converter business Rectifier Technologies Limited (ASX: RFT) tripled in value this week after the company announced its latest RT18 rectifier for the electric vehicle market is making progress towards potential commercialisation.

Given the wild excitement over any company with exposure to the hotly-anticipated electric car boom it’s no surprise investors sent the stock up nearly 300% on the news as it hit 4 cents from a level around 1.2 cents prior to the news.

The company closed at 3.3 cents today and now has a market value around $53 million. While the low share price may give many investors the impression of a loss-making penny dreadful stock the company is actually consistently profitable and posted a net profit of $571,000 for the six months ending December 31 2015. This followed on from two prior halves of solid profits.

Today’s news that its RT18 rectifier is progressing well is related to a recent contract the business signed with Efacec Electric Mobility, which is a European business involved in the provision of charging systems to the electric vehicle industry. If the RT18 rectifier is successfully developed within Efacec’s products there’s likely to be a step change in sales for Rectifier that explains this week’s torrid share price rise.

Given the stock trades at just 3.3 cents just a small move in nominal value can mean a large percentage swing in terms of returns, so investors interested in the stock need to be comfortable over fair value and strap in for some volatile price swings.

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Motley Fool contributor Tom Richardson owns no shares in any company mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.