The Surfstitch share price is soaring: Here’s why

Source: iStock

Surfstitch Group Ltd (ASX: SRF) shares are soaring today, up more than 14% to $1.22, despite the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) trading roughly flat in late afternoon trading.

Despite the rise though, the Surfstitch share price is still down 27% in the past five days as the chart below shows

Surfstitch share price chart Feb 2016

Source: Google Finance

Surfstitch is an online retailer of surf, skate, ski and street and a digital adventure platform, which only listed on the ASX in 2015. The company was once 51% owned by Billabong International Limited (ASX: BBG), but when it ran into trouble, Billabong was forced to sell off its stake in what now looks like its most profitable growth opportunity.

It seems investors are finally cottoning on to the potential growth of Surfstitch, after shares were heavily sold off last week, despite reporting a decent interim financial result. At one stage, Surfstitch’s share price was down by more than 20% on Thursday last week at $1.38, and it was sold off again on Friday.

But the bargain hunters seem to have arrived – and they may have picked up an absolute bargain, given the potential growth Surfstitch is aiming for.

Foolish takeaway

When Surfstitch reported last week, I wrote “Foolish investors might want to make space in their portfolios for Surfstitch“, and today’s price is still lower than when I wrote that.

Seems to me that there’s still a bargain to be had, despite today’s jump in the share price.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

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