While the Australian share market was fighting hard to carve out just the smallest of gains today, a number of speculative shares were rocketing higher with relative ease.
These three speculative shares are clearly in favour with investors right now, are they the real deal?
The Eden Innovations Ltd (ASX: EDE) share price finished the day 18% higher at 11 cents on Thursday. This latest gain means that the clean energy company’s shares have now rallied an incredible 175% in the space of just four weeks. Investors have been buying its shares in a frenzy ever since the company won a US$525,000 Federal contract for its EdenCrete admixture product in the United States. The company followed this up with an announcement this morning advising that a joint evaluation trial with the Metropolitan Atlanta Rapid Transit Authority found that the use of EdenCrete will provide the Authority with significant savings by reducing both the life cycle cost and the frequency of maintenance. While I do like the product and believe this trial could lead to further contract wins, I feel its $140 million valuation is getting excessive.
The Food Revolution Group Ltd (ASX: FOD) share price stormed 7.5% higher to 14.5 cents despite there being no news out of the juice company. This latest gain means that Food Revolution’s shares have more than doubled in value in just over two months. The company recently announced a strategic investment and Chinese distribution deal with Careline Australia. The distribution deal aims to grow the company’s sales from ~$35 million to up to $500 million within five years. While such lofty goals are often best taken with a pinch of salt, I do think its product range has a lot of promise. In fact, I’m a big fan of their drinks and regularly purchase its kombucha products from my local Wesfarmers Ltd (ASX: WES) operated Coles supermarket. I think it is well worth keeping a close eye on Food Revolution given its relatively low price to sales ratio.
The Jatenergy Ltd (ASX: JAT) share price rocketed 26% higher to 7.8 cents on Thursday. This means that the energy-cum-infant formula company’s shares have doubled in value since this time last week. The catalyst for this gain was a surprising quarterly update which revealed a sudden surge in cash receipts. Jatenergy saw its cash receipts from sales increase from $320,000 in the June quarter to a massive $10.7 million in the September quarter. But another metric that also rocketed was its product manufacturing and operating costs. They increased to $15.4 million, leading to a net operating outflow of $5.5 million. While its sales growth looks impressive, I would approach this one with caution. Especially given its limited cash balance and sizeable cash outflows forecast.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. 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 Scott Phillips.