Why Vmoto shares are up 5x in 2019

It's the manufacturer's surging sales over the second half of 2019 that have really put a rocket up shares.

Tom Richardson

Tom is a holder of the CFA Society of the UK administered Investment Management Certificate (IMC) and has more than a decade's professional experience in the investment management industry in Australia and the UK. Tom now works as a writer and editor for TMF Australia and has two easy to remember rules of investing he likes to follow. Avoid overpaying for growth stocks and avoid paying at all for stocks that are cheap for a reason. Tom prefers growth investing over value investing and says it's not rocket science, just avoid overpaying for the best returns.

Published December 11, 2019 4:17 pm AEDT

This morning Vmoto Ltd (ASX: VMT) reported that it expects to post a net profit between $1 million to $1.3 million over calendar year 2019.

Vmoto shares are up more than 5x over 2019 on the back of investors backing the China-based electric scooter business as a turnaround story.

While a 5x or 400% rise sounds impressive, it's worth noting that Vmoto is just a penny stock that has gone from 5 cents to 26 cents over the period. Shareholders should remember that these kinds of volatile penny stocks can fall as fast as they rise.

Still if Vmoto delivers a net profit more than $1 million over 2019 it would be a long way ahead of almost every other penny stock on the local market in delivering respectable profits.

Over the quarter ending September 30 2019 Vmoto reported that it sold 6,027 electric scooters, which is nearly double what it sold on the prior quarter.

It's the manufacturer's surging sales over the second half of 2019 that have really put a rocket up shares.

Vmoto does have a mixed track record though and investors must do plenty of research on this business.

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