Avoid SGOCO Stock Like the Plague

Shares of SGOCO Group Ltd. (NASDAQ: SGOC) closed last Thursday at $2.58 a share. The next day, SGOCO stock exploded as 124 million shares changed hands. The stock climbed as high as $18.80 before closing at $9.79.

On Monday, the penny stock exploded higher again, as high as $29 during the day. Over 100 million shares went into circulation.

That’s pretty interesting, since SGOCO only has about 100 million outstanding.

What was the reason for the move?

Like so many stocks in the last year, there is none. The so-called “meme stock” traders decided to push it higher. But the move certainly has nothing to do with the company's business.

Here’s why you should stay away from SGOCO stock.

What Is SGOCO Group?

The Hong Kong-based company has three segments and made about $4 million in revenue last year. Three years ago, it had over $180 million in assets and more than $120 million.

SGOCO currently makes mortgage loans as well as personal and corporate loans. It also owns four rental properties in Hong Kong.

Another one of its holdings is a company that provides an online financial marketplace connecting financial institutions and users worldwide via its mobile application.

Looking through the financial filings, SGOCO’s primary business over the years seems to be the buying and selling of small companies without success. Total assets and equity at the company have been declining for several years.

Right now, it looks like it has about $90 million in total assets and around $70 million in equity.

This is a money-losing company with less than $5 million in total revenue. It was trading with a market cap of about $3 billion on Monday.

So, if there’s any question of whether you should buy SGOCO stock, we can make this easier for you today…

profit watch now

Buy These Stocks with Just $10

Anyone can get in on the best stocks on the market by buying fractions of shares. Buy these before market close TODAY.


profit watch now

Buy These Stocks with Just $10

Anyone can get in on the best stocks on the market by buying fractions of shares. Buy these before market close TODAY.


Don’t Buy SGOCO Group Stock

There is barely a real business here. Don’t even think about it.

There is no reason for the SGOCO stock price boom beyond Internet chatter.

Meme stock traders can push stock prices higher, and in some cases, like GameStop Corp. (NYSE: GME) and AMC Entertainment Holdings Inc. (NYSE: AMC), the prices can stay up longer than logic would dictate.

In the case of AMC, meme stock traders made it possible for the company to sell stock at higher prices and raised enough cash to save the company.

That's not even the case here. This company doesn’t produce much of anything at all. Business was awful before COVID-19, and it remained awful after COVID-19. You are basically buying hot air and hoping you can sell it at a higher price before the inevitable collapse.

There only about 300,000 shares sold short and more than that traded in the first few hours last Friday.

The company had just six days volume sold short, so it was not much of a short squeeze candidate.

To push a worthless company up to 10 times its closing price in two trading days is pretty impressive. However, anyone stepping in to buy shares now that it is falling would just be recklessly gambling.

Those who started the meme on Friday morning have made an enormous amount of money in a short period of time. But you will not find a business here.

There did not appear to be any hedge funds long or short the stock before it began flying higher.

The Internet gang might be able to reverse the pullback from the highs on Monday that took the stock from a high of $29 to a closing price of $20 on Monday.

However, if they fail to reverse the selling, the stock is heading back into penny stock status.

Three Stocks Better Than SGOCO

Chief Investment Strategist Shah Gilani just held his first-ever stock-picking lightning round event - running through more than 50 stocks to tell you if they are stocks to buy or stocks to sell.

Dozens are overpriced and overhyped – you should ditch them ASAP.

But Shah says THESE three stocks are “screaming buys.”

All three are trading at a discount… they’re under-the-radar companies most people haven’t even heard of… and they have massive tailwinds ready to send their share prices into the stratosphere.

To get the company names, tickers, and price targets for Shah’s picks, go here now.

Follow Money Morning onFacebook and Twitter.

7 Stocks to Sell Immediately

These popular stocks have hit their peak - get their tickers so you can take your profits and move on.


7 Toxic Stocks to Sell Immediately

These popular stocks have hit their peak - get their tickers so you can take your profits and move on.