Castor Maritime (NASDAQ:CTRM). It’s been a sinking ship amid a rising tide in the broader market. But is now a good time to buy CTRM stock, utilize a hold and hope strategy or simply steer clear shares? Let’s dive a bit deeper into what’s happening off and on the price chart, then offer a risk-adjusted determination to keep investors afloat.
Source: Pavel Kapysh / Shutterstock.com
CTRM stock. Blame it on Redditors and Wallstreetbets. If you’ve heard of it, traded or invested in it, it’s likely due to that group of retail traders using the popular message board’s investing forum. Today and through brokerage vehicles like Robinhood, CTRM has become synonymous with a class of diverse securities increasingly known as meme stocks given their head-spinning volatility once put in play.
CTRM Stock and the Meme Crowd
While the SEC might disagree, I’m enjoying the proverbial little guy fighting back. That’s particularly true when there’s some overdue legitimacy to the crowd’s efforts.
Notorious short-squeezes by Redditors in GameStop (NYSE:GME) and AMC (NYSE:AMC) are two that fit that bill. SPACs Churchill Capital (NYSE:CCIV) and Virgin Galactic (NYSE:SPCE) are two other meme stocks which have been popularized by this band of merrier-by-the-minute, trading marauders.
Go Redditors!! But CTRM?
Look Beyond the Surface
On the surface, Castor Maritime sounds like a good business to be in. The company is engaged in dry bulk seaborne transportation. From iron ore to steel, fertilizers, cement, scrap metals, sugar and the likes, Castor will move it from one shore to another for the right price. And today, where inflation has made an appearance in our daily lives and demand for those goods is high, CTRM stock is in the sweet spot, right? Not entirely.
Unlike its broader Redditor peers who’ve also used secondaries to pad their rainy-day funds, Castor’s multiple capital raises have been excessive. CTRM’s shares outstanding ballooned from around 7 million in 2020 to nearly 90 million today.
The dilution to CTRM found InvestorPlace’s Mark Hake warning investors in late April to avoid buying Castor for more than two-thirds of the stock’s net asset value. That was when shares were nearly 40% higher and only now fetching its NAV.
But could there be other margins of safety at work right this minute for today’s CTRM investors? Maybe.
More recently, fellow contributor Ian Bezek notes CTRM’s decline, steady valuation in recent weeks and 2021’s ship-grabbing tactics, which have landed the company a fleet of 17 vessels. Shares are looking more fundamentally attractive than prior to Redditors taking the helm in CTRM stock. What’s more and right now, the price chart is shaping up to be a seaworthy vessel for transporting bullish stock positions to profits.
CTRM Stock Weekly Price Chart
Source: Charts by TradingView
In no shape or form is CTRM stock going to be the next Apple. Technically though, and following Castor’s rather large 85% correction, an engulfing weekly pivot low is setting up alongside a well-positioned and oversold stochastics indicator. And together, it’s looking bullish for shorter-term investors.
Should shares of CTRM rally above $4.10, the chance to position for a playable bottoming pattern exists.
I wouldn’t expect a second wave of buyers like we’ve witnessed in GME and AMC this past month to come to the rescue. But an upside target of $6.50 to possibly $8 into an area of price resistance looks doable. Bottom line, relative to today’s candlestick pattern risk, that makes a speculative purchase in CTRM stock a bit less dangerous. And, possibly worth your consideration.
On the date of publication, Chris Tyler did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.