When it comes to investing in Remark Holdings (NASDAQ:MARK), the conditions look promising. Still, speculating on a riskier, but bullish narrative being pitched off and on the price chart of MARK stock looks a good deal more interesting with a well-positioned options strategy. Let me explain.
Sporting a market capitalization of just over $260 million, Remark is the very definition of a small-cap company. Yet just over a month ago, even those fortunes were a stretch. Shares traded for a capitalization of less than $50 million in late April. Coupled with its price tag of less than 50 cents, the combination put MARK squarely on the brink of broken dreams within the universe of micro-caps.
Despite the close call at mortality and huge rebound of than 550% in share price, chances are good investors haven’t heard of MARK. Of course, with the ‘trillion dollar club’ of Microsoft (NASDAQ:MSFT), Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN) and Alphabet (NASDAQ:GOOGL,NASDAQ:GOOG) ‘mostly’ back in full-force these days and NASDAQ Composite hitting new all-time-highs, that would be easy to do.
But if we’re to believe some of the recent excitement in MARK shares the past month, this could be the start of something much bigger for Remark and even the next next big thing in investing. Well, maybe.
In a nutshell, Remark is a technology company. MARK is a way for investors to position in an up-and-coming artificial intelligence (AI) stock whose fortunes may just now be turning for the better.
Optimism for MARK and its shareholders are largely tied to the company’s portfolio of AI-enhanced thermal screening products which have gained acceptance since the novel coronavirus. Apparently, it’s the real deal and a superior technology for efficiently detecting customers with Covid-19.
There’s also an agreement with China Mobile (NYSE:CHL) and its 17,800 retail stores which could prove a boon for MARK. Remark’s AI technology is to be used to help the telecom giant with facial identification, traffic counting, and helping customers with a smoother in-store experience. That’s not all, though. MARK also has Wall Street’s attention for another reason.
Remark has a 4.5% stake in an AI-powered, app-based personal healthcare platform. The company known as Sharecare is co-founded by television personality Dr. Oz. It’s another business which stands to grow in the aftermath of the coronavirus. What’s more, love him or hate him, Dr. Oz isn’t the only party of notice interested in Sharecare either.
Sharecare has an ally in Oprah Winfrey, as well. Investors following her lead in WW International (NASDAQ:WW) a couple years back could have cleaned up big time. Could this be another windfall? What’s more and according to Silicon Valley venture-capital fund Rock Health last summer, Sharecare has what it takes to go public. And right now MARK investors could have an indirect piece of that action if it pans out.
MARK Stock Monthly Price Chart
Source: Charts by TradingView
All told, it appears in a new social-distanced normal, Remark could be on the cusp of much bigger things to come. But MARK shares also come with stomach-churning volatility and a stock whose financial track record is still in need of a clean bill of health. Technically, the big picture does tease of a larger powerful rally in the works.
After being as close to death as one can get in the eyes of publicly-traded companies, MARK has staged an interesting-looking recovery that may have legs to run. A breakdown reversed early on during May’s triple-digit ascent now finds shares firmly above the brief pattern failure. But before you think shares have already priced in the best of possibilities, record-breaking volume of more than 1.5 billion shares changing hands over the month suggests otherwise.
As a secondary indicator, volume isn’t as important as price action. But Remark’s May total trading levels put shares into the big leagues of investing and beyond the scope of just short-term speculators wagering for nickels and dimes. I believe it’s worth paying attention to.
To put MARK’s massive activity in perspective, investors might consider the cannabis market as Exhibit A. Despite all the speculative fervor on both the way up, and dizzying crash down in that market the past couple years, not a single producer from Canopy Growth (NYSE:CGC) to Aurora Cannabis (NYSE:ACB) or Tilray (NASDAQ:TLRY), ever came close to the volume accompanying MARK’s rally last month.
If volume is the real muscle as many believe it to be, the signs for MARK look good. And with shares also well-positioned for momentum before the stock appears grotesquely overbought against more meaningful overhead Fibonacci resistance, there’s additional evidence to support a long position.
Bottom-line, Remark looks like a solid, albeit more speculative investment to consider. Moreover, with surprising liquidity available in MARK’s listed options, investors can vastly limit and reduce downside risk while setting themselves up for huge leveraged returns using a bull call spread. One favored play right now is the January $3 / $6 bull call spread for 37 cents with shares at $2.58.
Investment accounts under Christopher Tyler’s management do not own positions in any securities mentioned in this article. The information offered is based upon Christopher Tyler’s observations and strictly intended for educational purposes only; the use of which is the responsibility of the individual. For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.