TOP Financial Group (NASDAQ:TOP) is back at it on Wednesday, with TOP stock up more than 50% as of this writing. This action comes shortly before the Federal Reserve makes its rate-hike announcement and updates investors on its outlook.
That could make a volatile name like TOP stock even more volatile into the market close, given how much the stock market tends to swing once Fed news is out. In any regard, today’s rally has investors wondering what’s going on with Top Financial.
TOP stock began garnering investors’ interest last Thursday on April 27, when shares closed higher by 197%. U.S. stock indices have done pretty well this year, but this is still not the environment where a stock typically triples in a day.
TOP wasn’t done then, either. On Friday, shares climbed 1,182% at one point before closing higher by “just” 441%. From the high, shares fell more than 80% before bottoming at $40.60 on Tuesday, May 2. Today, though, shares were up as much as 77% at the high on more bullish momentum.
When shares of Top Financial climbed more than 1,000% at one point last week, it traded more than 34 million shares that day. Currently, under 4 million shares are traded for the day and it doesn’t look like volume will explode higher.
Still, traders want to know: Is TOP’s momentum sustainable?
Can the Rally Last in TOP Stock?
TOP Financial now commands a market capitalization of almost $3 billion. However, this Hong Kong-based stock belongs to cohort of other, smaller-cap Chinese stocks displaying robust bullish momentum lately. For whatever reason, this group — which also includes U Power (NASDAQ:UCAR), AMTD Digital (NYSE:HKD), Magic Empire Global (NASDAQ:MEGL), Huadi International (NASDAQ:HUDI) and AGBA Group (NASDAQ:AGBA) — has been exploding higher.
Some stocks have done better than others, but by and large the entire group has made a pretty big move. Of these stocks, TOP is the largest. In fact, only one other stock — AMTD Digital — has a market cap north of $1 billion. The rest have market caps below $250 million. In fact, MEGL and HUDI have market caps below $100 million.
Regardless, TOP stock finds itself trending on the day. While the company has about 35 million shares outstanding, its float is much smaller at around 5 million shares.
That’s another commonality between these stocks — a low float. This has made it easy to build up bullish momentum, driving TOP stock and others higher.
Can the momentum last? In the short term, yes. But without the fundamentals to back these names up, the rallies will eventually fizzle out. Some have even gone as far as to call TOP a pump-and-dump scheme.
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On the date of publication, Bret Kenwell did not hold (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.