If you subscribed to our membership area (and you are without excuse since it’s FREE) you were alerted to Compton Petroleum (CMZ). I’m not typically a fan of stocks under $5 since 1) the opportunity for loss beyond the stop-loss is much higher then normal, and 2) for the wild price swings that come about with not logical reason whatsoever. With that said, I had a setup come across my screener in CMZ that I thought offered a great risk-to-reward opportunity.

As you can see in the chart below, this things has seen a huge surge in volume and thus buying interest without any notable news surrounding it. The price of CMZ recently broke through resistance and is basing right above that level in the 130’s and high 120’s. I bought into this today at 1.31 with a stop-loss at 1.07. I also have the intentins of buying more of this stock at 1.23 and 1.15 before I have a full position to work with. I’ll also buy more as the stock increases in value.

Nonetheless, I don’t go into this thinking I’m going to get rich off of this thing in fact I am fully accepting of the fact that I could get stopped out of CMZ over the course of the next couple of days – and that is okay. However, I think that there is a lot of upside to this stock, and if it plays out in my favor, should provide a very nice return.

Don’t expect me to put these types of stocks out all the time (i.e. penny-stock) because the success rate is erratic at best. But, I like what I saw in this setup and is one of the low-priced stocks that provided me with a definable risk-to-reward setup.

Here’s the CMZ chart…