Stock Market

Is Safe and Green Development (SGD) Stock the Next Big Meme Stock?

This incredible rally is one that may not end well for investors buying in right now

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One of this week’s most impressive movers has to be Safe and Green Development (NASDAQ:SGD). Shares of SGD stock have rocketed another 40% higher today, continuing an absolutely incredible move over the past two days.

Since closing around 50 cents per share on Wednesday, shares of SGD stock have surged to more than $4.30 at the time of writing. This sort of 700% move in the matter of a couple of days rightly has some retail investors considering whether this company is the next meme stock to focus on.

Safe & Green Development is a rather intriguing company, providing modular construction and integrating technology and innovation into its manufacturing process. The construction industry is one many investors have long believed could be ripe for disruption, and it appears some in the market believe this little-known company may be the one to provide that innovation.

Let’s dive into this incredible move and what investors may want to make of this stock right now.

SGD Stock Surges on Incredible Volume

This week’s surge in SGD stock is notable, particularly on its incredible volume of more than 31 million shares (relative to an average daily volume of around 500,000 shares). It’s also notable in that there’s no specific or apparent news driving this price action. In other words, it appears a relative lack of liquidity in this small-cap name is the primary driver of this move rather than fundamentals.

On such surges, it’s important for investors to take a very cautious approach. Yes, momentum can continue to build, and it’s possible for any given stock to squeeze higher (theoretically to infinity). However, in cases where supply is limited and volume-driven momentum drives a given stock more than 1,000% higher in two days, the fallout from this move could be potentially catastrophic. So, for any sort of momentum traders or meme stock investors, taking profits and limiting downside risk is perhaps more important than where this stock could head in the next day or two.

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Read More: Penny Stocks — How to Profit Without Getting Scammed 

On the date of publication, Chris MacDonald 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 MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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