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Background
pSivida Limited (PSD) is a biotech company specialising in the biomedical and nanotechnology area. PSD were mainly focused on the BioSilicon technology that can be used in a variety of healthcare applications, including drug delivery and tissue engineering.

The company had well positioned itself in key markets such as USA, UK, Europe and Australia. PSD was recommended on the back of a strong and experienced management team that had implemented significant strategic relationships. PSD was recognised as an exciting 'growth story'.

Strategy:
PSD was recommended on 16/05/2003 at $0.21c with a nominated Stop Loss price of $0.15c and a 12-month target price of $0.50c

Result:
Once the recommendation was made, PSD’s performance was monitored every week in the portfolio management section of the Wise-Owl Equities Report, where members were updated on any changes or important levels to take notice of.

In just over 3 months, PSD was trading at $0.46c (total potential member return at 119%).

If you had purchased this performer, what would you do next?

Seeing these gains, most investors would have taken profits, but we simply placed a Profit Stop to lock in gains. Wise-Owl members knew that if PSD had breached the first Profit Stop (31 cents), they would have sold (the chart below illustrates the progress of the stock.)



You may, as an investor be happy with a profit of 119%, however had you taken the profit at that point, you would have been disappointed as profits were eventually locked in at 333% (2nd March, 2004).
The chart below shows how the profit stop level was raised, but never breached.  You will also notice that the share price performance rapidly increases when Standard & Poor's announce that PSD is to be included in the S&P/ASX 300.

Even though a stock might reach our 12-month target price earlier, by following the suggested strategy, you would have avoided the disappointment of getting out before the full potential of the stock was realised.

PSD continued to outperform and, consequently, the Profit Stop level was revised upwards a number of times. Before long, PSD went from being an unknown small cap stock to becoming one of Australia’s best performing stocks in 2003/04.

PSD was included in the S&P/ASX 300 index and, in the true sense of the phrase, became a 'blue chip of tomorrow'.
It’s not uncommon for a stock that we have chosen to enter into the S&P/ASX 300 or S&P/ASX 200 index over the course of our recommendation and this often fuels the stock price even further. A few other examples of this are stocks such as Macarthur Coal (MCC), Funtastic Ltd (FUN) and Great Southern Plantations Ltd (GTP).

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At Wise-Owl you get education, analysis, strategies and 'winning' stock picks every week. Click here for your complimentary report or call us on 1300 306 308 to take your next step.