Will Cyclone Power Technologies Inc. (PINK:CYPW) Continue Its Positive Run on the Charts?

Has the hunt for the next 5-10 bagger begun? Though it is still a long shot, this question has definitely popped up among a myriad of investors who have been keeping their eyes glued to the stock of Cyclone Power Technologies Inc.(PINK:CYPW) for the last couple of days.

Consistent surge for four sessions in a row has now led to a 170% cumulative increase in the value of CYPW stock. The latest trading session alone brought about a record-breaking performance as the company’s share price went up 45% to close at a two-year peak of $0.339 with a staggering turnover of 1.56 million. The latter marked not only a ten-fold increase over the average volume, but also an all-time high for CYPW.

Whether or not last week’s news about the signed LOU has contributed to CYPW’s incredible run on the stock market, seems to be beyond question now. Obviously, the investors’ response triggered by the very announcement was so massive that it made any promotional activities completely redundant, hence the lack of promotions behind CYPW stock. However, traders should keep in mind the preliminary character of every LOU. After all, CYPW has a long way to go before turning a mere LOU into a done deal. [BANNER]

As already mentioned, the prospective agreement will focus on the development of revolutionary external combustion engines. Yet, the current financial state of the company raises doubts about its ability to finance a venture of such a scale. Although CYPW actually began generating operational revenue back in 2008, its results for the quarter ended Sep. 30, 2010 indicate:

a working capital deficit of $2.3 million;

a net loss in excess of $550 thousand.

While these figures show a minor improvement over the same period in 2009, it is still not significant enough to guarantee that CYPW managers will not lure themselves into diluting stockholders when raising additional capital. The latter prospect is likely to happen since only 30% of the company’s A/S has been issued. Nevertheless, in case CYPW’s external combustion engine really comes to fruition, stockholders will strike it rich.