U-Swirl, Inc. (OTCMKTS:SWRL) Wins Universal Appeal
What to do when a company is too good to be true? U-Swirl, Inc. (OTCMKTS:SWRL) flew under the radar so far, but now has to deal with much stronger exposure. Now, despite its solid business model and underlying data, SWRL will have to show if it can withstand extremely high investors’ interest. On Thursday, the shares rose on near-record buying volumes, adding more than 22% to $1.26. Dollar volumes were a bit above $360,000. 
The company, capped currently at just $19 million, with a bit above $15 million shares outstanding, is a rare gem among the penny stocks, with a small free float, well-locked insider holdings and a potential for a cash-rich business. SWRL has an expanding network of franchises, offering self-service frozen yoghurt, and the network was grown by acquiring the locations of several companies. Currently, SWRL operates 12 company-owned stores and has granted 77 franchises. Roky Mountain Chocolate Factory is the owner of a 57% share in the company. 
The financials behind this ambitious development are as follows:
- $676,691 cash
- $1.07 million total current assets
- $685,082 current liabilities
- $1.25 million quarterly revenues
- $159,792 quarterly net gain
As it is easily seen, SWRL is chugging along nicely, with so far very manageable liabilities and recently, not bad quarterly gains. Now, the question remains of how long this pretty scenario would last. SWRL is not mentioned in a paid promotion, and the press releases generated by the company are rather rare. Despite this, SWRL faces the test of a suddenly active ticker at a rather novel price position. While share price may need to grow further to reflect the company’s potential, the rapid rise may also become a cause for realizing profits, causing short-term fluctuations.
On Friday, a small setback started as soon as markets opened, but SWRL has corrected in the past weeks and continued upward, so the small retreat may not cause concern.
Yet other very promising companies that burst on the scene offer an unnerving movement. Recently awakened Biozone Pharmaceuticals, Inc. (OTCBB:BZNE) initially was seen as capable of making a run, but managed only a small net gain, with days that drove the share price all over the place.
Be careful when a company comes in with a juicy promise for a successful franchise business. Recently, GrillIT, Inc. (OTCMKTS:GRLT) used such a story plus a promotion to jump to a higher stock price, reaching as far as $5 in August, only to retreat and drift around the $1 levels.
For SWRL, the small amount of available stocks looks even more inviting. Still, it is best to choose the time frame well and avoid getting caught in the inevitable short-term fluctuations.
