RC365 stock (LSE: RCGH) has risen from almost total obscurity to become one of the UK\u2019s top-performing shares. Even after a recent 35% haircut, the share price is still up a jaw-dropping 363% in just under two months.<\/p>\n\n\n\n
Until July, I\u2019d never heard of this Asia-focused provider of payment gateway solutions and IT support. But it doesn\u2019t surprise me that a penny stock linked to artificial intelligence (AI) \u2014 which RC365 has been presented as in various online articles \u2014 has surged so dramatically.<\/p>\n\n\n\n
After all, this type of thing does happen periodically. In the late 1990s, the share price of basically any firm linked to the internet went to the moon. A couple of years back, any stock associated with crypto went into overdrive. Today, it\u2019s the turn of AI, which some estimate could become a $1.3trn market by 2030.<\/p>\n\n\n\n
RC3.0<\/p>\n\n\n\n
On 1 June, RC365\u2019s subsidiary Regal Crown Technology signed a memorandum of understanding with Hong Kong-listed Hatcher Group.<\/p>\n\n\n\n
RC365 said they \u201cwill collaborate with each other to bring the possible implementation of AI solutions and other intelligent prediction algorithm models into the development and optimization of Regal Crown\u2019s proprietary applications\u201c.<\/p>\n\n\n\n
Then on 23 June, it confirmed a contract with a subsidiary of Hatcher Group called APEC Business Services. This is to develop and upgrade the existing RC2.0 wealth management solutions app.<\/p>\n\n\n\n
APEC will pay the company HK$15m (\u00a31.5m) and the two of them will each receive 50% of revenue generated from the upgraded app. Upon launch, this RC3.0 version will offer users enhanced features and functionalities in digital banking.<\/p>\n\n\n\n
A telling omission<\/p>\n\n\n\n
In late July, the company reported its annual results for the 12 months to 31 March. Year-on-year revenue soared 109% to HK$16.9m (\u00a31.6m).<\/p>\n\n\n\n
However, as my colleague Edward Sheldon recently noted, AI wasn\u2019t directly referred to once in the report. CEO Chi Kit Law did mention \u201csmart algorithm technology\u201c, but nothing more.<\/p>\n\n\n\n
Presumably, if the company\u2019s growth was actively being driven by AI in some way, management would be shouting that from the rooftops. After all, according to Reuters, the words \u2018AI\u2019 or \u2018artificial intelligence\u2019 were mentioned 827 times on 76 separate US quarterly conference calls up to the end of July. That was 105% more than in the same period last year.<\/p>\n\n\n\n
So, I don\u2019t think we can really call RC365 an AI stock yet. And if I\u2019d bought the shares hoping that the firm becomes the next Nvidia, I\u2019d be questioning my investment thesis right now.<\/p>\n\n\n\n
On the sidelines<\/p>\n\n\n\n
Whether RC365 goes onto become a fully-fledged AI firm is unknown at this point. But what is much more certain is that the valuation of the stock is extreme.<\/p>\n\n\n\n
On a price-to-sales (P\/S) multiple, it isn\u2019t far off 100. That\u2019s over double the P\/S ratio of Nvidia, which is undeniably a thoroughbred AI stock. There would be no ChatGPT as we know it without Nvidia\u2019s technological input.<\/p>\n\n\n\n
RC365\u2019s revenue will have to accelerate rapidly for it to justify its current valuation. So, I\u2019ll remain a curious bystander watching things play out while I put my money to work elsewhere.<\/p>\n\n\n\n
Like buying \u00a31 for 51p<\/p>\n\n\n\n
This seems ridiculous, but we almost never see shares looking this cheap. Yet this recent \u2018Best Buy Now\u2019 has a price\/book ratio of 0.51. In plain English, this means that investors effectively get in on a business that holds \u00a31 of assets for every 51p they invest!<\/p>\n\n\n\n
Of course, this is the stock market where money is always at risk \u2014 these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.<\/p>\n\n\n\n
What\u2019s more, it currently boasts a stellar dividend yield of around 8.5%, and right now it\u2019s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?<\/p>\n","protected":false},"excerpt":{"rendered":"
RC365 stock (LSE: RCGH) has risen from almost total obscurity to become one of the UK\u2019s top-performing shares. Even after a recent 35% haircut, the share price is still up a jaw-dropping 363% in just under two months. Until July, I\u2019d never heard of this Asia-focused provider of payment gateway solutions and IT support. But […]<\/p>\n","protected":false},"author":2,"featured_media":20525,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_seopress_robots_primary_cat":"none","_seopress_titles_title":"","_seopress_titles_desc":"","_seopress_robots_index":"","footnotes":""},"categories":[2],"tags":[],"class_list":["post-20523","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news"],"rttpg_featured_image_url":{"full":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",900,506,false],"landscape":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",900,506,false],"portraits":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",900,506,false],"thumbnail":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34-150x150.jpg",150,150,true],"medium":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34-300x169.jpg",300,169,true],"large":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",900,506,false],"1536x1536":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",900,506,false],"2048x2048":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",900,506,false],"post-thumbnail":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",747,420,false],"graptor-sq-xs":["https:\/\/web3unplugged.io\/blog\/wp-content\/uploads\/2023\/08\/Untitled-34.jpg",100,56,false]},"rttpg_author":{"display_name":"Admin CG","author_link":"https:\/\/web3unplugged.io\/blog\/author\/admin-cg\/"},"rttpg_comment":0,"rttpg_category":"news<\/a>","rttpg_excerpt":"RC365 stock (LSE: RCGH) has risen from almost total obscurity to become one of the UK\u2019s top-performing shares. Even after a recent 35% haircut, the share price is still up a jaw-dropping 363% in just under two months. Until July, I\u2019d never heard of this Asia-focused provider of payment gateway solutions and IT support. But…","_links":{"self":[{"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/posts\/20523","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/comments?post=20523"}],"version-history":[{"count":1,"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/posts\/20523\/revisions"}],"predecessor-version":[{"id":20526,"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/posts\/20523\/revisions\/20526"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/media\/20525"}],"wp:attachment":[{"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/media?parent=20523"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/categories?post=20523"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/web3unplugged.io\/blog\/wp-json\/wp\/v2\/tags?post=20523"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}