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Over the past few weeks, retail interest has soared in Woodbois (LSE:WBI) shares. The Woodbois share price was trading at an average level around 4.5p for much of the past year. However, within the space of April, the price doubled to 9p. The move completely retraced in the space of a couple of weeks, but has started to show signs of being bid up again. So where is the next stop for the stock?

The spike post results

For those investors that track fundamental moves in a share price, it might be puzzling as to why the Woodbois share price took off in the first place. The company is a relatively modest producer and seller of African hardwoods. It’s international in nature and has a respectable turnover, but isn’t what we would call a large cap.

In the 2021 results, the business experienced a good bounce back from the pandemic. It jumped back into profitability, with an EBITDA of $1m in comparison to the loss $1.7m from 2020. It also commented that “2021 also saw material improvement in the Company’s balance sheet as well as enhanced capacity, efficiency and margins throughout its operations.”

Yet this came out at the beginning of April, and doesn’t really correlate to the sharp rise more towards the middle of the month. Further, would those results really warrant the share price doubling? We doubt it.

Therefore, we think that the results might have triggered the start of the rally, but then the speculative buying helped to push it higher from there. It’s worth noting the small market cap helps to acerbate these moves. A surge in buying at this size stock can often cause a much large move than would be seen in a large cap stock.

Could 10p be next for Woodbois shares?

The initial dump correlates with the speculative buying pump, as investors made a quick buck and sold out. What’s interesting is that the share price now trades at 5.7p, showing a rally in recent days. This seems more sustainable to us than the initial move a it’s at a slower pace and comes after most of the sellers have now left.

10p is the next key level of resistance that we are looking at. This would represent a new high for the stock, as well as being a double digit important level. It should be noted that this isn’t some kind of wildly high price that’s never been seen before. Back in 2017, the Woodbois share price traded comfortably above 10p for an extensive period of time.

On balance, we’ll be holding off buying shares for the moment to wait and see the confirmation of direction in coming days.

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