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CPP Group's Incredible 672% Return

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LONDON -- The shares of CPP Group (LSE: CPP.L  ) jumped 6 pence, or 14%, to 48 pence during early London trade this morning to cap off an amazing week for shareholders of the troubled small cap.

CPP, which provides insurance for mobile phones and credit cards, saw its shares rally 28% on Monday, 40% on Tuesday, a further 40% on Wednesday, and then 42% on Thursday.

Alongside a 34% advance last Friday, the total compound gain during the past week or so has been 446%. Indeed, the price has surged an incredible 672% since hitting a 5.5 pence low just three weeks ago.

The zooming share price has been driven by a combination of a rock-bottom valuation and the company becoming a bid target.

Prior to this week, CPP's shares had largely been a disaster. After floating at 235 pence during 2010 and quickly hitting a 329 pence high, the price has since slumped 98% after the Financial Services Authority investigated the firm's sales practices.

Subsequent discussions with the FSA involved overhauling the group's compliance systems, limiting its future borrowing capacity, and calculating customer compensation for product mis-selling.

The stock market clearly thought the game was up for CPP, having pushed its market cap from a high of more than 500 million pounds down to as low as 10 million pounds.

However, that low valuation was in contrast to half-year results published in August, which showed underlying first-half earnings of 13 million pounds and a net cash position of 8 million pounds.

An update last week then confirmed the business had continued to trade profitably, while a statement this week revealed a tentative bid approach from marketing firm Affinion.

Whether CPP can continue its incredible recovery is difficult to say. Certainly if the bid comes to nothing and the final orders from the FSA prove extreme, this week's price gains could evaporate quickly.

However, CPP's price gains do show that enormous profits can be made in super-quick time by those willing to take large risks with unloved companies.

Indeed, if you are keen to earn such generous returns from higher-risk shares, this free Motley Fool report could help you on your way.

The report explains how taking a contrarian view and backing shares at rock-bottom prices can put you on the path to the magic 1,000,000-pound milestone. You never know, maybe the next CPP is out there right now, ready to transform your wealth. Just click here to download the "Millionaire" report today.

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Maynard does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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