Be wary of cheap stocks – but these sound all right
Dear Mr. Berko:
I used to trade penny stocks, and in the past 12 years, I’ve lost about $100,000. I had a one-year subscription to a penny stock tout sheet service and made good money with him last year. Now he’s out of the penny stock business and only emails a monthly list of 10 stocks selling under $5. His new service just recommended the following stocks, and this time, I’d like your opinion before I buy any of his recommendations. Some men spend their money on costly golf vacations, exotic hunting trips, gold jewelry, fancy cars, expensive wines, etc. I like the thrill of gambling on cheap stocks, and I’d like to roll the dice. So please don’t tell me I’m a fool. And please tell me which of the enclosed recommendations you would buy.
S.R., Oklahoma City
Dear S.R.:
You’re a fool. Penny stocks and cheap stocks appeal primarily to investors with short attention spans who were breast-fed till they were 4, never had girlfriends in high school, perspire easily and have ED.
Westell Technologies Inc. (WSTL-$3.56) is a $189 million revenue broadband access solutions company. WSTL has zero debt, 68 million shares out, $1.36 in cash per share, a book value of $1.62 and a net profit of 22 cents per share. Though 2012 revenues and earnings will be lower, the Street seems to like the stock.
Wet Seal Inc. (WTSLA-$3.93) is a 500-plus-location retailer that in 2010 sold $561 million in apparel and accessories to teenage girls and women. WTSLA has zero debt, 100 million shares out, $1.82 in cash per share and a book value of $1.82 and should earn 22 cents in 2012 on 12 percent higher revenues. Some hedge funds are nibbling.
Force Protection Inc. (FRPT-$4.58) is a $662 million revenue company that designs and makes blast- and ballistic-protected vehicles for the Mafia, the Mexican drug cartels, members of Congress and certain U.S. corporate executives. FRPT has no debt, 68 million shares out, $2.27 in cash per share and a book value of $4.91. Its revenues should grow 14 percent next year, and earnings might double.
Kopin Corp. (KOPN-$4.86) is a $131 million revenue company that makes flat-panel displays and gallium arsenide chips and wafers for communications and digital imaging applications. KOPN has zero debt, 65 million shares out, $1.59 in cash per share and a book value of $2.72 and earned 14 cents last year. For 2012, revenues might rise to $157 million, and earnings could rise to 22 cents. Could be takeover material.
Tuesday Morning Corp. (TUES-$3.99) is an $830 million revenue retailer selling discounted, upscale home furnishings, housewares, gifts and related items through 850 stores across the United States. TUES has $14 million in debt, 43 million shares out, only 15 cents in cash per share but a book value of $6.43. This coming year, revenues should grow by 6 percent, and net income might increase from 25 cents to 46 cents per share. Good business model.
I’ve never heard of a tout sheet that only emails subscribers the names, symbols and prices of 10 cheap stocks per month. It’s probably run by a high school geek who bought a huge mailing list, trolled the Internet for customers and offers recommendations for $99 per year. But you know what? This guy has recommended some interesting issues.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or email him at malber@adelphia.net. ©2011 Creators.com
Trending News
