BERKO: Double your money? These stocks might do it
Dear Mr. Berko:
I have a little more than $12,000, and I would like to speculate with it and buy one or two stocks that trade below $10 a share. Please recommend a few low-price issues that can maybe double their value in two or three years. I don’t want to lose this money, but I’m willing to take a chance if there’s a possibility that I can double my money.
T.J., Rochester, Minn.
Dear T.J.:
It’s an old joke, but my dad used to tell me that the only sure way to double your money is to fold it in two and put it in your pocket. Now we know that the second sure way is to invest on insider information with a member of Congress. But you can also consider the following:
Clearwire Corp. (CLWR-$1.92), a subsidiary of Sprint Nextel Corp. (S-$2.32), is a $1.3 billion revenue wireless broadband supplier, providing 4-G, pre-4-G and voice over Internet protocol (VoIP) services to homes and businesses. CLWR serves 88 markets in the United States, covering about 115 million people, and maintains a smaller market in Europe of about 3.1 million people.
Credit Suisse’s David Chaplin believes that CLWR, based upon its recent commitment from Sprint, will now be able to sign wholesale agreements with other carriers. Losses are expected to drop significantly in 2012 and 2013 with a possible break-even by 2014 on an anticipated $2 billion in revenues. Chaplin reckons that CLWR could be a $5 to $6 stock in the coming dozen months.
Boston Scientific Corp. (BSX-$5.30) is a $7.7 billion revenue company that was one of the darlings of Wall Street at $120 a share before splitting in 2003, when its shares were a must-own in every growth portfolio. BSX has a nonpareil reputation in the interventional medical device industry, selling pacemakers, stents, balloon catheters, guide wires, embolic protection devices and an impressive array of other highly regarded devices.
In 2004, exceptional management hubris, pricing pressures, lower procedure volumes, BSX’s failure to innovate, loss of focus and a decline in capital spending caused earnings to crash and the stock price to implode. Today, improved product development, potentially enormous revenue growth from emerging market countries such as Brazil, India, China and Argentina, and better revenue growth from the United States are bullish factors for BSX. All margins are expected to improve, revenues should increase to $9.1 billion, earnings could double to 85 cents a share, and if Morningstar’s analysts are correct, BSX could trade in the $17 to $20 range.
Ruby Tuesday Inc. (RT-$7.07), founded in 1920, owns and operates 749 casual dining restaurants in 39 states. In 2007 and 2008, management failed to compete with the heavy, high-value TV advertising of its bigger rivals. As a result, revenues fell and earnings crashed 80 percent. The dividend was eliminated, capital spending was cut by 90 percent, net profit margins collapsed from 7.7 percent to 1.9 percent, and the shares imploded to a buck a share.
Now profitability is on the rise. Earnings may double to $1.40 a share by 2014. Fund manager Robert Olstein believes RT could trade between $15 and $18 in the next two years.
Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, Fla. 33429 or email him at malber@adelphia.net. ©2012 Creators.com
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