Thanks for starting this thread, Quirky. It was needed. I should have done the same instead of posting my recent comments in the Make me Rich thread. Anyway, I’m far from an expert in the market, but I’m learning. Unfortunately, a lot of my learning has been from bad experiences, but those are the ones that teach lessons most forcefully.
For example, I bought a tech IPO a number of years ago when they were all the rage, despite the fact that I didn’t understand the company or its product but just got swept up in the excitement. This IPO also turned out to be one of many that were being sold by fraudulent brokerages that hyped (lied about) the stock, recruiting scores of investors, before the top officers all cashed in, the stock crashed and then NY’s atty general, Elliott Spitzer (my hero), pursued criminal charges against all the bastards who were living in gated mansions in Florida. Fortunately, I’m a lawyer, so I sued everyone who ripped me off in that swindle and I got them to give me my money back rather than fight the lawsuit. What I learned from that is never buy a product or company that you don’t understand completely, never buy based on hype, and IPOs are extremely dangerous, especially because the owners may wish to recruit your money then bail out. But that experience was just one of many. Anyway, based on my prior experiences, your stock is far too risky for me. It’s reaaaaaly cheap, and it’s headed seriously downhill.
Barring a miracle I see them either filing bankruptcy or lingering where they are for a long time. Maybe it will get the army order maybe it won’t. Do you have any reason to believe it is better qualified than other potential bidders?
Admittedly, in the past year I’ve come to like cheap stocks, but not that cheap. I know one is supposed to look at various factors, such as does the company generate a positive cash flow, are sales and earnings accelerating, is it priced relatively cheaply in particular due to some perceived problem that’s really not so bad (I once bought a company that sold transdermal pharmaceutical patches for that reason, after the stock dropped based on an unfavorable report that I gambled was not so serious, and I scored when it bounced back big), high insider ownership, effective management with good return on assets and, finally, is it a good product. But in addition to all that, for short-term trading, I’ve come to see the wisdom of investing in cheap stocks, because there’s more potential for a quick gain (say 20% in a month), although things can obviously go either way.
Below are three I’ve looked into recently. The first one, Blount International (BLT), makes lawnmowers, chainsaws, outdoor and industrial equipment. I came across the company through work (but didn’t have any inside info), I checked it out and was impressed. I bought it on 12/21 at 16.7 and its now trading at 17.42.
I also must confess that I bought some shares of VCLK, an internet advertising company despite the prudent warning from Jlick, who definitely knows computers and the internet so I took his comments seriously, but in the end I decided, hell, I’ll go for it (where’s the finger crossed smiley face?). I bought on 12/29 @ 13.7 and, damn, it’s now at 13.33, but it’s only been two days, I expect (pray) that it will continue climbing.
That stock I bought after reading the BusinessWeek where to invest issue and seeing, among other things, that VCLK’s revenues should grow 146% this year and sales are expected to grow 31% next year.
A third stock, that I almost bought instead of the above is Siebel Systems (SEBL), which the above magazine noted was trading at 9.99 per share, but the company has $2.15 billion in cash. Additionally, Oracle recently noted that it was considering purchasing SEBL. I probably should’ve bought SEBL instead of VCLK, but too late now.
I should reiterate: I AM NOT AN EXPERT. I don’t know what the hell I’m doing. If anyone buys anything and loses money based on my advice it’s your own stupid fault. (But I hope a month from now this post will reflect what brilliant foresight I had.)
By the way, the serious trader in my household is my wife. She has been buying and selling a huge wad of cash in 2 or 3 companies and in the past 2 months has gained 32%!!! Not only that, but she did it in Taiwanese stocks, paying miniscule commissions and zero capital gains tax. I LOVE my wife.