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Published: January 28, 2010
I have an odd "watch list" to find great
opportunities in stocks under $10.
It's my favorite stocks trading over $10... and under $15.
Keeping this list handy is one of the best secrets to making
money in low-priced stocks.
Why do I watch $15 stocks when my mandate is to analyze stocks
under $10? Consider the story of my most recent buy
recommendation, small cap Take-Two Interactive...
Take-Two Interactive owns one of the most valuable entertainment
franchises ever created: Grand Theft Auto. If you're not
a video game player, you can think of the franchise as the
"Harry Potter of video games." It's a product that makes its
target market go crazy...
To give you an idea of how valuable this game is, consider that
on April 29, 2008, the fourth installment of the series sold 3.6
million copies and generated $500 million in revenue in the
first week of the release. It was one of the largest one-week
entertainment launches in U.S. history. It was bigger than
Star Wars, Spider-Man, Harry Potter, or just
about any other movie, music, or book launch ever.
Just before the game was launched, a larger game company
offered to buy Take-Two for $26 a share. The company wanted
control of the Grand Theft Auto franchise, along with
some of Take-Two's other successful titles. Take-Two management
turned the company down. Then the credit crisis hit... and
Take-Two shares were crushed along with every other stock.
Fast-forward to mid-2009. Take-Two had rebounded to over $12 per
share. This is too "expensive" for my mandate. But I knew
Take-Two had terrific potential to keep the Grand Theft Auto
franchise going... and I knew some competitors had enough cash
to buy the small cap. So I kept the company on my watch list...
and I waited for a slipup.
Take-Two did make a misstep on December 4. The company issued a
terrible earnings report. It delayed the launch of new products.
It missed estimates. The stock fell -30% to $7.74 per share. Now
here's where penny stock traders, armed with their watch lists
of stocks trading for $10-$15, step in.
A few trading sessions after the fall, Penny Stock Specialist
grabbed the stock. Take-Two jumped like a coiled spring back
over $10 in less than a month.
Now, I can't tell you exactly why many industry leaders -- like
Take-Two -- that sink below $10 a share quickly trade back above
that level. All I can tell you is that it's one of the greatest
trading tools in the stock market.
Below is a list of a few other industry leaders who saw their
share price dip under $10 and snap right back. In the past year,
these companies not only recovered but also outperformed the S&P
500 two to five times over...
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I can't explain this phenomenon. In fact, some of you may say
I have too much time on my hands. But my subscribers have cashed
in countless times by paying close attention to this trend.
My advice is to make a list of industry leading stocks that
trade over $10 and under $15. Monitor them every week. If one
has a misstep or reports weaker-than-expected earnings, you may
get the opportunity to buy the stock under $10. It's one of the
best-kept "penny stock" secrets I've found.
-- Frank Curzio
Editor
Penny Stock Specialist Note: This article originally appeared on
Daily Wealth. |
