Picking a beaten-down stock requires a different kind of selection process. Normally, most companies beaten down this far have no earnings to speak of. Of course, if the company continues to earn money, one can apply normal valuation techniques. By that measure, many of these stocks appear outrageously undervalued: an indication of great buys. But this may also be a red flag that things are "too good to be true".
Another criteria we look at focuses on the breakup value of the company and/or the ability of the company to keep operating in troubled times. For example, debt ratios are important because we want to be sure the company will not be swallowed up in its debt payments. Book Value tells us the value of each share based upon the accountants valuations of assets and liabilities. Sometimes, we also look at cash-on-hand to determine if the company is able to continue as a going concern.
A glance at the high and low price that the shares have sold for in the past may indicate no more than how crazy the market was only a few short years ago. Still, if investors were willing to pay $200 per share for a stock two years ago, it is difficult to believe that it's worth less than a dollar today. Maybe the reality is somewhere in between.
Openwave Systems (OPWV $1.12, High $208; Buy Aggressively), is the top supplier of software that mobile service providers use to offer text and instant messaging to customers. It also provides mobile Web browsing software. The company, which resulted from the merger of Phone.com and Software.com, develops products providing wireless data transfer and messaging, mobile e-mail, and directory services. A recent acquisition of SignalSoft adds a new product line, software that assists cellular users to locate destinations or other users. The company has a loyal subscriber base, and outstanding growth prospects. Openwave, however, is typical of today's bargains. Formerly selling as high as $208 per share (no, that's not a misprint), shares today cost only a little over a dollar. With a book value more than 4 times that amount, virtually no debt, and cash on hand in excess of the stock price per share, there can be no doubt that the shares are now selling at outrageously low prices. We believe these shares represent an outstanding high-risk buy at current prices.
To send comments or to learn more about Scott Pearson's Investment Advisor Services, visit http://www.valueview.net
Scott Pearson is an investment advisor, writer, editor, instructor, and business leader. As President and Chief Investment Officer of Value View Financial Corp., he offers investment management services to a wide variety of clients. His own newsletter, Investor's Value View, is distributed worldwide and provides general money tips and investment advice to readers both internationally, and in the U.S.
![]() |
|
![]() |
|
![]() |
|
![]() |
The gleam and bright lights of Wall Street lure in... Read More
Congress recently passed another new law that is supposed to... Read More
When it comes to mutual funds, there is a lot... Read More
I was recently interviewed for a press release through a... Read More
It is finally catching up with them. The brokerage companies... Read More
Buy high and sell low -- It's not a typo.Millions... Read More
When will the stock market stop going down and start... Read More
When it comes to 401k's there is an overabundance of... Read More
Refuse is a serious issue in any society, about as... Read More
Because you don't feel too sure about which stock or... Read More
If you want one.And I don't recommend any broker with... Read More
One of the things people are always asking me is... Read More
For years I have been saying you must have a... Read More
Before we get into all the good news out there,... Read More
What does it take to be a stock trader? It... Read More
You must take the time once a month to review... Read More
On November 17 I bought 7 different mutual funds and... Read More
Every day on CNBC-TV they show a 200-day moving average... Read More
You have heard about a particular mutual fund from a... Read More
Are you attracted to the idea of being in control... Read More
Everyone who follows the financial news has heard of mutual... Read More
A few years back ? it seems like an eternity... Read More
How many times have you said to yourself, "I'd like... Read More
This is the continuing story of our two imaginary traders,... Read More
Why? Because I am going to shatter your conventional wisdom... Read More
If you are a baby boomer, time is not on... Read More
When we go to the circus we see a trapeze... Read More
There is no question that the stock market is being... Read More
The stock market can present you with a lot of... Read More
You probably know the story of Sherlock Holmes and the... Read More
The stock market has been in an up trend for... Read More
Spread trading is a technique that can be used to... Read More
As an investor you will want to check out any... Read More
The stock market often closes a week in the middle... Read More
Disclaimer: Please note that I do not necessarily purchase, own,... Read More
Because you don't feel too sure about which stock or... Read More
At some time in your life you have been on... Read More
Today we are inundated with tons of information about the... Read More
One of the things people are always asking me is... Read More
There is no question that the stock market is being... Read More
If you want one.And I don't recommend any broker with... Read More
If it walks like a duck, quacks like a duck... Read More
A 'stock option' is a contract between two parties giving... Read More
We have two candidates for president that have really different... Read More
"Buy and hold" is one of the most heralded investment... Read More
Let's say you are interested in this one company. You... Read More
When you invest in the stock market for ever-increasing cash... Read More
Ever turn down a street, get half way and suddenly... Read More
There can't be many traders who haven't at least considered... Read More
Invest in the stock market for the RIGHT reason, using... Read More
I read a comment by a forum member on another... Read More
With the stock market stubbornly refusing to settle down and... Read More
Before you buy another car you walk around the lot,... Read More
We all know the expression, "My country, right or wrong",... Read More
One of the main reasons many of us get into... Read More
There is a current movie entitled "Eternal Sunshine of the... Read More
It is wonderful to be alive in the information age.... Read More
In a previously written article, we expanded the use of... Read More
There is so much involved in developing peak performance, that... Read More
Congress recently passed another new law that is supposed to... Read More
Let's assume that you want to make some serious money... Read More
There are formulas for just about everything, but it has... Read More
Three little pigs went to the market to stock up... Read More
The Shadow knows. There used to be a radio program... Read More
After finding the price of a particular stock, usually the... Read More
Cat or dog? Maybe Zebra. Shucks, I don't know, but... Read More
Stocks & Mutual Fund |