This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

A Penny Stock to Bank On

Stocks in this article: EKCS.OB

CLIFTON, N.J. ( TheStreet) -- I had sworn off penny stock investing, but after enjoying some success with this market segement in 2009, I now find myself knee-deep in stocks trading for less than $1.00.

My addiction to risk keeps me coming back for more. Throughout 2010, I will continue to devote a portion of my portfolio to penny stocks while avoiding the pump-and-dump schemes that are all too common in this stock universe.

Following the same theme I did in 2009, I will attempt to identify penny stocks of companies that are rectifying liquidity issues or re-energizing their business models. Electronic Control Security (EKCS.OB)

I first purchased shares of this Clifton, N.J.-based company after it was selected as a primary contractor for the U.S. Air Force IBDSS project and after it became a subcontractor for Lockheed Martin (LMT) in an antiterrorism initiative for U.S. naval bases around the world.

Although the Lockheed contract is still going strong, the IBDSS contract did not pan out as the company had hoped. Consequently, my investment failed to yield any return.

Consequently, I recently asked the company's CEO, Arthur Barchenko, why the contract did not meet expectations. He explained that the problem originated from the company's earlier business model where it acted as a primary contractor for government projects.

Aside from the challenges of having to compete against much larger competitors, dealing directly with the government meant unpredictable order patterns and the risk of mispricing bids, which can quickly erode margins.

Furthermore, the original IBDSS contract, which has expired, was originally slated to address 34 Air Force bases, but in the end it only addressed five.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs