5 Stocks Under $10 That Probably Won't Double in 2012
Right when you think a stock like RIMM or NOK cannot go lower, it does. In both cases, investors -- for good reason -- have absolutely no confidence whatsoever in management. As TheStreet's Richard Saintvilus noted in Research in Motion Should Just Shut Up:
RIM is in no position to diagnose itself, regardless of what its CEO may want people to believe. Numbers don't lie. RIM has done a lot more talking and a lot less executing, and it is time to reverse them. It can start a recovery -- as faint as that may be -- by just shutting up.
It's only slightly different at Nokia, primarily because that company did several things RIM refused to do such as move faster to shake up management, abandon a dead-on-arrival operating system and forge a key strategic partnership. Now, here comes the hard part - executing.
That's what makes claims that any stock in a position similar to the pickles RIMM and NOK find themselves in could double so absurd. Like Saintvilus says, RIM needs to shut up first, come up with a viable plan and then implement it. Why should any investor give the company the benefit of the doubt in this respect?
If you enter a long position in RIMM or, in my case, NOK, approach it with a cautious and humble skepticism. Competitive headwinds and about 3.5 billion outstanding shares (at NOK) should make anybody cautious, humble and speculating in small doses. Don't enter these stocks even half-expecting a double. That's a great way to set yourself up to fail and mismanage a position.Another stock you've been told by any number of people will double in 2012 is Ford Motor (F - Get Report). Go into this trade with more than "a cautious and humble skepticism," but with a time horizon measured by geological instruments.
Because Ford returned almost 1,000% between late 2008 and early 2011, the cats who argue it will "double in 2012" think it just has to happen again. And, heck, a mere double is only 1/10 of what the stock is capable of. As if, it's a professional athlete coming off of a fluke season. The 50% haircut F took over the last year-and-a-half - it wasn't a fluke. There might not be a more certain industry on the planet than the auto sector, especially if you're one of the major players trying to build business in Europe and China, while selling to a domestic customer too scared to spend and too poor to save. If I have to be in the space, give me shares of a luxury dealer who sells to people less concerned with price and the broad economy.
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