Taking Stock: 3 techs and 1 eatery may double your shares

Dear Mr. Berko: I have a little over $12,000, and I would like to speculate with it and buy one of two stocks that trade below $10 a share. Please recommend a few low-price issues that can maybe double their value in two or three years. I don't want to lose this money, but I'm willing to take a chance if there's a possibility that I can double my money.

--TJ, Rochester, Minn.

Dear TJ: It's an old joke, but my dad used to tell me that the only sure way to double your money is to fold it two and put it in your pocket. The second sure way is to invest on insider information with a member of Congress. But you can also consider the following:

Clearwire Corporation (CLWR-$1.89), a subsidiary of Sprint (S-$2.24), is a $1.3 billion-revenue wireless broadband supplier, providing 4G, pre-4G and voice over IP services to homes and businesses. CLWR serves 88 markets in the U.S., covering about 115 million people, plus maintains a smaller market in Europe of about 3.1 million people.

Credit Suisse's David Chaplin believes CLWR, based upon its recent commitment from Sprint, will now be able to sign wholesale agreements with other carriers. Losses are expected to drop significantly in 2012 and 2013 with a possible break-even by 2014 on an anticipated $2 billion in revenue. CLWR has a $3.58 book value, including cash of $2.80 per share with a float of 120 million shares. Chaplin reckons that CLWR could be a $5 to $6 stock in the coming dozen months.

Boston Scientific (BSX-$5.28) is an $7.7 billion revenue company that was one of the darlings of Wall Street at $120 a share before splitting in 2003, when its shares were a must-own in every growth portfolio. BSX has a nonpareil reputation in the interventional medical device industry, selling pacemakers, stents, balloon catheters, atherectomy systems, guide wires, embolic protection devices and an impressive array of other highly regarded devices.

In 2004, exceptional management hubris, pricing pressures, lower procedure volumes, BSX's failure to innovate, loss of focus and a decline in capital spending caused earnings to crash and the stock price to implode. Today, improved product development; potentially enormous revenue growth from emerging market countries such as Brazil, India, China and Argentina; and better revenue growth from the U.S. are bullish for BSX. All margins are expected to improve, revenues should increase to $9.1 billion, earnings could double to 85 cents a share, and if Morningstar's analysts are correct, BSX could trade in the $17 to $20 range.

Ruby Tuesday (RT-$6.90), founded in 1920, owns and operates 749 casual dining restaurants in 39 states. In 2007 and 2008, management failed to compete with the heavy, high-value TV advertising of its bigger rivals. As a result, revenues fell and earnings crashed 80 percent. The dividend was eliminated, capital spending was cut by 90 percent, net profit margins collapsed from 7.7 percent to 1.9 percent, and the shares imploded to a buck a share.

Now, profitability is on the rise. RT has a superb balance sheet, a book value of $9.31 and only 68 million common shares out. Earnings may double to $1.40 a share by 2014. And fund manager Robert Olstein believes RT could trade between $15 and $18 in the next two years.

And Gilat Satellite Networks (GILT-$3.65) is an Israeli company providing IP-based digital satellite communications networking products and services to users around the globe. It designs, produces and markets very small-aperture terminals for cellular traffic backhaul, allowing operators to expand their market reach. GILT also provides an emergency response/ rapid deployment system that is transportable and ''man-pack'' communications solutions.

Revenues for 2010 were $250 million, and revenues for 2012 should come in at $350 million. GILT owns 31 percent of the North American market, where it processes credit card transactions at gas stations, and its 69 percent share of state lottery transactions makes GILT very compelling. There are 41 million outstanding shares reporting a book value of $6.71 with revenue growth potential of 9 percent to 12 percent per year over the coming three years. GILT is a favorite of money manager James Roumell, who believes the stock could double by 2014.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko @yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.

Copyright 2012 Creators.com

Published: Mon, Jan 9, 2012

Comments

  1. No comments
Sign in to post a comment »