Dear Mr. Berko: I began trading cheap stocks — below $5 a share — in 2001. I’ve had some good years and some bad years. Over the 17 years, I’m down about $19,000. I initially invested $100,000, and I’ve got $81,000 remaining. I’ve subscribed to 30 or 40 low-price stock services, and it’s been lots of fun. Most of these stock services brag about how well they do, but I’ve learned it’s mostly baldfaced lies to attract suckers like me. I’ve never seen you recommend cheap stocks. I’ll bet you have some good names on a list somewhere. So how about giving me a dozen or so recommendations?
— HT, Jonesboro, Ark.
Dear HT: I’m only allowed to give you three.
I’ve watched lots of low-priced stocks try to cross the river in the past 50 years. Most foundered before they reached the halfway point, but a few succeeded and got to the other side.
Though issues trading below $5 a share are not on my radar screen, I had an idea about how to help you. Crazy Mary Ginsburg has a knack for picking low-priced stocks. She enters a psybient trance and reveals her recommended visions only to her husband. Her doting husband, Guten Ginsburg, collects them in book form but so far has sold only 11 books. I called Crazy Mary, and after about seven minutes of pleading, scraping and groveling, I got her to suggest three extremely speculative issues. Crazy Mary says these three are guaranteed to have between a fourfold and ninefold increase in value in 16 months, fall flat on their bums and declare bankruptcy, or trade anywhere in between.
Lloyds Banking Group (LYG-$3.30) is a $65 billion-revenue bank with 2,067 branches run by 75,000 employees and has been doing business with Londoners since 1695. In the early part of this century, LYG traded between the $40s and the $60s; then the market finally collapsed, and revenues imploded. Income also imploded, and so did the price of LYG. This is the U.K.’s fourth-largest bank. It offers services through the Bank of Scotland, Halifax, Scottish Widows et al. And LYG’s business is improving. In 2017, LYG’s net income was $4.8 billion, 45 percent higher than 2016, and this year, LYG should post impressive results. The 16-cent dividend, which may be increased before the year ends, yields 4.8 percent. LYG seems to be a good name and, if Crazy Mary’s right, a good capital gain.
MYnd Analytics (MYND-$1.65), which has never earned a dime, is home-ported in Mission Viejo, California, the largest master-planned community ever built in the U.S. MYND provides objective clinical decisions to assist health care providers in their treatment of behavioral disorders, such as depression, anxiety and post-traumatic stress disorder. MYND uses a neurometric platform to predict the likelihood of responses by an individual to a range of medications. MYND came public in 2007 at $7.50, and about five years later, it traded in the mid-$40s. Then it began a long, slow decline. Last year’s revenue was $128,000, and though the company has never earned a pfennig, watchers believe that MYND’s diagnostic platform gives mental health practitioners an effective way to work with those who have mental health issues.
Ziopharm Oncology (ZIOP-$3.17) is a Boston-based biotechnology company with zero debt. It develops, acquires and commercializes cancer therapies. ZIOP focuses on treating hematological and solid tumor malignancies using cellular therapeutics, and it generated $6.4 million in revenues last year. There are 140 million shares outstanding, and management has never declared a dividend. ZIOP has lost money annually ($833 million) since inception, and I can’t imagine that many big investors will continue supporting ZIOP’s losses unless there’s a potential dollar sign on the horizon or a light at the end of the tunnel. I’m surprised to see such ownership names as BlackRock, Vanguard, State Street, Northern Trust, Morgan Stanley and Fidelity. Maybe Crazy Mary has better eyesight than I do.