5 Ultra Low Priced Summertime Stock Suggestions

As you know, in late February 2009, as the stock market was in extreme panic mode, I put together 5 very low-priced stocks to watch for an imminent bear market rally- a rally that took hold in full force only a week later. At the time I made these calls- I was met with extreme skepticism. Turned out I was right- and then some. The stocks I chose as potential 3-baggers, well, see for yourself how they actually fared:

Beazer Homes USA (BZH)- went from 56 cents to May 5th high of $3.95 (near 7-bagger)

Russ Berrie & Co.(RUS)- went from $1.34 to a May 19th high of $3.08 (and counting)

Las Vegas Sands (LVS) - went from $2.16 to a May 5th high of $11.94 (near 6-bagger)

Bank Of America (BAC) - went from $5.31 to a May 7th high of $15.07 (3-bagger)

Libbey Inc.(LYBI.OB) - went from $1.06 to a May 12th high of $2.75 (almost a triple)

I'd say my calls were pretty good!

Now I have a few more stocks to keep an eye on for the next few months- and for the longer term as well. Buy and hold ain't dead yet. These are stocks that can easily become 3 or 4-baggers (and even more).

Jabil Circuit Inc. (JBL)- JBL just had its credit rating upgraded from Fitch to BB+ with a revised mixed/positive outlook for the company. JBL will be paying down some serious debt over the next 1-2 years. Before the crash, the stock spent much of its adult life in the $15-35/share range- and in the event of a U shaped recovery, this one should be an easy double from its current $8/share price. In the event of a sustained rally (bear market or otherwise), this in one of those stocks that really climbs- straight up- with the market. So, it could be a 3 or 4 bagger should things fly. True- neither the consumer, nor the automotive and aerospace industries will be coming back any time soon (blah, blah, blah) - but JBL has sustained a mountain of good and bad times like a champ- and it holds its own internationally-speaking. So it's a safer play, overall.

Drinks Americas Holdings Ltd. (DKAM.OB)- This up 'n coming beverage company, in its building stages, has Kid Rock Bad Ass Beer due out by Labor Day, 2009 (check out Tuesday's RollingStone interview for more info) - with promotional units looking to coincide with his upcoming summer tour, which begins in June. This beer will be huge. The Kid is a winner, so I would bank on his beer being a winner, too. It could generate very large returns for the partners involved (and therefore stock holders). Bad Ass Beer is being brewed by the Michigan Brewing Company.

Drinks Americas also recently acquired Dutch vodka maker Olifant Vodka, which will be co-sponsoring this summer's Snoop Dogg tour. Of note- In summer 2007, Drinks Americas announced a partnership with Universal Music Group's Interscope/Geffen/A&M Records to release beverages from several of its artists. Somewhere in the pipeline apparently lurks a Dr. Dre cognac - called Aftermath Cognac (Aftermath Entertainment is a subsidiary of UMG) - which was originally due out to coincide with Dre's mythical, re-worked and delayed Detox LP. Meantime - Death Row Records is working on the final touches of Dre's "The Chronic Relit.” Drinks Americas has distribution around the world (and may be working on locking in a new Asian distributor) - and has recently secured a new line of credit through Premier Trade Solutions. The stock (on the OTCBB) is currently in the 13-15 cent range - way too low. Given what is on the plate - this stock could launch at any time as word gets out to investors about this off-the-radar company. Hard to say where the stock will end up in the longer term, but, certainly, it would be worth holding for a couple of years, and certainly in the near term.

Direxion Daily Financial Bull 3X Shares (FAS)- If you believe that the financials will eventually recover to even one-half of whence they came, pre-Great Recession, this is the one for you. This ETF contains some of the big bank players and is specifically geared to triply-emulate the Russell 1000 Financial Services Index. FAS is currently bouncing between the $8-12/share range, up from the $3-5/share range that preceded the early March 2009 financials bang-up. The ETF debuted in mid-November 2008 at $29.22/share and ceremoniously tanked as the bottom dropped out of the market. This sucker has mega-major daily volume (so it's essentially manipulation-proof)- and stays pretty dang true to its chosen index- unlike some of its ETF step-cousins. Since it can leap (and fall) in leaps and bounds- it has become the defacto day-trade. However- when you get tired of trying to pin-the-needle-on-the-FAS-donkey jumping between the channels, you can easily buy and hold it for the longer term- which can mean $30-50/share at some point in 2010 when the market finally pomps and stomps its way steadily higher, despite the gloom-sayers. The RFSI is currently at about 140 - and it would be at about 315 in a more normal environment, which means about 6x where the stock is now (seems that FAS goes at a 2.6x/index average clip rather than 3x). And, if you don't believe the financials will recover - well, you can buy (long) its evil twin- the Direxion Daily Financial Bear 3X Shares (FAZ) - which conveniently operates the same way as FAS- only in reverse.

Image Entertainment Inc. (DISK) - I recently wrote a piece about this California-based digital/DVD distribution company. Shareholders were sent on a wild roller-coaster ride involving DISK's M&A situation with Nyx Acquisitions Inc.- which, ultimately fell apart, leaving the stock down in the 80-90 cent range. The company has received buyout offers in the $2-4/share range over the last few years - including the recent $2.75/share price offer by Nix. Yes- the economy has trounced M&A since the markets tanked- but the acquisitions environment has been improving as the markets have now, essentially, bottomed. Image has just inked a 5-year deal with Universal Music, sales are steadily improving and I would expect more buyout-news coming over the next while- bouncing this stock to the $1.50-2.00/share range. Additionally, as the overall market improves- so too will the stock prices of these kinds of companies. So this one could end up at $4-5/share a couple of years from now.

Stemcells Inc. (STEM) - I know, I know. A company for speculators. The stock has moved up from the lower dollar range to the upper dollar range recently, and seems to be in a holding pattern as investors try to figure out- "so where do we go from here?" My feeling is that, as the stem cell sector is in a brave new world- under the aegis of the new administration and a boat-loaded Democratic Congress- we'll have 8 years of Obama-land for which stem cell potentials to become closer to realities. This would suggest the sector - and emerging companies like Stemcells- will have very strong anticipation from the market going forward. So, as things progress from here- this stock is cheap, give or take 50 cents. Could end up at $10-12/share in 2-3 years and $4-5/share on the next stop.

All of the stocks above are speculative by nature. Do your own due diligence and come to your own conclusions.

Disclosure: Author currently holds no positions in any of the stocks mentioned in the article above

Comments

[Jonesz:]

You SHOULD NOThold 2x/3x funds ala FAS for the long term as the returns are mirrored on DAILY movements. For example if an example "single levered (1x) FAS" goes down 10% in a day (i.e. $1.00 to $0.90), real FAZ would go down 30%..i.e. from $1.00 to $0.70. The next day "1x FAS" goes up 11.1% it would be back to $1.00. 3x FAS would, in turn, go up 3X that, or 33.3% and would then be at $0.93. So, even though the market is back where it started two days ago, you are still out 7% on your investment. This is why volitility absolutely KILLS levered ETF's. The more up and down volatility you have, the more the inherent nature of the daily levered ETF eats away at your investment.

May 21 09:49 AM

[Cantbeme:]

On DKAM you noted above, Kid Rock actually misstated the release of his new beer. The nationwide full release will be by Labor Day. However, his sold out concerts at Comerica Park with Lynyrd Skynyrd, and his summer concert tour, will all be featuring Kid Rock Bad Ass Beer. This is expected to be the biggest beer introduction in two decades. Over 8 million web hits for the beer and it isn't on the shelves yet. The formal release for the beer is July 4th and it has already been estimated that close to $10 million in Bad Ass Beer has been pre sold in just 5 states. I believe you are more than correct in your assumptions.

May 21 03:58 PM

[Titus Andro...:]

I am watching STEM and GERN very closely. The minute they find something remotely constructive, I will sell all of my other stocks and invest in bio-pharm. Probably not the safest move. If I'm right, my grandchildren won't have to worry about any financial issues. I already own a little bit of each, but I'm not ready to pull the trigger just yet. I think ALOT of other investors feel the same. It's hard to invest in a company that doesn't (yet) offer anything.

May 22 10:05 PM

[shmu:]

How will the new LVS casino outside New York will affect the stock price for the long run ?

May 25 12:41 PM

[Experienced...:]

Can someone comment on Telanetix (TNXI)? It has VOIP products including video conferencing and was referenced in a Barrons article on video conferencing a couple of years ago. It's stock went all the way down to .04 but now back up to .14 to .18 range - can anyone see it going back to former levels?

May 25 02:55 PM

[Cantbeme:]

Following up again on DKAM as noted here for a summertime pick. On 6/4, the company announced their previously reported "largest agreement to date" was shipping and payments coming in. A $75 million agreement over 15 years in Israel will yield the company a minimum monthly inflow of cash of $300K. That's $3.6 mil per year minimum with a contract exceeding $5 million per year. This company's TTM sales were roughly $3 million. On 6/5, they followed up with an announcement their recent acquisition of Olifant Vodka was now shipping and received another $200K. This business was doing $1.5 million a year. So, its obvious DKAM has seen their sales jump from $3 million to at least $7 million, if not $9-$10 million. Yet the stock is still 15 cents. 15 cents makes no sense when in comparison to other 15 cent stocks out there have 300K-600K in sales and are trading at 30-200 P/S ratios. SHMN and UOMO come to mind readily as there are dozens of others. DKAM should be well north of a dollar on this growth rate the market has completely ignored. After all, it went to $3.55 in 2007 on less sales than this.

Jun 13 07:53 AM

[Reagan12:]

Anyone concerned that DKAM allegedly cannot fill over $800K in backorders with LIQR, along with the breach of contact suit filed for not paying marketing fees, etc?

Jul 07 09:37 AM

[BCInvestor:]

Here is an excerpt from LIQR's 10Q filed today:

On June 30, 2009, the Company filed a breach of contract claim against Drinks Americas Holdings, LTD / Drinks Americas, Inc. ("DKAM") claiming damages in excess of $1.95 million. The Company documented the failure of DKAM to pay their contracted and agreed marketing obligations totaling $7,000 per month for each month of the contract beginning May 2008 to the time of the filing; as well as DKAM's failure to fulfill back order obligations to Liquor Group customers in 18 States in excess of $830,000. Under the terms of our contract with DKAM, the contract entitles the Company to triple damages against DKAM, which now exceed more than $2.0 million. Further details of the claim can be found in the Company's filing on Form 8-K dated July 1, 2009.

Jul 15 10:04 PM

[Cantbeme:]

This is the stock everybody is talking about. In fact, the comparisons to HANS are popping up everywhere.

DKAM. Drinks Americas. Call them. Do something. This is the biggest no brainer in several years.

The company unleashed Kid Rock's Badass Beer over the weekend on Kid Rock's return to Detroit.

Badass Beer outsold Bud, Miller, Coors, Corona, and St. Pauli combined by 3 to 1. And this was a soft launch?

Based on this, first year sales estimated to be over $100 million. Stock is currently doing $3 million in annual sales.

THE MATH:

*400 Distributors are signed on to sell BadAss Beer to 50000 retail locations nationwide.
* Kegs sell to distributers at $60; cases at $10.
*The average American per capita beer consumption is 30 gallons per year.
*Kid Rock has sold 25 mil albums worldwide; Kid's fans number over 5 million in the US.
* 50000 retail locations will sell an average of 200 cases per year minimum, or 30 kegs.
* 10 million cases sold, or $100 million in sales.
*First beer is "Redneck Lager"..second Beer due out this fall called "Blue Collar Lager". Doubles sales.
*Every concert will have Kid Rock telling 40,000 fans "the beer is awesome...buy the beer!"
*Chris Chelios (Detroit Red Wings) told Kid Rock personally on Friday he is buying the stock tomorrow. Cuba Gooding there and said me too! I WAS THERE!!!!

THE STOCK IS 13 CENTS!!!!!!!!!!

This is the next HANS! Bud and Miller executives there and witnessed what happened. Undoubtedly, they will make an offer for the company within a year.

Oh...P.S. Company is making the move to Nasdaq by the end of the year just like FRPT and HANS.


Friday, July 17, 2009 11:18 PM
New beer rocks fans
Adam Graham / Detroit News Pop Music Writer
Detroit -- Kid Rock's Friday night show at Comerica Park was not just a massive concert event. It also acted as the soft launch of Kid Rock's new beer -- because why wouldn't Kid Rock have his own beer? -- appropriately titled Badass Beer.

Lines for the Webberville-brewed lager were two or three times longer than other concession lines along the Comerica Park concourse, and reviews were mostly positive.

"It's delicious!" said Elizabeth Hussey, 25, of Shelby Township, after her first sip. She praised its "lean aftertaste" and "crisp, summery" savoriness. "It's not heavy in your mouth, it's light on your palate," she said, comparing it to a Sam Adams summer lager. More to the point, "it's definitely not Bud," she said. (In her eyes, that's a good thing.)

"I like it, it's a workin' man's beer," said Scott Carignan, 34, of Chesterfield Township. He said he'd gladly pick up a sixer if he saw one at the store.

But not so for Bill Watson, 59, of New Baltimore. "We're here for Kid Rock, so of course we had to get a Kid Rock beer," he said. But after a few sips, he wasn't blown . Would he pick up some from the store? "Probably not," he said.

Kegs of the beer carried a sticker that read "Badass American Lager," and read in various spots "Born on the Fourth of July" and "Born in Michigan, made in America." The labels were also adorned with the large eagle logo Kid Rock has across his back.

[e-mail] [phone]

www.detnews.com/articl...

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So the streets outside Comerica Park will become an all-American rock 'n' roll carnival Friday and Saturday afternoons, with food and drink vendors, a local-band stage, an extreme-motocross exhibition, hotrod displays and a chili cook-off sponsored by Rock's pal Chris Chelios.

Revelers can also get their first taste of Rock's Bad Ass Beer, which, as Rock puts it, is getting its "soft unofficial launch" this weekend.

www.freep.com/article/...

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4:26 p.m.: Mostly positive reviews are flowing in for Kid Rock's Bad Ass Beer, which is making its debut here this weekend. Inside Cheli's, bartenders say they're moving plenty of the American-style lager -- at $3.50 a cup -- to curious connoisseurs.


"It's a good sipping beer," says Derek Lecki, 21, of Davisburg,. He's on his fifth cup.

"It's got a lot of flavor, and we've already figured out if you put an orange in it, it's awesome."

www.freep.com/article/...-

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ONE OF 15 KIOSKS INSIDE COMERICA PARK 7/18 WHILE LYNYRD SKYNYRD PERFORMING!
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FIRST NATIONWIDE LOCATION OF BADASS AT CHELI'S IN DETROIT 7/17
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COMERICA PARK CONCERT...KID ROCK....SATURDAY NIGHT 7/18
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BADASS BEER LABEL
photos-b.ak.fbcdn.net/...

Jul 20 10:59 AM

[kool:]

I bet Thermogenesis (KOOL) will be a 5 bagger in 12 months.

Sep 06 01:45 PM