I took a look at stocks under $10 that George Soros has been accumulating, and, while some of these stocks carry the inherent risk of a cheap stock, others should not be looped into that category at all. My analysis is focused on the investments themselves and metrics useful to intermediate-term investors, rather than on George Soros' historic trades. Here is what I found to be most useful:
Hecla Mining Company (HL): In an economic downturn, gold has always been a safe haven for investors but its use as a practical commodity is really nonexistent and investors have been turning to other metals such as silver as a refuge. Hecla Mining Company is good example of such a bolt hole and the company has just implemented a new dividend policy that makes it even more attractive. Hecla Mining Company will link dividend payments to Hecla's average quarterly realized silver price in the preceding quarter. The policy will pay 3 cents per share of common stock if Hecla's average realized silver price for the quarter is $40.00 per ounce and will increase or decrease by 1 cent per share for each $5.00 per ounce increase or decrease in the average silver price in the preceding quarter. Although it has gone mostly unnoticed, silver has actually outperformed gold over the past two years. In 2009 and 2010 SPDR Gold ETF (GLD) returned 23.99% and 29.27% while iShares Silver Trust (SLV) brought in returns of 47.29% and 82.14% respectively. With silver at a low it hasn't seen in months and global uncertainty raising its disquieting head, now is a very good time to get into the precious metal (see this article). Hecla Mining Company also sells its silver in bullion bars for those of us inclined towards extreme measures (though sleeping with the stuff in your mattress can get a little hard on the back). See this article for more options on buying silver.
Sirius XM Radio (SIRI): Sirius XM Radio has just added NHL to its playlist but the stock took a 13% nose dive shortly after the announcement. It has since regained its former composure and actually ended up 2% higher. It seems the catalyst for this sudden fluctuation was a series of articles bashing Sirius XM. A couple of rising threats to the satellite radio monopoly that Sirius XM seems to enjoy are Pandora Media (P) and Clear Channel (OTCQB:CCMO). With most new automobiles coming with streaming radios of one form or another, Pandora Media is primarily thought of as just streaming music and Clear Channel is now strongly promoting several different types of programming in direct competition to Sirius XM (see this article). Pandora Media in the meantime has just landed a significant deal with Toyota in that would be offered as an option in the 2012 Camry, which is the number one selling car in the United States, as well as the Tacoma model. The saving grace for Sirius XM may be its highly anticipated Sirius Satellite 2.0 which is rumored to have a DVR like feature and personalized stations. The good thing about competition is it inspires innovation and that may just be what this fallen angel needs to get back in the clouds.
ClickSoftware Technologies LTD (CKSW): A company that is second only to Apple (AAPL) when it comes to innovation and producing products that fit their customers' needs, in the past year ClickSoftware Technologies has released four new versions of its patented ServiceOptimization Suite and added several high profile clients to their customer base including DIREC TV (DTV) and ADT. In this same time period ClickSoftware Technologies has consistently upped its guidance and has paid out its first ever dividend to its stockholders. Currently the company anticipates record revenues for the third quarter of $22.7 to $23.5 million and full year revenue forecasts of $85 - $87 million (revised up from $81.5 million). Dr. Moshe BenBassat, the man in the top seat, stated in a news release that strong results in the third quarter would be followed by additional contracts. With third quarter results expected towards the end of October 2011, the stock climbed 5.5% to $8.22 on the news and is up 6.8% for the year, as reported in this market update). All things considered there is not much risk in this stock and the rewards should be substantial.
Smith & Wesson Holding Corp (SWHC): "You feeling lucky today, well are yeh?--punk!" Smith & Wesson is feeling lucky. The company said its sales of hand guns are up 10% for the year and they had a backlog that was up 153% last quarter. (see this article) The uncertainty of the economy and the steady rise of unemployment have prompted a lot of Americans to consider arming themselves. FBI background checks for handgun sales has soared 44% since 2006 and even there is no direct correlation between background checks and sales, one can still logically assume that with more checks there will be more arms sold. Smith & Wesson's numbers seem to prove this hypothesis. Smith & Wesson also plans on selling its perimeter security business to focus on its core gun manufacturing business. The security business has been losing money mostly due to cutbacks in government spending and so beginning from October, the perimeter security business will be reported as a discontinued operation in the financial results. Shares of Smith & Wesson are trading at their 52 week low of $2.29 down 38% from their 52 week high of $4.20 that was reached last December, as reported in this article. With the increased demand and the back-to-basics approach, this stock might just make you feel lucky today.
SandRidge Energy (SD): Market panic creates opportunities if you know where to look and SandRidge Energy just may be that post-panic buying opportunity you are looking for. Though creative financing is one thing, SandRidge Energy have never run into a problem before and the results have been staggering. In July 2011 SandRidge Energy was at 12.00 a share. Since then, as investors worry are staying clear of the debt markets, the price has been driven down to under 5.00 a share in a classic panic selling – as you can see in this article. SandRidge Energy is accumulating land for oil development along the Mississippi and has a target of one million acres by the end of the year. The company has just picked up its second parcel and has leveraged the purchase bringing the total asset to just two hundred thousand acres, having partnered with Atinum Venture Capital to develop the land. To make a long story short, SandRidge Energy's initial investment of $200 million will result in assets totaling over $3.85 billion. That is a pretty good return on investment by any standard and in any economic environment. The trick to investing wisely is to buy when everyone else is selling and this is one stock you should be buying.