The occasional shower of pennies from heaven might do our bank accounts some good, but we Fools can't say the same for penny stocks. The world of penny stocks is often full of manipulation and deceit, so it's harder for investors to separate its few good offerings from the multitude best ignored.
Still, many investors dabble at the low end of the stock-price spectrum. At Motley Fool CAPS, we award the "Pennies" title to investors who rate stocks trading in the single digits more than half the time. Believe it or not, you'll find some of the best CAPS All-Stars among those members.
Pinching pennies
This week, we'll look at some of the low-priced investments these All-Stars have praised. If the best investors regularly scanning this end of the market have singled out these companies, we might want to turn our umbrellas upside-down -- or run for cover!
Here's the latest list of low-priced stocks with All-Star support:
*Price when the outperform call was made.
Your two cents' worth
There has been something of a scratched lens at flat-panel screen maker Corning. Its upbeat predictions for growth despite production cuts at AU Optronics (NYSE: AUO ) and LG Display (NYSE: LPL ) finally caught up with the company, and management has essentially conceded defeat. There have been some encouraging signs of growth overseas, but Corning still expects to cut capital expenditures next year and possibly consolidate manufacturing capacity.
Yet Corning remains a prodigious generator of free cash flow, and conserving its cash at this time can serve to boost those numbers further. CAPS member RMFIII looks at management's business plan and thinks the LCD maker is too good to pass up:
With its Solid business plan and mgmt. that had to eat some crow lately, they now have [ingested] a large amount of humility so it is now time to buy. [Corning] is truly one of the real companies that is truly on SALE. With its low debt and PE excellent ROE and high net profit margin [this] is a no brainer.
Meanwhile, it was no doubt a welcome relief that MannKind was able to report recently positive results from phase 3 trials for its inhaled insulin formulation Afresa. Although there remains significant risk before it can be deemed a success -- the FDA still needs to get on board, for instance -- CAPS All-Star zzlangerhans finds there is enough going for it to believe the stock will respond favorably in the near term. In a pitch from mid-November:
I remain long-term negative on Mannkind due to the well-established problems with inhaled insulins. However, the product has solid efficacy data which at least positions it for a favorable review from the FDA. I expect the FDA to set safety standards for Technosphere which are virtually impossible to overcome in terms of time and resources. In the near-to-mid-term I'm positive at this price point.
Penny for your thoughts
What do you think? Should we fill up the change jar with these penny stocks, or ignore 'em like a discarded coin on the street? It pays to start your own research on these stocks on Motley Fool CAPS. Read a company's financial reports, scrutinize key data and charts, and examine the comments your fellow investors have made -- all from a stock's CAPS page. Consult our free CAPS investor-intelligence community, where your two cents count as much as anyone else's.
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