Trader Mike

“SkyGuy” left this comment on my post about high-priced stocks:

I disagree about low-priced stocks! $5 stocks have the highest profit potential of any stock out there. The reason is that this price level is where small companies make the jump to big companies. It’s the best part of the growth curve in terms of revenue and profit acceleration.

If Google brings in $4 bil of revenues this year, how much longer can it continue to double its revenues? Not much. OTOH, a small restaurant chain with a $4 stock with 30 stores can easily double rev’s by franchising another 30 stores.

There are 40 stocks in the $1.50 to $7 range that have outperformed Google this year.

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CNBC just did a story on the recent run in Micro Cap stocks. If you’re interested, here’s a link to the story - Small companies, big risks, potential rewards.

As for me, I wouldn’t touch the thinly traded ones with my worst enemy’s money. The volume in these stocks is ridiculously low. For example, the average volume on BSML, which was highlighted on CNBC, is only 12,000 shares. (and of course it more than doubled the average volume within 10 minutes of the report) You could throw a couple of dollars at these stocks and move the market. Ugh! But they work for some people. Different strokes…

Fortune magazine, in their intro to this year’s Fortune 500, explains just how big Wal-Mart is compared to the other 499 companies. Here are their thoughts on what it would take for them to fall from the #1 spot:

…is there any scenario in which Wal-Mart is not No. 1 next year? Improbable but not impossible is that oil prices rise–yet not so far that SUV drivers stop filling up–pushing Exxon Mobil into the lead for a year. Barring that scenario, here’s the best we could do:

- All the defense companies on the list (Boeing, Lockheed Martin, Raytheon, and four others) merge to form Military Industrial Complex Inc. Total revenues: $162 billion. Not even close. …