Monday, June 27, 2011

$NOK as Penny Stock

[guest post by ..TS.]
You probably would have never thought of Nokia as a penny stock, especially has it still has some $60B in sales and a $20B market cap, but it's stock price recently dropped below $6, putting it in spitting distance of the $5/sh definition for a penny stock.  Just as Citigroup, Ford were once penny stocks, and very nearly GE, Nokia, which has been a major force in mobile telecommunications for decades, has nearly touched these fabled depths.

How do we play penny stocks?  Well, generally, we're advised to steer clear of them.  But, remember, penny stocks can generate the greatest returns in one's portfolios, especially if news and/or results bring them back from the proverbial brink.  Realistically, what company with some $15B in cash is really at the brink?  Well, RIMM has $20B in cash, and look at it's gyrations.

Now, I have not implemented exhaustive research on $NOK, but based on a couple of flimsy items, I plunged into a bunch of calls at $9 and $10 for Jan 2012 early this morning:  they just leaked details of a Windows Mobile touch phone, they just hit a 52-week low, and... I just have a vague feeling their management doesn't want to be seen as roadkill along the telecom/info highway.  A Windows Mobile phone? Really?  With new iPhones coming out every two weeks?  Well, now that Microsoft and Nokia are the mobile underdogs (and better positioned than Palm ever was), they should be able to gently gobble marketshare back from Apple.

What do you think?  Rash?  Ridiculous? Irresponsible? Let us know.



  1. Nokia... done. Count on it.

  2. Anonymous,
    you could be absolutely right, I may have merely stumbled upon a dead-feline bounce. But, that's the beauty of this market: if your convictions carry you the other way, by all means, proceed. And perhaps in the short-term you'll be correct. But I think a combination of general investors flight from debt to equity and Nokia's desire to claw back market-share make this value play difficult to pass up.