Dear Mr. Berko: I began trading cheap stocks — below $5 a share — in 2001. I’ve had some good years and some bad years. Over the 17 years, I’m down about $19,000. I initially invested $100,000, and I’ve got $81,000 remaining. I’ve subscribed to 30 or 40 low-price stock services, and it’s been lots of fun. Most of these stock services brag about how well they do, but I’ve learned it’s mostly baldfaced lies to attract suckers like me. I’ve never seen you recommend cheap stocks. I’ll bet you have some good names on a list somewhere. So how about giving me a dozen or so recommendations?
— HT, Jonesboro, Ark.
Dear HT: I’m only allowed to give you three.
I’ve watched lots of low-priced stocks try to cross the river in the past 50 years. Most foundered before they reached the halfway point, but a few succeeded and got to the other side.
Though issues trading below $5 a share are not on my radar screen, I had an idea about how to help you. Crazy Mary Ginsburg has a knack for picking low-priced stocks. She enters a psybient trance and reveals her recommended visions only to her husband. Her doting husband, Guten Ginsburg, collects them in book form but so far has sold only 11 books. I called Crazy Mary, and after about seven minutes of pleading, scraping and groveling, I got her to suggest three extremely speculative issues. Crazy Mary says these three are guaranteed to have between a fourfold and ninefold increase in value in 16 months, fall flat on their bums and declare bankruptcy, or trade anywhere in between.
Lloyds Banking Group (LYG-$3.30) is a $65 billion-revenue bank with 2,067 branches run by 75,000 employees and has been doing business with Londoners since 1695. In the early part of this century, LYG traded between the $40s and the $60s; then the market finally collapsed, and revenues imploded. Income also imploded, and so did the price of LYG. This is the U.K.’s fourth-largest bank. It offers services through the Bank of Scotland, Halifax, Scottish Widows et al. And LYG’s business is improving. In 2017, LYG’s net income was $4.8 billion, 45 percent higher than 2016, and this year, LYG should post impressive results. The 16-cent dividend, which may be increased before the year ends, yields 4.8 percent. LYG seems to be a good name and, if Crazy Mary’s right, a good capital gain.
