How do you define your risk before entering a position?
Well I look at the share price, P/E ratio, as well as the likelyhood that a company will go bankrupt and invest accordingly. NOK, AMD, ZNGA, and ALU are all currently priced as if they will be going out of business next week, but given the current climate of their various business i think they all have a legitimate chance to survive out of their current trying situations.
NOK is currently the leading Windows Phone manufacturer and unless Windows phone goes completely into the bushes (unlikey) i belive there is a chance this stock can hit 5-6 dollars this year
AMD is currently priced as if its going bankrupt tmw, but AMD has already secured its graphics chips into ALL the next gen consoles. Furthermore they are the second leading producer of CPU and GPU chips. That alone will ensure they will be in business for at least the next 5 years, as well as the chance that they will likely be profitable. AMD was 5 bucks last year and they currently expect to be profitable by Q2-Q3. I expect some nice returns with this stock by the end of the year.
ZNGA is likely my biggest question mark, but the price is too low for me to ignore. They currently are working to seperate themselves from Facebook and are actively looking into online gambling with real money. This is my smallest holding (4k) but i anticipate they will likely grow as their real money online gambling starts to take off.
ALU is a dirt cheap stock that i don't anticipate will grow for the next 5 years. ALU is currently priced as if they are going bankrupt as well, but thier patent portfolio alone is worth 1.40 a share. Secondly, they have already secured numerous contracts with various cell phone providers in Europe, India, and S. America so i anticipate they will be on the road to recovery soon. Furthermore, the French government has already stated they will take over the company before they allow it to go bankrupt due to the fact that ALU's patent portfolio is so valuable. The main issue with this company is that its based in France, so their business practices are not entire ideal for shareholders.
I'm a high risk high reward value investor. I hit big last year with DDD, NOK, and NFLX. I'm hoping the aformentioned picks will allow me to have and awesome christmas.
P.S. I'm currently looking at QCOM next. They just missed earnings this past quarter and had a massive selloff in response, but i anticipate them having a blowout q4 and q1 next year due to their chips being all up in all the upcoming smartphones.
Feel free to dap a nikka accordingly..
P