If you think I have an ax to grind with Radio Shack, think again. I’m simply here to point out what penny stocks make good investments, and which do not (in my book of course…)
Making the news yet again is a penny stock I called for a complete collapse in numerous times over the past 2 years. While the company is still operating (currently that is), it appears that after last quarter the fat lady may be warming up her vocal cords just off stage.
My advice is for long-term diehard investors to take their losses and sell Radio Shack (RSH)
In February, I made this call…
Even as RSH continues to slide from last year’s over-hyped rally, the bleeding for investors appears far from over. I’d go as far to say we’ll see new 52-week lows and a break below $2 before the month is out.”
You can read the previous article here…
With RSH posting a loss of $98 million this past quarter, virtually triple their previous loss, it’s hard for anyone to see how Radio Shack will avoid bankruptcy. Poor sales of phones, aggressive price competition, and an industry-wide decline in consumer electronics sales contributed to the loss, the company reported.
Additionally, many analyst are in agreement with me that management doesn’t seem to be executing on the plan they hoped would turn the faltering electronics giant around. But I’ll go one step further…
I don’t believe that anyone could turn this company around.
The problem isn’t a expense issue, or operations issue- it’s a paradigm shift in electronic sales and consumer preferences that will simply leave RSH in the past. Who really wants to walk into an outdated store and hope they have the next coolest “must-have” gadget? And for the price consumers want to buy it at…
I’ve said it before, and I’ll say it again. The crux of the problem is there are too many other places to get exactly what Radio Shack sells both cheaper and faster. (Best Buy, Amazon, Ebay, etc…)
With gross margins falling, and operating expenses on the rise I’ll continue to hold to my call that Radio Shack will become a sub-$1 penny stock in no time!
Keeping you one step ahead,