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Author Topic: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock  (Read 271 times)

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Vantage 8 dude

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Ran across an interesting article discussing defense, more specially drone development, stocks. Not a lot of pure plays because many companies engaged in this activity have large capitalizations and only participate in this area as a small portion of their overall operations. However, I have discovered an idea that is as much a "pure play" as you'll likely find in this growing sector.

The company in question is an Israeli-based firm by the name of RADA Electronic Industries (RADA). It closed yesterday around $3.45. The company develops a wide variety of electronic defense technologies for various military and corporate clients around the world. Their products include data recorders, heads up  displays, avionics and mission control systems.

They already have a strategic relationship with such companies as Lockheed Martin, Boeing, Embraer S.A, and Rafael Advanced Defense Systems. These relationships should obviously gives this rather small firm instant credibility.

However, it's the company's work in drone defense that really should catch the attention of investors.

That falls into an area called Multi-Mission Hemispheric Radar-MHR for short-which allows for very specific peripheral equipment that can observe and target hostile drones. The company sold 300 of these systems to date to various global customers, according to company data. In line with these orders is a "breakthrough" order from an unnamed branch of the U.S. military for $8 million. While such an order might appear to be "small potatoes" to most, the company's revenues rose 94% in Q2/17 to $5.3 million, up from only $2.7 million just 12 months earlier. At the same time, gross profits hit $1.7 million over the same time frame, representing an attractive gross margin rate of 31.%.

The most exciting news, however, is that RADA sound from an operating loss of $1million in Q2/16 to an operating PROFIT of $500,00 in this year's second quarter. While these numbers won't "blow the socks" off many investment managers, it does point to the likelihood the company has most definitely turned a very positive profitability corner.

Most certainly this idea is NOT for the faint of heart. It's obviously a speculative suggestion and most definitely should be approached as such. My approach would be to begin initiating positions around this level. However, I would NOT advocate one putting all potential funds into the stock at this point. "Dollar cost averaging" on any pullback in price would likely work out fine. As this is a longer term idea, I would also avoid the temptation to merely "trade" on any bounces. As there are some fairly large "rain makers" who have provided some additional financing for the company I would speculate they have some long term designs on the company.

Good luck to one and all.
 
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HiggiePiggy

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Would have been really nice to buy that in November of 2015 when it was 90 cents a share. I do like cheap stocks though. I have a ton of them. I buy to keep though for dividends.
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Vantage 8 dude

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Would have been really nice to buy that in November of 2015 when it was 90 cents a share. I do like cheap stocks though. I have a ton of them. I buy to keep though for dividends.
Remember the key to consistently making money is NOT to necessarily buy a stock when it first comes public or even shortly after it does so (not saying this is the case here). Many times I had clients bemoan that fact if only they had bought Wal-Mart when it first came public, or Apple, Google, Amazon, etc. five or then years ago. While that would have no doubt been nice, the key to FUTURE gains is to identify and invest in future trends and company's that address them. Whether it be drones, alternative energy sources, on-line shopping, artificial intelligence or whatever other industry or market(s), it's the company's that can successfully navigate the needs in these areas that will be the winners. Therefore don't be so concerned about where a stock's price was at some point in the past. Rather, be more focused on where you think it might be in the future-in other words, don't invest based on the past. IF one believes a company's ability to continue growing earnings, revenue, sales, etc. remains strong then very likely the FUTURE stock price will be higher as well.

Having said all that, however, I do agree that the positives of dividends can't be over looked or over emphasized. In fact, historically over the past (approximately) 100 years of market returns-roughly 10% annually-roughly 40% of that return is actually achieved through the payment of dividends. I suspect a good portion of investors aren't aware of that fact. So a core of good solid dividend (totally return) equities is essential in virtually any well balanced/allocate portfolio. However, there's not nothing wrong with many investors having some acceptable portion of their overall portfolio in a stock similar to RADA. Just ensure it's with "risk money" that one could afford to lose if worst came to worst.
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HiggiePiggy

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Iím about to have 12 or 13k to put into stock. Selling a house and taking some of that to put in.  I was thinking of buying some safe stocks that have dividends.  Looking to buy a few stocks that will give me dividends every month.  Want to try and build up dividends stocks to where I am getting over 100 a month next year. 

Last year I started and ended the year with 354 in dividends.  This year I am at 520 and by the end of this year I will probably hit 800. Next year my goal is to be close to 1500 for the year.  All I do is keep reinvesting my dividends.

Stocks I have now range from 1 dollar to 20. With the 13k I was planning on buying some of the bigger type names that have been solid for decades.  Iím looking at 9 stocks that range from 30 to 55 per share.  Also I will bump up my weekly investing from 50 to 75 until my wife and I pay off the house in Rogers. Which should be close to 4 years. 

After that I plan to up my 401k to 25% and then up my weekly investing to 100 and probably throw in an extra 500 to 1k every month on top of that to play with. 

My 401k is dodge and cox stock and t. Rowe growth stock fd
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ricepig

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Iím about to have 12 or 13k to put into stock. Selling a house and taking some of that to put in.  I was thinking of buying some safe stocks that have dividends.  Looking to buy a few stocks that will give me dividends every month.  Want to try and build up dividends stocks to where I am getting over 100 a month next year. 

Last year I started and ended the year with 354 in dividends.  This year I am at 520 and by the end of this year I will probably hit 800. Next year my goal is to be close to 1500 for the year.  All I do is keep reinvesting my dividends.

Stocks I have now range from 1 dollar to 20. With the 13k I was planning on buying some of the bigger type names that have been solid for decades.  Iím looking at 9 stocks that range from 30 to 55 per share.  Also I will bump up my weekly investing from 50 to 75 until my wife and I pay off the house in Rogers. Which should be close to 4 years. 

After that I plan to up my 401k to 25% and then up my weekly investing to 100 and probably throw in an extra 500 to 1k every month on top of that to play with. 

My 401k is dodge and cox stock and t. Rowe growth stock fd

I don't know any company that pays a dividend every month. I have probably 20 stocks that I own for basically their dividends, and pretty much get some income every month, but they all pay quarterly.
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Vantage 8 dude

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I don't know any company that pays a dividend every month. I have probably 20 stocks that I own for basically their dividends, and pretty much get some income every month, but they all pay quarterly.
rice, what he may be referring to are ETFs. While there are a few stocks that pay monthly most that do are structured as portfolio of individual stocks (such as REITs) that are then put together so they pay once a month.
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HiggiePiggy

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I don't know any company that pays a dividend every month. I have probably 20 stocks that I own for basically their dividends, and pretty much get some income every month, but they all pay quarterly.

I actually have 5 stocks that pay monthly, but I wasnít meaning monthly on the safe type of stocks Iím about to get.  Iím buying 9 that pay quarterly and I have found 3 each that pay in different quarters  so 3 that are 1,4,7,10. 3 that are 2,5,8,11 and 3 that are 3,6,9,12.


Cheap stocks I have right now that pay every month.  OAKS 5 cents, HRZN 10 cents, EAD 6 cents, SCM 11 cents and the best one I have so far for monthly is CEFL it averages close to 20 cents every month.   I have had all of these stocks for almost 2 years now all are under 20.  Cefl use to be 13 when I first bought now itís almost at 19 a share.
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ricepig

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rice, what he may be referring to are ETFs. While there are a few stocks that pay monthly most that do are structured as portfolio of individual stocks (such as REITs) that are then put together so they pay once a month.

True, I was going on individual stocks. I own 4 REITs, they pay very well, but I'm getting a little concerned on them.
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HiggiePiggy

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Yeah. Iím very new to this stuff. I pretty much consider everything as stocks.  I know that isnít true though. 
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Vantage 8 dude

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True, I was going on individual stocks. I own 4 REITs, they pay very well, but I'm getting a little concerned on them.
Unless there is a problem when it comes to a company's fundamentals I wouldn't be too concerned. The main reason for any weakness would be due to a concern in higher interest rates. While the Fed seems totally intent on raising rates, I still wouldn't sweat it. You'll be fine if you're truly looking for yield.
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ricepig

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #10 on: October 07, 2017, 08:11:23 pm »

Unless there is a problem when it comes to a company's fundamentals I wouldn't be too concerned. The main reason for any weakness would be due to a concern in higher interest rates. While the Fed seems totally intent on raising rates, I still wouldn't sweat it. You'll be fine if you're truly looking for yield.

A couple are up 20%, and a couple are down 10%, but they average around 8% on their dividends. I was happier when they stayed flat and just paid the 8%, now I'm looking at share price too much, lol.
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #11 on: October 08, 2017, 02:45:10 am »

A couple are up 20%, and a couple are down 10%, but they average around 8% on their dividends. I was happier when they stayed flat and just paid the 8%, now I'm looking at share price too much, lol.
Well remember that you have no loss (or gain) until you sell. What you DO have, baring some major negative change in the fundamentals that would impact the dividend(s), is the continuing yield that may also very well be rising over time. Since there's no "free lunch" in the investment world you have to ask yourself a couple of things:

First, what are you honestly trying to achieve out of your investments. If it's income/yield it AIN'T going to be sticking the money in some CD or money fund. Therefore, you're going to have to give up something-like totally guaranteed price stability.

Secondly, and I believe more importantly, how well can you sleep at night with however you're invested? If you're honestly worried to the point that you're tossing and turning concerned about the vagaries of the market and your investments then IMHO you're too aggressively positioned. As I constantly remind my clients: there's absolutely NO investment EVER worth losing a minute's sleep over. Sweet dreams ;)
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ricepig

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #12 on: October 08, 2017, 08:02:26 am »

Well remember that you have no loss (or gain) until you sell. What you DO have, baring some major negative change in the fundamentals that would impact the dividend(s), is the continuing yield that may also very well be rising over time. Since there's no "free lunch" in the investment world you have to ask yourself a couple of things:

First, what are you honestly trying to achieve out of your investments. If it's income/yield it AIN'T going to be sticking the money in some CD or money fund. Therefore, you're going to have to give up something-like totally guaranteed price stability.

Secondly, and I believe more importantly, how well can you sleep at night with however you're invested? If you're honestly worried to the point that you're tossing and turning concerned about the vagaries of the market and your investments then IMHO you're too aggressively positioned. As I constantly remind my clients: there's absolutely NO investment EVER worth losing a minute's sleep over. Sweet dreams ;)

Oh, I sleep well, but like the next guy, I'm greedy. I probably haven't sold 5 stocks in 20 years, I buy and hold. Sometimes, that wasn't the best strategy, but it's been mine. That's probably my works fault, not letting go of a loser, anyone need any Windstream stock?
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #13 on: October 08, 2017, 09:34:50 am »

Oh, I sleep well, but like the next guy, I'm greedy. I probably haven't sold 5 stocks in 20 years, I buy and hold. Sometimes, that wasn't the best strategy, but it's been mine. That's probably my works fault, not letting go of a loser, anyone need any Windstream stock?
Trust me: we've all been there. If you've been investing longer than five minutes then I can assure you we've all had our clunkers. Personally I applaud your recognition that "time in the market" is far more important to success than "timing the market". It never ceases to amuse me that you have plenty of clowns on tv and elsewhere who say that a "correction is coming" or some such. Hello, yeah, keep saying such and you'll finally be right. Eventually we most definitely will have a sell off and it's finally going to be one more along the lines of 10-20%. Then again, have many such have we experienced over the past 100 years? Far more than most to count.

As far as Windstream is concerned I'm afraid that's one that was sending some major warning signals long before they gutted the company and dividend. The company's management obviously misread the whole industries direction and future. In a sense they were living in the past while accumulating huge piles of debt to boot. A prime example of why it's critical of all of us who own stock to diligently keep abreast of what's going on in the economy, particular industry, and company. Never get married to a stock to the point that a sell (divorce) would be so painful. One other thing: at the first sign of danger be on high alert for a possible change. Determine before hand what triggering event, price or development that will cause you to say "sayonara". Remember that a small loss is far preferable to a huge one and pride is usually easy to recover than money.

One last thing: don't apologize for being greedy. We all tend to be because it's part of our nature. One of the first things my late father, who was a financial advisor for over 40 years, taught me is that  by virtue of it being controlled by humans the market is always going to swing between the extremes of fear and greed. Always has been, always will be. With that in mind good luck.
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HawgWild

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #14 on: October 08, 2017, 12:08:19 pm »

Oh, I sleep well, but like the next guy, I'm greedy. I probably haven't sold 5 stocks in 20 years, I buy and hold. Sometimes, that wasn't the best strategy, but it's been mine. That's probably my works fault, not letting go of a loser, anyone need any Windstream stock?

I could have made you a great deal on my SD before it went bankrupt last October. I'm going to be writing that "investment: off my income taxes for another 5 years.
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #15 on: October 08, 2017, 12:14:08 pm »

I could have made you a great deal on my SD before it went bankrupt last October. I'm going to be writing that "investment: off my income taxes for another 5 years.
Well look at it this way: at least you get some benefit from it. (Just kidding, just kidding).
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HawgWild

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #16 on: October 08, 2017, 02:15:04 pm »

Well look at it this way: at least you get some benefit from it. (Just kidding, just kidding).

I did actually, experience.
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #17 on: October 09, 2017, 09:46:46 am »

I did actually, experience.
As painful as that may be, I've found that sometimes that may be the best return one can receive from an investment.
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ricepig

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #18 on: October 09, 2017, 10:31:57 am »

As painful as that may be, I've found that sometimes that may be the best return one can receive from an investment.

In 30 years of farming, I've learned to enjoy carrying forward and back, a loss, haha.
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #19 on: October 09, 2017, 10:52:43 am »

In 30 years of farming, I've learned to enjoy carrying forward and back, a loss, haha.
Well for me, I've never enjoyed a loss whether it be forward or back. However, I also realize it's the realistic "price of admission" into investing.
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HawgWild

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #20 on: October 09, 2017, 01:07:26 pm »

V8, you're a little new to the board to have read my posting about trying to corner the silver market with the Hunt brothers back in the early 80's. I've still got that silver some where. Last good use I got of my 1,000 gram bar was as a weight for a piece of driftwood I had in my aquarium.
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #21 on: October 09, 2017, 04:50:49 pm »

V8, you're a little new to the board to have read my posting about trying to corner the silver market with the Hunt brothers back in the early 80's. I've still got that silver some where. Last good use I got of my 1,000 gram bar was as a weight for a piece of driftwood I had in my aquarium.
Well sometimes even the "big dogs" don't know what the hell they're doing. Valuable lesson for us all.
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HawgWild

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #22 on: October 09, 2017, 05:24:56 pm »

FWIW, Leon Cooperman was a big owner in SD. I was going to ride it to $10 with him. Didn't get there. Don't take any investment advice from me.
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #23 on: October 11, 2017, 09:53:08 am »

As a followup to this idea thanks to a very good friend of mine who works in the Department of Defense I was just able to get a good gander at their '18 budget (not surprisingly a HUGE jump in approved spending to over $700 billion). What I found very interesting/relevant is the fact that the portion earmarked for drone spending-both "attack" as well as more passive types-will go up dramatically from the $4.61 BILLION in the current fiscal year to over $117 BILLION next! Anyone want to say "GROWTH" with a capital "G" ??? :o While this obviously doesn't specifically point to RADA, with that kind of massive money flow does anyone necessarily want to count against the company getting at least a portion of that massive pie? Consider too that, as mentioned previously, there are not that many "pure play" opportunities out there. So many of these drone makers are mere "offshoots" of larger companies. That dampens down some of the pure flow-through of the increases.

Just thought you'd like to know.
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HawgWild

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #24 on: October 11, 2017, 01:54:15 pm »

RADA up 250% in the last year. Trump signaled big boost in military spending right out of the gate. Wonder how much the pps has already priced that in? Not saying it canít happen. Lord knows there are a bunch of happy FB owners that bought in @ $17 and Iím not one of them. Good luck.
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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #25 on: October 11, 2017, 02:58:58 pm »

RADA up 250% in the last year. Trump signaled big boost in military spending right out of the gate. Wonder how much the pps has already priced that in? Not saying it canít happen. Lord knows there are a bunch of happy FB owners that bought in @ $17 and Iím not one of them. Good luck.
Please keep in mind that you make money over time not by necessarily buying a stock at it's lowest point, rather before it's true growth potential is fully built in. Does this make RADA, or any other company's stock, a "sure bet". Of course it doesn't. However, I use both my experience as a financial advisor AND investor as a good signpost as to whether or not any idea still offers merit.

First of all, is the investment a "Have to have" or a "Nice to Have"? I mean someone like GoPro and it's supposed "cutting  edge" technology was never going to be a "have to have". It was a nice idea for a while, however, the barrier to entry were non exist, hence, fairly easy competition. It was also a technology that wasn't ever going to change the world to the extent that it's business model was going to be extended for long. Sure enough, after a year or so the stock crashed after making money for some folks (and a lot of losses for many more).

On other hand, folks like Google, Apple, Amazon and many others really fall into the "have to have" category. Their products and operating systems are revolutionizing the world. And while they will always face competition, as will any good company, their management, culture, and entire operating model lends itself to (likely) continued success for years to come. That's why I've bought stocks like Google, Amazon, Alibaba and others even after their strong run ups. The whole rationale is that I honestly believe that their stock prices will be far higher down the road-say the next 12, 24, 36 months or more-than they are today. In other words, I don't agonize and worry over the fact I didn't buy them 6, 12, 36 or even 60 months ago. In the end I'm looking at their potential long term, not the next five minutes or even six months.

So.....this leads me back to RADA. Yep, it's had a nice run and there's no arguing that it COULD have a correction at any time. However, like some of the others I've cited (and I'm certainly not going to compare them to the AMZNs or APPLs of the world), I believe the trends are there for their business to likely grow by leaps and bounds over the coming years. Apparently the need for drones is being recognized far and wide. Obviously our Dept of Defense sees the need; and they're by no means the only ones. So unlike a "nice to have" ideas it seems to me this company fits into the "have to have" category. Add that to the fact that they're one of the few "pure plays" in this sector. However, and as I've also acknowledged, that's merely my personal view. If one can't abide the fact they're not buying on its all time low, and after all when does that ever really happen, then don't buy it....makes no difference to me. After all, it's your money and there are a ton of investment ideas where this one came from.

One final thought: while it's true that Trump signaled a massive increase in defense spending, did the investment community necessarily factor in the incredible parabolic rise in the spending for defensive drones this coming year? I seriously doubt it. Most concentrated on ship building, plane production, and other more main stream programs. And if you honestly think that world wide drone technology being adopted left and right is suddenly going to significantly slow or even stop in the foreseeable future then I would offer you a "it ain't going to happen".
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je100

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #26 on: October 13, 2017, 08:49:59 am »

Ran across an interesting article discussing defense, more specially drone development, stocks. Not a lot of pure plays because many companies engaged in this activity have large capitalizations and only participate in this area as a small portion of their overall operations. However, I have discovered an idea that is as much a "pure play" as you'll likely find in this growing sector.

The company in question is an Israeli-based firm by the name of RADA Electronic Industries (RADA). It closed yesterday around $3.45. The company develops a wide variety of electronic defense technologies for various military and corporate clients around the world. Their products include data recorders, heads up  displays, avionics and mission control systems.

They already have a strategic relationship with such companies as Lockheed Martin, Boeing, Embraer S.A, and Rafael Advanced Defense Systems. These relationships should obviously gives this rather small firm instant credibility.

However, it's the company's work in drone defense that really should catch the attention of investors.

That falls into an area called Multi-Mission Hemispheric Radar-MHR for short-which allows for very specific peripheral equipment that can observe and target hostile drones. The company sold 300 of these systems to date to various global customers, according to company data. In line with these orders is a "breakthrough" order from an unnamed branch of the U.S. military for $8 million. While such an order might appear to be "small potatoes" to most, the company's revenues rose 94% in Q2/17 to $5.3 million, up from only $2.7 million just 12 months earlier. At the same time, gross profits hit $1.7 million over the same time frame, representing an attractive gross margin rate of 31.%.

The most exciting news, however, is that RADA sound from an operating loss of $1million in Q2/16 to an operating PROFIT of $500,00 in this year's second quarter. While these numbers won't "blow the socks" off many investment managers, it does point to the likelihood the company has most definitely turned a very positive profitability corner.

Most certainly this idea is NOT for the faint of heart. It's obviously a speculative suggestion and most definitely should be approached as such. My approach would be to begin initiating positions around this level. However, I would NOT advocate one putting all potential funds into the stock at this point. "Dollar cost averaging" on any pullback in price would likely work out fine. As this is a longer term idea, I would also avoid the temptation to merely "trade" on any bounces. As there are some fairly large "rain makers" who have provided some additional financing for the company I would speculate they have some long term designs on the company.

Good luck to one and all.
 

Thanks for the tip V8.  Looks like a company that deserves some due diligence at least.

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Vantage 8 dude

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Re: Interesting Investment Idea For Fairly Low Priced (under $5 a share) Stock
« Reply #27 on: October 13, 2017, 03:36:17 pm »

Thanks for the tip V8.  Looks like a company that deserves some due diligence at least.

That's for the excellent "heads up". Wasn't aware this particular video was available. Most certainly far more detailed information as to what the company's doing.
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