Market Talk with Piranha is currently moving to its new home at chrisperruna.com. The new site is up and running but many of the posts need editing as the images and stock charts did not transfer successfully (thanks blogger). I will post all new entries to both blogs – Thank you for your patience while I make this change!

Tuesday, April 25, 2006

Higher Priced Stocks keep Going Higher!

I harp on this subject over and over but I do so for a reason. Most investors are still scared to buy stocks that are priced above $50 or $100 per share. They continue to reason with themselves that they could buy 1,000 shares of a $10 stock rather than 100 shares of a $100 stock. They like the idea that they own 1,000 shares and they focus on the possibility that the stock could double from $10 to $20 a lot easier than $100 to $200. I guess the joke is on them and I know that this is one of the reasons why many of these people continue to fail at investing in the stock market. It all boils down to false perceptions and lack of experience.

If you search this blog or the MSW archives, you will see that I have been covering Tenaris (TS) and Hansen Natural (HANS) for about a year. Every chance I get, I talk about these stocks because I have owned them both (multiple times). Most recenely, I wrote a blog post on March 3, 2006 that spoke about this same topic and compared the gains/losses in Tenaris and Sirius (a beloved lower priced stock that does nothing). In that last post, I showed you how Tenaris moved from $123 to $179 while Sirius moved from $7.12 to $5.08 in a three month period of time (ending 3/3/06). Since March 3, 2006, Tenaris has moved from $179 to $241 while Sirius has moved from $5.08 to $4.81 yet many of the Sirius speculators still believe that SIRI is the better investment over time. Really? They continue to sit there and WAIT for something to happen while other higher quality companies and stocks contine to push higher making their investors solid gains.

Another stock I wrote about on March 3, 2006 was Hansen Natural (HANS) when it was priced at $98.79 (a pre-split adjusted price of $197.58). I bought the stock near $66 (pre-split adjusted) and couldn’t care how large the prior advance was because the trend was still higher and I wanted to make a profit based on my analysis (not the height of the price). HANS is now trading at $140.05 (a 42% advance) in seven weeks (this comes after the several hundered percent advance over the past two years). Keep in mind that the pre-split adjusted price is now $280.10. The stock has gone from $66 to $280 since I first purchased it eleven months ago (no I haven’t owned it the entire way but I did establish postions at two ideal entry areas). Tenaris has gone from $50 to $241 over the past 12 months.

Another great example is Chicago Merchantile Exchange (CME); it has traveled from $200 to $500 over the past twelve months. You may say I am only picking out a few higher priced examples but that statement would be ignorant sicne I specialize in stocks traveling through the $60-$100 range and see dozens of stocks make the trek in a few months.

The morale of this post: Don’t ever make an investment decision based on the height of the price because you may miss a huge winner. Stocks can move from $100 to $200 just as fast as they move from $10 to $20; especially if the $100 stock is in a strong up-trend and the $10 stock is sub-par or trading in a downtrend. Take a look at the charts

Piranha

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