Low Price Stocks worth the risk?

[StregaChess]

How do you feel about the following stock?

HIET: HIENERGY TECHNOLOGIES INC
(I think it now trades as HIET.OB)

Here's some basic info...

HiEnergy Technologies, Inc. (“HiEnergy” or the “Company”) is a nuclear technologies-based company focused on the development and commercialization of proprietary neutron-based “stoichiometric*” sensor devices. The Company’s Stoitech™ technology developed in the course of the past six (6) years is unique in its ability to decipher the chemical formulas of selected substances and determine with 95% accuracy, automatically and without human intervention and through steel, whether an object or container carries dangerous or illicit selected substances, such as explosives, biological agents, or illicit drugs. HiEnergy’s primary focus is currently on the production and sale of multiple products:

(1) CarBomb Finder 3C4™, a vehicle-borne system, for the detection and identification of car bombs,
(2) CarBomb Finder 3C5™, an in-ground explosive screening system also for the detection and identification of car bombs,
(3) SIEGMA™, a suitcase-borne system for the detection and identification of home-made bombs, also known as Improvised Explosive Devices or IED’s. and
(4) STARRAY, an unexploded ordnance detector, also useful to detect IEDs.

(end....)

So given what's gone on in the UK, I was wondering if this stock is worth the risk....

Figure for the price you can't get hurt....

[Mr. Now]

Well of course you can get hurt. Just because you have a little account does not mean you must trade these thin issues. The SEC has info on "microcap fraud"-- see below.


These .OB stocks are thinly traded and are often used as the vehicle for "pump and dump" schemes. For example anyone with 50 to 100K can manipulate a stock whose daily dollar volume is less than that. Add to this the very wide bid-ask spreads and you have a very -EV situation.

A better approach might be to find some sectors that are already trending, identify a leader in the sector, and make a purchase of the leader on price weakness that tests the trendline.

Consumer staples XLP (etf) is a good example of a sector that is trending. You can consider the sector etf, a leader within the sector, or some combination of both.

HIET.OB may be OK as a lottery ticket where you "invest" less than 1% of your total account.

The consumer staples sector is a defensive sector. It tends to rise or at least hold value when the broader market is falling. A tremendous amount of money never leaves the market and must constantly be searching for a place to be parked. This tends to support the idea that there is always an uptrending sector.

Pump and Dump:
http://www.sec.gov/answers/pumpdump.htm

Chart of XLP:
http://finance.yahoo.com/q/bc?s=XLP&...amp;q=l&c=

Related Article:
http://www.marketwatch.com/News/Story/St...amp;siteid=yhoo

[StregaChess]

Thanks for the reply and the info.
I don't think this one falls under "microcap fraud" but its good to know that it exist.

I'm releated to someone that's the head of the bomb squad in a major city (very major...) they were "pitched" some of these systems by the company and while impressed it did not fit their current needs. However... some of this stuff is very emotional and the recent issues did make it seem like a good lottery ticket!

[ QUOTE ]
Just because you have a little account does not mean you must trade these thin issues.

[/ QUOTE ]

OK, let me be more to the point.
I'm looking at just getting started in stock and wanted to get my feet wet with $1,500 to $2,000. Figured under $10 per stock was a good price point, but maybe I'm approaching this all the wrong way...
Any general advice for a new investor with little budget?
The sector idea makes a lot of sense but the issue price is still a bit high no?

[jthegreat]

For $2,000, you can buy 50 or more shares of some really good companies. I'd stick with something a little less volatile. I'd rather have 2 shares of a great company at $1,000 a share than 1,000 shares of something crappy.

[buffett]

For $2,000, you can buy 50 or more shares of some really good companies. I'd rather have 2 shares of a great company at $1,000 a share than 1,000 shares of something crappy.

[DesertCat]

Save up some more money. You can get a B share of Berkshire Hathaway for a little over $3,000, and you'll be able to sleep at night.