Re: penny (or "junk" stocks) vs. micro-caps
This is just a semantical reply. penny stocks refer to stocks, strictly speaking, whose shares trade for $1.00 or less. Some people
use the term to refer to shares that trade below $5.00 per share, but
this is a non-standard definition.
Micro-cap refers to companies whose total market cap is below some
arbitrary level (usually $100M). Market cap is defined as total shares outstanding times share price.
You will notice that these are somewhat independent definitions. A
company's stock may be a penny stock (<$1.00), while the market cap may be >$100M (not a micro-cap). Conversely, a company with a higher
priced stock might be a micro-cap. This second scenario is much more
common, especially early in a company's history.
I'll use my company, Tellabs, as an example. The lowest the stock ever traded was $8.25/share (definitely not a penny stock) back in
December of 1989. At the time, there were about 12.6 million shares
outstanding, making the market cap roughly $100M (therefore, a micro-cap).
Keep in mind that when you look at share prices, one must look at NON split-adjusted share prices. If you looked at a 10-year chart of TLAB stock, it would appear that the shares were worth about $0.70 back in December, 1989, but they were really $8 to $9.
So the short answer is, NO, MSFT, INTC, CSCO, TLAB, and companies of
that nature (long-term, high growth companies) were most likely NEVER
penny stocks.
I hope this helps,
Bob Martin |
