Re­new­able Plas­tic

The Record (Troy, NY) - - BUSINESS -

I’m an en­vi­ron­men­tal­ist and, as such, I hate plas­tic bags and all things plas­tic. Some years ago I ran across a small com­pany that was “a lead­ing man­u­fac­turer of pro­pri­etary biobased, sus­tain­able bio­plas­tics,” fo­cused on re­new­able plas­tics, and win­ning var­i­ous awards in Europe. So I plunked down a huge sum (for me) for some shares. Mean­while, my job was get­ting highly pres­sured, my mother was dy­ing, and I stopped watch­ing my port­fo­lio. I lost ev­ery­thing but $1.13. Big les­son: I watch my stocks all the time now. And I read and eval­u­ate com­pa­nies as well as I can, us­ing spread­sheets and ev­ery­thing — with bet­ter re­sults. — M.K., on­line The Fool Re­sponds: Like many in­vestors, es­pe­cially be­gin­ners, you got overly ex­cited by a stock’s story and po­ten­tial and didn’t spend enough time as­sess­ing its fi­nan­cials. Ide­ally, a com­pany you in­vest in should be prof­itable, with lit­tle debt and in­creas­ing rev­enue and earn­ings. Many young and small com­pa­nies aren’t at that level yet, so they can be ex­tra risky. You need to keep an eye on your stock hold­ings, too. This one of­fered a few red flags over the years, such as two re­verse stock splits — and hefty ones, at that. Shares split 1-for-40 in 2010, leav­ing any­one with 2,000 shares sud­denly with only 50 shares. A 1-for-50 split in 2014 would have turned those 50 shares into just one. The com­pany filed for bank­ruptcy pro­tec­tion in 2014, too.

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