May 5, 2009 - What makes a good speculative stock? A great story? A low price? No and no. Stories are fun, but they're no way to invest. A low price doesn't mean anything if there isn't a company with assets or earnings.

The first is Ford Motor Co. (F-NYSE). Yes, they've lost a lot of money, and the book value is a minus $7.17. But the new cars from Ford are outstanding value from the Focus to the Fusion to the Mustang. Plus it's the most "green" American manufacturer with many hybrid offerings. The biggest positive: the company has no government money, no government interference (except normal regulatory ones), and no government control. If you are somewhat aggressive and want to own a car company, my vote is for Ford.

The next speculative issue is Beazer Homes (BZH-NYSE). Beazer makes single-family and multi-family homes in the U.S. It covers the spectrum, from first time buyers to luxury to retirement communities. It also has a huge debt load ($1.74 billion), lost $24.66 a share last year, and is expected to lose another $5.93 a share this year. So why touch this one? Just because of the leverage. If the housing market does turn, the most highly leveraged builders will gain the most profit and the value of its land and inventory will be higher. Also, it's having good succes with its new eco-friendly houses and claims foot traffic is considerably better than a few months ago. The company reports earnings on Friday, May 8.

Dendreon (DNDN-NASDAQ) made headlines the last few weeks. It's vaccine, Provenge, showed its efficacy against prostate cancer, giving patients an additional 4.5 months of life, on average. It still has to get FDA approval but since there's already a drug with FDA approval that extends patient lives for 3 months and has worse side effects than Provenge, the approval seems realistic. The company has spent years and millions on development. The stock is an absolute roller coaster, going from a little over $1 to $27 three times in the last several years. Look for approval in December of this year and sales early next year. The possibility of a takeover is high since most major drug companies need to bolster their pipelines. But even without a takeover, the market for Provenge is very large, some estimates are of a billion dollars or more. But it won't be a straight path higher. Plenty of people have owned the stock for years, waiting just for the latest rally. They're selling some of their stock (it hit $27 in the last run up). Some of the company insiders are selling large blocks at current levels. And there are concerns about Dendreon's manufacturing facilities which could receive the most intensive focus from the FDA. This is no sure bet, but there's no questioning the efficacy of their product. Now that that's been proven, it's only a matter of time before it's monetized. There will no doubt be more stock issued to bolster the company's capital as it expands manufacturing and marketing. The ride will still be bumpy here.

General Electric (GE-NYSE) qualifies just because of uncertainty about the economy. If it gets worse, so will GE's earnings. If it improves, so will GE. Owning GE is like owning a mutual fund. You have a number of businesses that are diversified across a wide spectrum, from NBC television to GE financial to jet engines to appliances to light bulbs to railroad locomotives and much more. If you think the economy will recover any time soon, GE is one of the better stocks to ride that recovery. The stock also has a dividend of a $1.24 for a yield of almost 10%.

The last one: Melco Crown Entertainment (MPEL-NASDAQ). This is a Macau based casino/hotel operator that is still losing money but with a big presence on the gambling island. It's run by a local company owned by Lawrence Ho, son of the most powerful man in Macau, and an Australian firm. Melco just placed a large equity offering at $4 a share. Together the owners bought 50% of the stock. The offering was so strong that the company raised the number of American Depository Shares to 18.75 million (equivalent to 67.5 million ordinary shares) from the original plan of 15 million. Total proceeds to the company was $175.3 million with the over allotment exercised by the underwriters. Melco's new casino, the City of Dreams, will open in June. It has further development plans that include a new hotel and high-end apartments on Macau. Its gaming facilities will include City of Dreams, Crown Macau and Mocha Clubs when all development is completed. This stock offers a way to diversify out of the U.S. and participate in the robust Chinese economy.

Notice none of the stocks is a bank. There are plenty of good banks, Wells, Fargo and JP Morgan Chase pop immediately to mind. But the government is too enmeshed in their affairs. Once the banks get out from under the government TARP, they'll be good speculations as well. Right now, between the losses that might happen and more government regulations and restrictions, they are difficult businesses to evaluate.

Of course, there are plenty of other speculative stocks in this volatile market, but these 5 should give aggressive investors ideas to pursue. For full disclosure, I own each of them.

- Ted Allrich