Interesting article in Bambi Francisco of CBSMarketwatch’s regular email. It seems despite the dot.com bust, investors are still up for getting burned.
SAN FRANCISCO (CBS.MW) – Sometimes, you do what you can to stay afloat.As many market watchers have already observed, there are companies out there that appear to be promising candidates in a hot business area, but make their money off of something entirely non-related.
Some investors may have heard of a company called Mace Security International, whose shares traded to a recent high of $6.68 in mid-June after trading below $2 earlier this year. The stock went gangbusters because the company’s been touting its anti-terrorist, surveillance security products.
One would think Mace housed a number of technologists in cubicles. Yet those techies weren’t techies at all, unless washing cars requires an engineering degree. Apparently, Mace generated 85 percent of its sales this year from being a car wash, which a big signal that investors will be getting burned.
Mace shares eventually got washed up a bit as its true colors were exposed. Let’s face it, being a car wash isn’t a competitive advantage for a security company. (Now, if they were impersonating a car wash but were really a security company — I’d say that was impressive.)
But here’s what we can learn from Mace. Sometimes you have to be creative if you want to stay in business. More related information here.