HOUSTON – Enron Corp. stock may no longer be flying high near $90 on the New York Stock Exchange, but millions of shares are still being sold — and bought — every day.
At less than half the cost of a candy bar, the 24-cent shares in the bankrupt energy giant are popular with penny-stock investors and have consistently been among those traded most in the over-the-counter bulletin board market.
Volume hovered around 2.6 million shares Friday — far below the 82 million shares that changed hands per day shortly after Enron was delisted by the NYSE in January, but enough to make it a volume leader for the market.
The shares, though they have kitsch value, offer nothing to serious investors, experts said.
"Anyone you would go to with investment savvy would stay away from penny stocks like they would stay away from the plague," said Mike Greenberger, a professor at the University of Maryland School of Law and director of trading and markets for the Commodities Futures Trading Commission from 1997 to 1999.
"A penny stock can go from 24 cents to 48 cents and to 23 cents again in a day. It's the Wild West of speculation," he said.
Enron descended into bankruptcy in December amid allegations of accounting abuses that included hidden debt and inflated profits. Shares that approached $90 each in the fall of 2000 plummeted to less than a dollar, leaving workers and retirees with depleted 401(k)s that had been loaded with Enron stock.
Peter Homenuck, president of www.stockinsiders.com and author of "Stocks That Will Make You Money," said penny stocks are particularly volatile, and 95 percent of them are poor investments.
His company tries to find the 5 percent with realistic upside potential, using criteria that include a proven management team, growing revenues and earnings, a low or nonexistent debt load, patented technologies or innovations and market dominance.
"I would say that Enron falls well short in all of these categories," Homenuck said.
He said Enron meets the criteria for high trading volume and brand recognition. But the volume decrease since January makes it more difficult to profit from speculative trading. And the name "has a negative connotation and so is an additional strike against the stock," Homenuck said.
Even Enron officials have said they will leave the name behind as it reorganizes to focus on its natural gas pipelines and power operations and tries to emerge from bankruptcy.
As for shareholders hanging on to the stock, Enron said in a filing with the Securities and Exchange Commission last month that existing equity "has and will have no value" in an approved reorganization plan.
Todd Zywicki, a bankruptcy law professor at George Mason University, said that means Enron likely will propose canceling existing equity to issue new stock in whatever emerges from bankruptcy.