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RadioShack Stock: 3 Strikes And You're Out?

After RadioShack (RSH) filed for bankruptcy on February 5, the stock dropped to just a few cents per share. Many investors who sometimes dabble in penny stocks are probably wondering whether there will ultimately be any value in the RadioShack stock, which now trades in the OTC Markets with the symbol RSHC. I think that it is highly likely that the stock will ultimately be worthless, despite the company's well-known brand. The RadioShack stock has at least three things going against it.

First of all, the stocks of companies that file for Chapter 11 almost never do well. Under the bankruptcy laws, stockholders come at the bottom of the list of a company's creditors, and all of the other creditors must be paid off in full before stockholders receive anything. Since a company is usually in pretty serious trouble when it files for bankruptcy, it is very, very unusual for… Read More …