USA Today's Matt Krantz reports that shares of some companies bankrupted by the financial crisis have posted huge gains in recent months: "Lehman and WaMu, for instance, were booted from stock exchanges and filed for bankruptcy protection. Yet on the lightly regulated Pink Sheets markets, this year their stocks are up 500% and 1,050%, respectively."

The problem is that shares of companies like Lehman and WaMu are completely worthless with no prospect for recovery for shareholders. Ownership of the company's assets is no longer held by the common stock -- and with creditors taking losses, there is no chance that shareholders will receive a nickel.

My core investment strategy of trading strong penny stocks (which earned me 197% last year) has clearly benefited from the overall market's strength of the past few days. While I'm looking at these following five names, I'm not rushing into them just yet. Each has a different story to tell:

Ferro Corp. (NYSE: FOE), a struggling industrial materials maker whose stock price has plummeted in the past six months from the $20s to $1, basically doubled to $2 after the company amended its financing agreement -- meaning its lenders gave it some breathing room.

This week, I've been working on a list of penny stocks to buy. Given that any recovery is likely to be led by the small-cap space, I'm looking closely at the smallest of the small to drive my portfolio higher.

Not for the faint of heart, these so-called penny stocks can generate some really fat returns. I'm not talking about just doubling your money here. Stories abound of returns of 300% or much more on stocks that started out trading for less than $5 per share.

One of the stocks on my list is in the poker space, and to give you a bit of a preview, I want to visit one other player in the space that was worthy of consideration, but did not make the final list.

CryptoLogic (NASDAQ: CRYP) is a leading provider of software for the Internet gaming space for non-U.S. players. It is that last piece about non-U.S. players that has me quite excited about the stock.

The company has benefited from the explosion of online poker playing, but stagnated due to tough enforcement of rules and regulations against U.S. players. It is illegal to gamble online, and that is a huge problem for companies like CRYP.

My take on this stock is that regulations will change for a few reasons. At the top of the list is a new administration that claims to bring a non-lobby-based form of governing to Washington.

That means the Vegas lobby is out of luck when it comes to online gaming. Every other modern country allows it, why not ours?

Another big plus is the taxable revenue that would come from legalizing online gaming. Given the economy and massive debt loads, one would think this would make sense.

I think the space makes for a reasonable speculation, and CRYP looks like a strong play in my opinion.

With shares at $2 and change, off a 52-week high of $21.97, there is plenty of fuel here.

Of course, there is risk, but that's what penny stocks are all about.

I am merely suggesting that there is a legitimate trigger here for some serious upside. Sometimes that's all it takes for a penny stock like CRYP to take off.

And if you're interested in penny stocks, be sure to check out my Top 5 Penny Stocks to Buy Now.

Jamie Dlugosch is a contributor to InvestorPlace.com.

Ted Allrich is the founder of The Online Investor and author of the just released book: Comfort Zone Investing: Build Wealth and Sleep Well at Night. In this weekly column, he'll offer advice to investors who are just getting started.

In today's market it seems every stock is a bad stock. Doesn't matter what you buy. It goes down. But I'm not talking about good stocks caught in a bad market. This is about bad stocks with no earnings and no real prospects, the ones with great stories but nothing else. Lots of promise, but no profits.

There are lots of bad stocks, many more than good ones. Any prudent investor should avoid them. But most of us don't. There's always a story that seems so compelling, so right, so possible, that many of us buy a bad stock even though it has no earnings, or racked up huge losses. It's only human to hope for the best even when the facts tell you the odds are against success.

My only penny stock is SpaceDev Inc. (OTCBB: SPDV) and I am not recommending you buy any. I do not recommend any penny stocks and will leave that to others.

If you did buy some, it would probably move the stock because the trading volume is so low that you can actually have an impact. I'm losing a few hundred dollars over the course of about two years.

I bought the company after I had witnessed both launches of Space Ship One into sub-orbital space and wanted to keep track of this interesting company that created the motor and fuel technology.

This week, the company announced that its devices successfully landed on Mars. SpaceDev "provided a wide array of hardware and instruments for the Phoenix Lander that successfully landed on Mars' north arctic plane Sunday, May 25th at 4:53 pm PDT."

SPDV closed Wednesday at $0.62, unchanged. Its 52 week range is $0.51 to $1.05. There are no significant metrics worthy of discussion, but as a shareholder I am supporting an important aerospace company that is designing and building cutting edge space-age technology and keeping me informed and educated. It is located in Southern California, allowing me the opportunity to visit the company easily.

There is little chance of a big financial reward, unless one of its technologies finds some broad popular use, but sometimes there are other things in life that mean more.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I own shares of SPDV.

• Back in June of 2006, MarketWatch's Chuck Jaffe wrote up a company Electra was involved with as his Stupid Investment of the Week. Jaffe received a phone call featuring the prerecorded voice of Carmen Electra, touting a company called Luvoo.com (OTC PK: LUVT). Shares of that company have since collapsed to 8 cents per share.

• Electra also signed on as a spokesman for a company called eFoodSafety.com (OTC BB: EFSF), and the company put out a press release hyping her involvement.

• The most interesting one: Payment Data Systems Inc. (OTC BB: PYDS) is a tiny microcap that announced its Carmen Electara prepaid Mastercard last year. Here's where it gets potentially shady. The company paid penny stock shill Jonathan Lebed $25,000 for a one-month investor relations contract that mainly consisted of sending out emails to his subscribers touting the stock with messages like "Combined with PYDS's new Carmen Electra debit cards and many more celebrities coming soon, it doesn't get much bigger than this!!!"

• For those of you who don't remember, Lebed made headlines in 2000 when he settled SEC charges of stock manipulation -- at the age of 15. Ever the self-promoter, Mr. Lebed posted a YouTube video of himself rubbing elbows with Ms. Electra.
  

It used to be that you could avoid ads for fraudulent stock promotions if you didn't open up spam emails and managed to stay off the lists of boiler room cold-callers and mail houses. But now these thugs are taking out ads in top newspapers, according to The New York Times (permalink).

Such venerable publications as The New York Times and USA Today (by venerable I meant The Times) are featuring full-page ads touting "emerging growth" companies. If you want to know what that is, take a look at the insightfully sardonic Penny Stock Player's Dictionary:

Emerging Growth Company -- an implausible story about a hypothetical business.

Emerging Growth Stock -- a scam.

I hate penny stock spam as much as the next guy, and Kevin Kelly wrote an interesting piece on the SEC's efforts to crack down on it. But whenever I hear about this stuff, I have to wonder: How stupid do you have to be to buy a stock because you receive an email from someone you don't know saying that a stock you've never heard of is going to da moon?

A recent Associated Press article referred to the SEC filing charges "against two Houston-area men, accusing them of hijacking personal computers to send out spam e-mails and bilk investors out of $4.6 million." (emphasis added)

First of all, someone who buys stock based on a spam email isn't an investor. In fact, I can't even type the word I would use to describe someone who does that because BloggingStocks is supposed to be PG. And I would argue that these "investors" really bilked themselves out of $4.6 million through their unbridled greed and gullibility.

I don't think that the people who lose money on these penny stock scams can be characterized as victims. Their downfall is exactly the same as that of the perpetrators of these crimes: Greed.

When it comes to getting started in stock investing, many of us (myself included) look at the volume of information that's available and instantly become nearly overwhelmed with the sheer magnitude of it all. There's so much to learn about the markets. There are so many directions one could go. How does a person who just received a $2000 windfall take that money and invest it for himself or herself? How to find a broker? How to create and diversify a reasonably safe portfolio? There are a million questions that can be asked. Where are the answers and how much information is actually necessary to learn to make a safe start? I don't have that $2000 windfall to invest but I have that desire so I had a look around and I found out about investment clubs.

Investment clubs are kind of like mini mutual funds. They can be a very small coalition of amateur investors who have pooled resources to buy stocks and create a portfolio, or they can actually be groups that become large enough to form their own limited liability corporations. The magic lies in the fact that they don't have to bear the management fees associated with true mutual funds and the members most often vote on the choices of stocks their money will be invested in. This significantly reduces operating costs and helps small investors realize better returns from their invested funds.

Members of investment clubs have some serious advantages over the small investors who try to do it alone. They get input and support from the other club members. They get the benefit of a wide range of investment viewpoints. They get purchasing discounts through the increased volume of each stock purchase they're involved in and they get the comfort of knowing that there are other investors who are willing to take the same risks they are. It's a team concept and some people have gotten very wealthy utilizing it.