Wallflower Stocks

Wallflower Stocks: Wallflower stocks refer to those stocks that have generally fallen below the radar of the investors and are neglected by the market. As mostly of companies with low market capitalization have Wallflower stocks, this may lead them to being largely ignored by equity analysts. As such, although such stocks may have good fundamentals and may yield favourable dividends, they are traded at a discount as compared to the industry benchmarks. Thus, wallflower stocks are perceived to be undervalued, that is, the price of the stock is lower than the intrinsic value of the stock, and also exhibit low PE ratios as their stock price hasn’t been inflated due to investor demand.

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Wallflower stocks thus have good investment potential. There is always the opportunity to identify prospective wallflower stocks by canvassing stocks that have had little to no market analysis. Such an investment strategy could result in finding stocks underappreciated by the market with strong future growth potential.

Edited and Updated 08th March 2014

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