However potential and undervalued a stock can be, it’s equally...

  1. 19,991 Posts.
    lightbulb Created with Sketch. 1943
    However potential and undervalued a stock can be, it’s equally if not more important to see the stock’s price action. If the stock’s price action is not encouraging despite being undervalued or having the potential, it could well turn out to be a long drawn affair – and time we don’t have (as a possible meltdown is in the horizon).

    Some stocks just unfortunately don’t have it no matter what they do. Take
    CM8 (Crowd Mobile) @6.4c, down 50%+ this last 6 months , down 75% since Sep18 when it reached 25c and going further back , down from high of 36c in mid-2015. With exception of one small CR at 16c in August 2016, it even paid down debts. Its latest 6 months results showed $21m revenues (annualised circa $40m) and with a positive EBITDA, yet mcap today is just $14.3m! Unloved and bargain? The market’s a fool and be a contrarian?

    You see quite a number of such ‘dead stocks’ that you would possible not sell (because you didn’t pull the sell trigger then and won’t be now) and possibly stuck with it. But with limited capital, there’s opportunity costs- i.e capital locked in dead stocks could be liberated to buy those having a more prospective capital gain outlook.

 
arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.