That is because the market is almost always "wrong". By wrong I mean the market will either consistently trade below or above "true" market value.
Many will say that the share price is the market value. I disagree. I see the difference to "true" market value being predominately driven by "sentiment" - either directed specifically at the stock, or at the market as a whole.
That is why invariably in take-over situations, a company will pay a premium to take control of another - because they see that the market has undervalued a stock and they are prepared to pay a premium (or what they consider to be a reasonable value) to acquire that company.
AZZ has been consolidating at or around these levels for over 12 months now and despite very significant progress towards self-sustaining production levels, a share buy-back, fully funded drill program and no further capital raising required etc etc, the market continues to discount this stock even in the face of significantly higher third party valuations
This is similar to the situation with ALK, which has a NPV on its head line project af around $4.20 and is currently trading at 90 cents?? Go figure.
The issue as I see it is that people are plain scared - and sheep to boot. They want to make money without risk - or at least minimal risk. The follow the heard mentality even when a stock's under-value is obvious is frustrating, but also provides opportunities.
Unfortunately though, I can't see any big gains being made in most stocks (despite the very apparent disconnect to value) until good old "sentiment" turns a bit more positive - or someone realises the value and takes over AZZ - at a premium of course.
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