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A thread on a common worry of investors -
Why some stocks don’t grow, despite looking fundamentally strong and undervalued?
Do you hold such stocks? No no no...its not just ITC (i can read your mind)
Retweet if you find it useful
(1/6)
#stockmarket #investing #markets
Why some stocks don’t grow, despite looking fundamentally strong and undervalued?
Do you hold such stocks? No no no...its not just ITC (i can read your mind)
Retweet if you find it useful
(1/6)
#stockmarket #investing #markets
Fundamentals are a reflection of past & present:
Market expects the future of the company to be uncertain due to distuption (Ex - castrol)
2. Sectoral uncertainty or regulatory issues - ex #ITC
(ITC has 2 more reasons)
2/6
Market expects the future of the company to be uncertain due to distuption (Ex - castrol)
2. Sectoral uncertainty or regulatory issues - ex #ITC
(ITC has 2 more reasons)
2/6
3. Extremely high liquidity:
Why would you pay a higher price if there is always someone willing to sell at the current price.
Ex - a lot of PSU stocks and of course - ITC
(This factor works in combination with other factors discussed)
3/6
Why would you pay a higher price if there is always someone willing to sell at the current price.
Ex - a lot of PSU stocks and of course - ITC
(This factor works in combination with other factors discussed)
3/6
No track record of previously successful companies from that sector:
Markets get confidence in a company if it has a precedent that the peers of the company have done well in the past.
Ex - listed education companies suffer because of poor track record.
4/6
Markets get confidence in a company if it has a precedent that the peers of the company have done well in the past.
Ex - listed education companies suffer because of poor track record.
4/6
Value discovery is difficult :
Some stocks might test our patience coz the company has so many un-related businesses under a single listed entity that its difficult for the market to value it correctly as a whole.
Ex -ITC
Would love to have your views sir @dmuthuk
(5/6)
Some stocks might test our patience coz the company has so many un-related businesses under a single listed entity that its difficult for the market to value it correctly as a whole.
Ex -ITC
Would love to have your views sir @dmuthuk
(5/6)
Ahead of its time : The company might be a game changer but its so ahead of its time that the market did not understand its potential. Ex - CDSL till an year ago, few ppl expected this growth in demat accounts.
6/6 - End of thread
Can you give some examples of such companies?
6/6 - End of thread
Can you give some examples of such companies?
