Volatile low images
Some stocks are temporarily ignored, ill-loved, even hated.
These outcasts have tiny, but volatile images, specially in depressed or even
Here is an indicative table.
(mkt average img. = 0,6)
0,2 to 0,4
(mkt average img. = 1)
0,3 (0,5) 0,7
(mkt average img. = 1,7)
0,7 to 1,2
Very cyclical or erratic firms are roller coasters.
If a firm's results are zigzagging, its stock's image tends to be low and
Its level exaggerates the actual uncertainties, at least in atrabilious
Special situations (turnaround firms, take-over targets, lottery
tickets) are toads that may become princes if the fairies feel like it.
This applies to firms not very successful at the moment, but that:
are liable to benefit by a more or less foreseeable event that could
(without any certainty) improve their fortune in a spectacular way.
also have a low image, meaning a low market price, taking little into
accounts its opportunities.
The most worthy of interest are the emerging firms.
Having shown some first successes, these little robins are aplenty with
nice prospects ...if economic vicissitudes don't swallow them.
Those firms, at the same time:
are young and, like the forgotten stocks, not well known,
are therefore rather low-priced in the stock market,
show fair and growing results ...not puffed up by reckless management
or accounting steroids,
deal in a sector that is relatively new, or enjoying a renaissance thanks
to these firm's iconoclastic ideas,
have built a fairly large market share in their "niche".
Beware of decoys / false emerging stocks, the so-called stocks with a
future or pre-emerging stocks.
Some started with some sales, even profits, but not necessarily recurrent.
Others have only projects. Comes to mind such- and- such big canal or
tunnel, or new sector: biotechnology, new media….
Investments and costs are often underestimated at the start. Quite normal
for something totally new! Down with caution when working for the advance
Although the expected turnover is enticing at first sight, there is no way
actually to give a reliable figure on it from the start.
The expected EPS are faraway and uncertain. Sometimes a huge financial
leverage (up to 80 % debts) spices these potentials ...and makes it easy for
any snag to destroy
OK to bet on innovation. But not to pay a lofty image to buy a tiny EEV. Such
stocks are often launched on the market at stratospheric prices (see above)
in euphoric periods when investors flock around anything with a new and
Imagine the fall into Hell when the market sentiment turns around!