The Little Book of Big Profits from Small Stocks:
Why You’ll Never Buy a Stock Over $10 Again
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Author: Hilary
Kramer
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Much of Hilary’s success can be attributed to investing in low-priced beaten-down stocks.
Wall-street’s herd instinct is especially powerful in moving low-priced stocks.
Introduction: The Investing Edge You Have on Wall Street
1. The
herd instinct of Wall Street can not only create the opportunities by pushing
stocks too low, but when it reverses direction it can create incredible profits
by lifting stocks out of the low-priced sector and into double, triple and even
ten-bagger profit territory.
2. Why
aren’t more investors look to low-priced stocks:
a. They
think stocks under $10 are too dangerous
b. Some
institutional investors are actually prohibited from owning such stocks
c. Analysts
tend to ignore them. Analysts can have too much focus on the short term considerations
of a recession’s impact on a business and totally miss the big picture.
3. That
is a mistake and can be used to your advantage.
4. Beware
however, as many stocks under $10 are cheap because they deserve to be.
Example, they are:
a. Dogs
that never had potential
b. Permanently
damaged by recession
c. No
hope of getting back on track
5. Thus,
it is important to find those cheap stocks that have what it takes to reemerge
as winners.
6. There
are three categories of low-priced stocks:
a. Fallen angels: these are large company
stocks that had stumbled and fallen out of favor for various reasons (example:
due to cyclical business environment, mismanagement, and earnings fell short of
expectations).
b. Undiscovered growth companies: these
are great companies in unattractive industries.
c. Companies in good old bargain bin:
companies that are selling for less than the value of the assets they own.
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