Some investors believe that lower priced stocks have more room to increase in value compared to higher priced stocks, which may already be closer to their perceived fair value. It is a human tendency that people often gets attracted towards lower price rather than focussing on the quality of the products. People show the same tendency, while investing in stocks. Many investors believe that a lower-priced stock has a better chance of doubling or even tripling in value, leading to higher returns. But is share price everything while investing?
Ever since multi bagger stocks given a higher return to its investor, many investor started targeting small value stocks expecting their price to rise in future.
“This stock is just ₹10 - Let me buy 1000 shares , it might turn into a rocket!”
This is normal saying among the investors. And such statement alwsys Sounds tempting ! But here is the truth
Low price doesn’t mean it is a good stock. Unless the company’s business, management, and future growth are strong, the price is just a number.
Investors often focus on lower-priced stocks for several reasons, including the potential for higher percentage gains and affordability for smaller investors. Some investors may believe that lower-priced stocks have a higher trading volume, making it easier to buy and sell shares.
Investors should always conduct thorough research and analysis before investing, regardless of the stock price.
A ₹2000 stock can still be undervalued, while a ₹5 stock may never move.
It is crucial to differentiate between stocks that are genuinely undervalued and those with low prices due to poor performance or other issues.
Also remember, Price does not tell us if a company is small or big. For that, look at the market cap. That’s what shows the real size of the company.
So stop chasing cheap prices and Focus on business quality and true value.
In good faith - Peace!!
