The performance leaders for years.

PaulRen's picture
Category: 
Industry

The reality is that many great small cap stock values with their high dividends and growth prospects, don't' get any respect.  Yet they have been the performance leaders for years.The reason is that institutional investors must ignore them, strictly and only due to low (as these perceive it) average daily trading volume. And the many speculators, (whom most often know nothing about the stocks fundamentals or its valuation) do the same: just ignore all stocks except the highest volume leaders. But once a stock graduates to some trading volume, it commands more attention and so gets in time a higher valuation, i.e. a higher p/e ratio. Some companies which are not all that big, by market cap measure, but trade well...like TRC (4.56), can move and get attention. Others are not all that comparatively small but trade very little, so they just sit still. Some of these are just long confirmed "wall flowers", which will never move much.

Its just the realities of life here, that the more a stock trades (on average volume and this over time) the higher its likely valuation and so price will be. (all other things being equal). Where I can make a difference is by finding smaller great values, pointing them out to our members and then in time make them available for all our visitors here to see. This in time can increase trading volume (by simple awareness and information at hand ) and then so in time its valuation. Its a win/win for all, not the least the company whom are often discouraged that no local or foreign analysts will follow/write about them. Overall it works to our advantage and gives us individual investors an edge...but only if there is high integrity along with proprietary insights. This is what I have always strive for. TIES (3.12) is such a likely newer idea I now like, and will have more to say after my company visit next week.  They just stated they would not have a capital increase anytime soon as the current market price is too low, this is a positive as in the current environment investors just don't like the earnings dilution more shares would bring, even though this would likely increase the average daily trading volume.  TIES looks like the cheapest construction related stock on the SET....and construction spending is likely to increase sharply next year, post Thai elections.

Best Regards,

Paul A. Renaud.

www.thaistocks.com