20 Tricky Ways To Identify And Avoid Value Traps in Stocks

Tricky Ways To Identify and Avoid Value Traps in Stocks Stock trader shocked & confused after finding value traps in stocks.

(16) Growth By Acquisition

It is one of the most significant & tricky ways to identify and avoid value traps in stocks. Growth by acquisition or merger of a company is an important sign of a value trap.

A company with low growth & low P/E ratio when merged with expensive company of high P/E ratio is likely to be expensive as a whole.

You can not predict the new valuations of such false bargain stocks only on the basis of old financial statements provided by the management.

[Read Also: 10 Smart Reasons To Invest in Renewable Energy Stocks]

(17) Highly Regulated Industries

It is one of the most tricky ways to identify and avoid value traps in stocks. A company working in highly regulated sector of business may generate less profit as compared to unregulated sector of business.

A highly regulated sector is often associated with high fees and regulation cost. It decreases the possibility of increase in share price.

You should prefer to invest in unregulated sectors or less regulated sectors. This will help you to prevent yourself from being stuck in value trap investment.

Image Source

Recommended Posts

About Editing Staff
At GetUpWise, we are a team of professional writers from different areas of subjects. We are conducting thorough research on each & every topic from highly reputed sources before writing any piece of article. Once research is done, we try our best efforts to provide informative piece of articles in an easy to understand manner. It is something that is extremely essential to meet our goal while reaching & offcourse building a strong online community. We do update our articles from time to time in order to provide the most latest information quickly. Thus, our articles can be used as a "way to gain smartness".

Leave a comment

Your email address will not be published.


*


*

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Get Instant Access To GetUpWise Posts

Subscribe Us

Please do verify your email address by clicking a link sent to your email.

More in Stocks & Mutual Funds
Indicators To Make Money Quickly In Stock Markets.
16 Key Indicators To Make Money Quickly In Stock Markets

(12) Current Ratio It is one of the most popular financial indicators to make money quickly in stock markets. Current...

Close