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There are many strategies out there to pick a stock based on many articles that I've read. I can't guarantee its accuracy.
1. I guess, MF Canada is focusing on value of an enterprise, but ignoring the current market valuation. Yes, value of the enterprise or products/services didn't change, but its market valuation could be adjusted dramatically upon a quarter report or downward revisions/forecast by management. The worst case, investors must wait several years to get even.
-> Traders and investors had picked this type of business, thus they had jumped in to boot market cap over the roof. If we jumped in late, we would likely get severe corrections.
2. Contrarians picked stocks that investors have stayed away or dumped. They needed a turnaround or positive events to push stock prices up quickly in a few quarters.
-> Contrarians also love recessions, when all stocks are at steep discount.
3. Opportunity could be “temporary” troubles of a company or like contrarians in betting the other way than the market. Anyways, this case should also include picking unrecognized stocks or extremely under values stocks, e.g. hidden gems. Only a blowing quarter or explosive growth would draw all investors in to boot market valuation.
4. Momentum stocks: These stocks keep going up for little reasons. Of course it would fall off the cliff if something wrong occurred. The ridiculous upward momentum occurs as all people jumped in to buy stocks without analysis, i.e. stocks up 20% -> buy some more.
5. I don’t
know how to value a company, btw.
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