Analyst's Coverage
Recently, I was talking to an Equities Sales person.
I discussed with her, a stock that I had been following for a long time.
I then asked her why her IB does not cover this stock. The numbers looks good, the PEG is fantastic, it's in an industry that's fantastic, there's repeat purchase of it's products etc. In short, it's a Peter Lynch potential multi-bagger...
Her short reply was that their Analyst is wary of the company. Their Analyst has no condidence that Management is honest.
Then it hit me in the head. There's actually no Analyst covering this particular company despite it's fantastic numbers, the great industry etc.
I then promptly sold all the stocks that I have on this company.
Lesson Learnt: If it's too good to be true, it probably is. There's thousand of Analysts are there and if they are not covering your "fantastic" company, there's probably a good reason for it...