Business, Legal & Accounting Glossary
A wallflower stock is one that has been largely ignored by equity research analysts. Most wallflower stocks are companies with small market capitalizations or companies that are thinly traded. Wallflower stocks are also frequently found in industries that have fallen out of favour with investors. A wallflower stock may have strong fundamentals and favourable growth rates but trade at a discount to comparable companies because only a few investors know about the company. Many wallflower stocks have comparatively low P/E multiples. An investment strategy used by some value investors is running screens for stocks that have little or no research coverage. This helps identify prospective wallflower stocks. Fundamental analysis may then uncover a hidden gem among the wallflower stocks. Another name for a wallflower stock is orphan stock.
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This glossary post was last updated: 5th February, 2020