“High Priced” versus “Low Priced” stocks


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High Priced stocks may be undervalued

Frequently the highest per share prices represent the lowest total valuation for a company when price is multiplied by shares outstanding and compared with total earning power and other figures.

Why high priced stocks can be favourable?

I generally favour issues selling at high prices per share.

They are more often to be in the rapid-growth stage.
They are likely to have a better-grade following.

Think possible profits on percentage basis

One should regard one’s possible profits more on a percentage basis than on an absolute dollar basis.

A move to $10 from $5, is $5, but certainly no one would think a move to $130 from $125, meant the same thing.

Traders will not see anything dangerous in the doubling of a low-priced share to 10, from 5, though they will avoid, fear, and occasionally, even sell short a stock that moves to 175 from 125, or $50, when an issue in that class actually would have to rise to $250 to double.

It is quite useful to have a logarithmic chart just as a reminder. 

A “log” chart shows such movements in proper scale and tends to temper the judgement.

High-Priced stocks very occasionally can be available at low prices

Very occasionally, once in a good many years, normally high-priced stocks can be bought for low prices. 

This is so obviously advantageous, if one has the cash at the time and the foresight.

Low Priced stocks with small capitalizations

Sometimes one can buy low-priced stocks of companies that also have small capitalizations, and realise some very amazing profits.  

However, it should be realised that the possibilities of selecting one of the few a make good, and selecting it at the right time, are quite slight.

Low-Priced stocks with large capitalizations

Low -priced shares with huge capitalizations are usually quite undesirable.

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