Value Trap

Value Trap

A stock with a lower-than-usual price that appears to be a value stock but is not. A value trap appears to be undervalued at first glance but its fundamentals are unhealthy and the stock is unlikely to recover in price. One may fall into a value trap by looking only at the stock's price but not at any other financial information.
References in periodicals archive ?
Asian equities could well prove a value trap in 2016.
HSBC, sadly, is a value trap for now and its shares can well fall to 540 pence in London.
A stock is a value trap if it looks like a great buy but isn't.
Recent history shows there are any number of cases where this value trap has occurred.
A steeper US Treasury yield curve, of course, is gold negative and even $1600 is a value trap.
inevitable, creating a value trap," said Discern Inc analyst Cindy Shaw.
During market downturns many stocks can be cheap, but if there is no future growth potential, than that stock could be considered a value trap.
We see HMV as a value trap with potentially insurmountable structural issues," she added.
It is also clear that even if there is a transfer, the transfer for value trap will not be triggered if there is no consideration given for that transfer.
Falling cyclical earnings growth is a common value trap.
Impatience is the final value trap, usually resulting from underestimating the time needed for a given task--especially when the task is a new one.