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 ?
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.
Others believe that while it is important to be competitively priced, it is equally important not to fall into the value trap.
Falling cyclical earnings growth is a common value trap.
As much as Japan was hailed as the all-conquering hero in 1989, it is now decried as the ultimate value trap - a cheap market that is destined to remain that is destined to remain that way for a very long time," he says.
Downsides include weaker Asian exports, lower earnings with Taiwan and Korea (don't be swayed by the value trap of lower PEs) singled out for hits, Singapore and Malay-sia in negative thought, but "little effect" in China, Hong Kong, India and Thailand.
However, I still believe GDX is a value trap despite its 18 per cent fall last month.