concept company

concept company

A firm that attracts investors more on the basis of the type of business it is in or by the direction in which its management says it is moving than on its current earnings or dividends. For example, a company involved in sophisticated biomedical research that might achieve a major scientific breakthrough and large profits could qualify as a concept company. Concept companies of the 1990s include firms engaged in computer software development, Internet commerce, genetic engineering, and medical technology.

Is "concept" more important overall than assets or income, when one evaluates concept companies?

Concept companies rely on investor psychology rather than fundamentals. If an investor can spot a concept or fad before it actually becomes popular, there is the possibility for gains. Warning: fundamentals become secondary for a concept stock.

Steven Flagg, Senior Vice PresidentInvestments, UBS PaineWebber, Mount Kisco, NY