What is a Wallflower?
Wallflower is slang for a stock that analysts and investors tend to neglect.
How Does a Wallflower Work?
Usually used to describe individuals who are relegated to the sidelines in social events, in investing, wallflowers are stocks that investors and analysts tend to ignore. Also called orphan stocks, wallflowers do not typically display outstanding market performance, but sometimes the reason for a stock being classified as a wallflower may not be clear.
Why Does a Wallflower Matter?
Value investors sometimes hunt specifically for wallflowers. Because their stock price hasn't been inflated by investor demand, wallflowers tend to have low P/E ratios, which many investors believe can lead to solid long-term returns.
