Discovering Low-Cost Stocks for Over 100% Returns in 2018: A Cautionary Outlook for Investors
Investing in the stock market can be both exciting and challenging, especially when the goal is to achieve a significant return on investment (ROI). This article delves into the prospects of finding low-cost stocks that have a promising potential for a more than 100% return by the end of 2018. We will explore the current market dynamics, high-risk stocks with pending cases, and the vigilance required to make informed decisions.
Amazon: A Consistent Growth Machine
Amazon stock stands as a prime example of a company with the potential to double in the near future. Since April 7th, 2017, it has more than doubled, and its performance can trace back to quadrupling since 2015. Significantly, comparisons with penny stocks, often considered high-risk investments, highlight the stability and resilience of Amazon. While lesser-known penny stocks might potentially double, the odds are stacked against them, especially when compared to the stalwart Amazon.
The Challenge of Predicting Returns
Despite the allure of high returns, it is essential to acknowledge the complexity of predicting stock movements. Nobody can definitively say which stock will surpass a 100% return within a specific timeframe. However, historical data suggests that stocks which break out of long consolidation patterns are more likely to achieve such remarkable returns. The pharmaceutical sector is one such area worth considering, with the possibility of achieving around 100% returns, albeit over a longer period.
High-Risk High-Reward Stocks
Focusing on stocks with pending cases of NCLT (National Company Law Tribunal), enormous debt, and potential for debt repayment presents a high-risk, high-reward opportunity. Two such examples are Bombay Dyeing and GVK Piplcotton Limited. Bombay Dyeing, after divesting assets to clear debt and bolster cash reserves, demonstrated a year-to-date return of 300%. GVK Piplcotton Limited, with significant debt burdens, also presents a potentially multibagger, albeit with an uncertain outcome.
It is crucial to recognize that the allure of such high returns does not necessarily translate into actionable market data. If a stock had a promised 100% return within a specified timeframe, such claims would likely be met with skepticism. The reason being, if it were so attractive, the investor themselves would opt to invest the entirety of their portfolio. This further underscores the caution required when pursuing high-risk, high-reward opportunities.
Market Realities and Caveats
The potential for high returns must be weighed against the associated risks. The erosion of returns is a reality across different asset classes. For instance, while real estate might offer a 5% return, the equity in a mortgaged property compensates for mortgage payments, bringing the return to around 15%.
As the saying goes, 'A bird in the hand is worth two in the bush.' It is important to recognize the implications of holding onto stocks for extended periods to ensure substantial gains. The potential gains must be carefully balanced against the risks involved, including the possibility of significant losses.
In conclusion, while there is no magical formula for achieving a 100% return in 2018, investors can explore stocks with pending debt repayment, pending legal cases, and high debt levels. However, it is essential to approach such opportunities with caution and a thorough understanding of the associated risks. Ultimately, a balanced and informed approach is crucial for achieving long-term success in the stock market.