This is a Relationship Driven Market!
I keep reiterating, research coverage is still the starting point of an investment decision.
It’s extremely time consuming for the buy-side, individual investors and retail brokers to research small-cap stocks that trade under $1-2.00; there are just too many risk factors associated with “penny-stocks”! There is a recovery – but, CEOs need to better focus their VISIBILITY. As the market rebounds uncovered companies are subject to depreciated attraction for financing when compared with their analyst covered peers.
Are analysts publishing insightful recommendations or just … fulfilling a follow-up … if that or … is it just about fees and commissions?
Attracting investors is the momentum driver for any share price appreciation. Investors need to be stimulated, reassured and enlisted. Independent research identifies and validates share pricing insight or forward reference points. In this market, reviews should include detailed survival or sustainability benchmarks, a stated valuation model including its peer group comparison. Catalysts and milestones in relation to peers are most important as investors need to understand forward-looking recommendations.
Bottom Line: Individual investors and retail brokers are doing more … and more of their own research. Ultimately, the acid test of research performance is an appreciating share price that – opens – doors to “All” investors. There is a lot of money on the sidelines and there is no quick fix for an investment; but, consistent, quarterly coverage builds confidence, legitimizes sustainability and positions valuations for market upticks and needed financing.
