Wallflower

AAA

DEFINITION of 'Wallflower'

A stock that has fallen out of favor and does not get much attention from the investment community. A wallflower will typically have very low trading volumes and may also trade at low multiples of price to earnings or price to book. A wallflower stock is usually found in an unpopular sector, and seldom in a "hot" sector.


Also known as orphan stock.

BREAKING DOWN 'Wallflower'

In the social context, a wallflower is somebody who remains on the sidelines of a party for any number of reasons, including reticence, unpopularity or lack of interest from others. Similarly, in the financial context, the term "wallflower" may have its origins in the fact that such a stock is languishing on the fringes of the stock market.


Wallflowers often do not attract much coverage from research analysts, and this lack of institutional interest translates into below-average volumes and wide bid-ask spreads, which in turn can be a deterrent to retail investors.


A savage bear market can turn even best-performing stocks into wallflowers eventually, especially in cases where sector valuations have scaled absurd valuations in the preceding bull market. Examples of this phenomenon would be technology stocks after the dot-com implosion of the year 2000, and alternative energy stocks in the aftermath of the 2008-09 bear market.

RELATED TERMS
  1. Debt/Equity Ratio

    1. A debt ratio used to measure a company's financial leverage. ...
  2. Price-Earnings Ratio - P/E Ratio

    The Price-to-Earnings Ratio or P/E ratio is a ratio for valuing ...
  3. Correction

    A reverse movement, usually negative, of at least 10% in a stock, ...
  4. Fallen Angel

    1. A bond that was once investment grade but has since been reduced ...
  5. Bear Market

    A market condition in which the prices of securities are falling, ...
  6. Equity Market

    The market in which shares are issued and traded, either through ...
Related Articles
  1. Markets

    How To Use Price-To-Sales Ratios To Value Stocks

    Take a look at how this effective ratio can be influenced by certain critical factors.
  2. Investing Basics

    Getting To Know Stock Screeners

    Finding good stocks can be like finding a needle in a haystack. But these invaluable tools can help.
  3. Forex Education

    How To Use The P/E Ratio And PEG To Tell A Stock's Future

    While the price-to-earnings ratio is commonly used for assessing stock prices, the price/earnings-to-growth ratio offers forecasting advantages that investors need to know.
  4. Markets

    PEG Ratio Nails Down Value Stocks

    Learn how this simple calculation can help you determine a stock's earnings potential.
  5. Entrepreneurship

    Do "Widow And Orphan" Stocks Still Exist?

    Is there such a thing as a safe stock providing high dividend income? It may be time to redefine the terms "widows" and "orphans."
  6. Trading Strategies

    10 Tips For The Successful Long-Term Investor

    These guiding principles will help you avoid common folly during the decision-making process.
  7. Investing Basics

    What Happens in a Haircut?

    One meaning of haircut is the difference between prices at which a market maker can buy and sell a security.
  8. Investing Basics

    Understanding the Spot Market

    A spot market is a market where a commodity or security is bought or sold and then delivered immediately.
  9. Investing Basics

    Learn About the New York Stock Exchange

    The New York Stock Exchange (NYSE) is nicknamed the “Big Board,” and for good reason. It’s the largest, oldest and best-known stock exchange in the world.
  10. Investing

    What Rising Volatility Means for Momentum

    After remaining torpid for most of the year, equity market volatility is once again rising.
RELATED FAQS
  1. Why would a corporation issue convertible bonds?

    A convertible bond represents a hybrid security that has bond and equity features; this type of bond allows the conversion ... Read Full Answer >>
  2. What is the difference between shares outstanding and floating stock?

    Shares outstanding and floating stock are different measures of the shares of a particular stock. Shares outstanding is the ... Read Full Answer >>
  3. What is the difference between market risk premium and equity risk premium?

    The only meaningful difference between market-risk premium and equity-risk premium is scope. Both terms refer to the same ... Read Full Answer >>
  4. What is the difference between the QQQ ETF and other indexes?

    QQQ, previously QQQQ, is unlike indexes because it is an exchange-traded fund (ETF) that tracks the Nasdaq 100 Index. The ... Read Full Answer >>
  5. What is the difference between an investment and a retail bank?

    The activities and types of clients for an investment bank versus those for a retail bank highlight the primary difference ... Read Full Answer >>
  6. Will technology ever disrupt the role of the custodian bank?

    Custodian banks, along with other financial institutions that hold custodian accounts, are likely to be disrupted but not ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Recession

    A significant decline in activity across the economy, lasting longer than a few months. It is visible in industrial production, ...
  2. Bubble Theory

    A school of thought that believes that the prices of assets can temporarily rise far above their true values and that these ...
  3. Stock Market Crash

    A rapid and often unanticipated drop in stock prices. A stock market crash can be the result of major catastrophic events, ...
  4. Financial Crisis

    A situation in which the value of financial institutions or assets drops rapidly. A financial crisis is often associated ...
  5. Election Period

    The period of time during which an investor who owns an extendable or retractable bond must indicate to the issuer whether ...
  6. Shanghai Stock Exchange

    The largest stock exchange in mainland China, the Shanghai Stock Exchange is a nonprofit organization run by the China Securities ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!