Wallflower

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.

Investopedia explains '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.


Filed Under:

comments powered by Disqus
Hot Definitions
  1. XW

    A symbol used to signify that a security is trading ex-warrant. XW is one of many alphabetic qualifiers that act as a shorthand to tell investors key information about a specific security in a stock quote. These qualifiers should not be confused with ticker symbols, some of which, like qualifiers, are just one or two letters.
  2. Quanto Swap

    A swap with varying combinations of interest rate, currency and equity swap features, where payments are based on the movement of two different countries' interest rates. This is also referred to as a differential or "diff" swap.
  3. Genuine Progress Indicator - GPI

    A metric used to measure the economic growth of a country. It is often considered as a replacement to the more well known gross domestic product (GDP) economic indicator. The GPI indicator takes everything the GDP uses into account, but also adds other figures that represent the cost of the negative effects related to economic activity (such as the cost of crime, cost of ozone depletion and cost of resource depletion, among others).
  4. Accelerated Share Repurchase - ASR

    A specific method by which corporations can repurchase outstanding shares of their stock. The accelerated share repurchase (ASR) is usually accomplished by the corporation purchasing shares of its stock from an investment bank. The investment bank borrows the shares from clients or share lenders and sells them to the company.
  5. Microeconomic Pricing Model

    A model of the way prices are set within a market for a given good. According to this model, prices are set based on the balance of supply and demand in the market. In general, profit incentives are said to resemble an "invisible hand" that guides competing participants to an equilibrium price. The demand curve in this model is determined by consumers attempting to maximize their utility, given their budget.
  6. Centralized Market

    A financial market structure that consists of having all orders routed to one central exchange with no other competing market. The quoted prices of the various securities listed on the exchange represent the only price that is available to investors seeking to buy or sell the specific asset.
Trading Center