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. Sector

    A sector is an area of the economy in which businesses share ...
  2. Sector Fund

    A sector fund is a fund that invests solely in businesses that ...
  3. Average Daily Trading Volume - ...

    The average amount of individual securities traded in a day or ...
  4. Down Volume

    A stock volume that closes at a price lower than the previous ...
  5. Dollar Volume Liquidity

    The price of a stock or ETF multiplied by its daily trading volume ...
  6. Volume Of Trade

    The total quantity of futures contracts bought and sold during ...
Related Articles
  1. Insights

    How to Get Your Idea Featured on Shark Tank

    The opportunity to present a business idea to the cast on Shark Tank hinges on some good fortune, a marketable product and a well-organized plan.
  2. Financial Advisor

    Top-down analysis: Finding the right Stocks and sectors

    The top-down investment strategy depends on economy and market strength. Find out what you should know before jumping in.
  3. Trading

    Interpreting Volume for the Futures Market

    Learn how to read the volume reports, look at the relation to liquidity and interpret volume.
  4. Investing

    What Is The Value In Value Investing?

    Value investing has its advantages, but it also has significant drawbacks. We look at the pros and cons.
  5. Trading

    Essential Strategies For Trading Volume

    Looking to trade using volume? Have a look at these essential tips.
  6. Investing

    An Introduction to Sector Mutual Funds

    Investing among several different sectors in the economy is a way to diversify your portfolio.
  7. Investing

    Prospering In The Next Bear Market: Here's How

    Prepare to survive, and even prosper, in the impending bear market, by considering and putting into action the following four strategies.
  8. Trading

    Confirming Price Movements With Volume Oscillators

    Use this indicator to validate a change in price direction and moving averages.
  9. Trading

    What's In Store For These Stocks With Unusually High Volume?

    For these four stocks with recent usually high volume, the overall technical picture will be used to help gauge in which direction the next tradable moves will be.
  10. Trading

    How to Use Volume to Improve Your Trading

    Volume is a simple yet powerful way for traders and investors to increase profits and minimize risks.
RELATED FAQS
  1. What number of shares determines adequate liquidity for a stock?

    Learn how the liquidity of a company's shares is generally affected by bid-ask spread and trading volume of shares bought ... Read Answer >>
  2. What happens to the intangible assets of a company when it is bought or sold?

    Discover the best-performing stock market sectors over the past five years and learn which sectors continue to offer high ... Read Answer >>
  3. What are the determinants of a stock's bid-ask spread?

    Stock exchanges are set up to assist brokers and other specialists in coordinating bid and ask prices. The bid price is the ... Read Answer >>
Hot Definitions
  1. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  2. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  3. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  4. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
  5. Price Elasticity of Demand

    Price elasticity of demand is a measure of the change in the quantity demanded or purchased of a product in relation to its ...
  6. Sharpe Ratio

    The Sharpe ratio is the average return earned in excess of the risk-free rate per unit of volatility or total risk.
Trading Center