The garbage stock index refers to the stocks of companies with poor performance, corresponding to high performing stocks. These types of companies, either due to poor industry prospects or poor management, have even entered the ranks of losses. The performance of its stock in the market is sluggish, with a decline in stock price, inactive trading, and poor year-end dividends. 56. The official name of A-shares is RMB common stock. It is a common stock issued by a domestic company for domestic institutions, organizations, or individuals (excluding investors from Taiwan, Hong Kong, and Macau) to subscribe and trade in RMB.
Garbage stocks generally refer to stocks rated as non investment grade (BB or below). Garbage stocks not only refer to stocks issued by companies with operational problems, but also some newly listed high-tech companies or companies with excessive financial leverage may be rated as BB or below. Many commercial bank stocks in China are rated as garbage stocks by S&P. Due to the high risk of investing in junk stocks, the risk return rate (return) is also high. In the late 1980s, there was a boom in junk stock investment in the United States. Garbage stocks are not garbage!
As the name suggests, junk stocks refer to individual stocks with poor performance and many problems. Generally, stocks with earnings per share below 0.10 yuan can be referred to as junk stocks. Listed companies have the convenience of direct financing in the market, as well as various preferential policies, and their business performance should be quite ideal. However, due to changes in the management leadership, market environment, and mechanisms of listed companies, their performance has deteriorated year by year. Some listed companies go public for the purpose of "making money" in the securities market rather than providing returns to shareholders. After going public, they have neither achieved corporate restructuring, established modern corporate systems, nor effectively developed and strengthened their strength by utilizing the funds allocated from the market. Enterprises are still following the "old path" and cannot withstand the test of the market economy, resulting in a decline in performance. With the increase of listed companies, the number of junk stocks entering the market is also on the rise.
The existence of junk stocks does not mean that these stocks have no value. According to the principle of waste utilization in people's daily lives, junk stocks also have certain investment value. Especially in the current situation where companies are subject to certain constraints when going public, listed companies still have at least the value of "shell resources". In the actual stock market, the stock prices of some junk stocks far exceed those of high performing stocks, especially during the 1998 market frenzy of asset restructuring of individual stocks, where the saying 'the poorer, the more glorious' was once popular. On the other hand, some of the "dark horses" in the stock market are generated from junk stocks, such as "Kelihua", "ST Tongji", and "Guojia Industrial". The first 100 yuan stock in the Chinese stock market, "Yi'an Technology", also evolved from the previous junk stock "Shenjinxing". Therefore, speculation on junk stocks is still worth considering.
At present, domestic junk stocks can be divided into three parts: one part is ST stocks, which refers to stocks that have suffered losses for two consecutive years or have a net asset value below 1 yuan. Part of PT stocks refer to stocks that have suffered losses for three consecutive years. Another part refers to stocks with performance below 0.10 yuan, excluding the first two categories.
Guideline 1
The key to speculating on junk stocks is to see if they have the possibility of being "asset restructured". Generally speaking, the reason why a listed company's stock falls into junk stock is closely related to the existing situation of the enterprise. Therefore, relying on its own strength often makes it difficult to change the situation of its junk stocks, and most of them need to rely on external forces for restructuring to be possible. However, it is not said that "one group is enough", and "stories of failed restructuring" are also frequently reported in the stock market. However, no matter what, as long as the stock has the possibility of restructuring, its stock price will play a "ugly duckling turning into a white swan" story in the secondary market. Therefore, attention should be paid to the fundamental situation of junk stocks, especially those with dispersed equity or concentrated equity in individual stocks where the main business of the major shareholder is not obvious. These junk stocks are most likely to undergo asset restructuring, and if the restructuring party comes from a private high-tech enterprise, the effect is the best. At present, several domestic junk stocks are most prone to creating myths after being restructured by private enterprises, while individual stocks that have undergone government initiated restructuring often perform poorly. Therefore, the key to speculating on junk stocks is to see if they have the possibility of being restructured.
Guideline 2
To speculate on junk stocks, it is necessary to carefully study the reasons why the stock has become a junk stock. Some junk stocks should be avoided:
Some listed companies have experienced a decline in performance due to a lack of clear identification of their main business
2. Poor management of some listed companies leads to poor performance
3. Some listed companies have poor market share due to outdated brands, resulting in poor performance
4. Some companies are burdened with huge debts that hinder the improvement of their business situation, especially some listed companies, which have heavy debts, often exceeding one billion yuan, or are embroiled in lawsuits
Even if some people are willing to restructure the above-mentioned types of junk stocks, they often hesitate in the face of such a situation. Such companies often have limited opportunities for performance and should be avoided as much as possible. Only after the company undergoes a major surgery can attention be paid.
