Falling knife stocks are from the volatile market structure where whipsaw is not much distant and there is a rebound in the majority of these stocks. This is necessary for the investors to evaluate the possibility of such stocks for earning a profit. Due to pandemic, the majority of the investors have developed an interest in holding on to falling knife stock but they are required to remain cautious while investing in such stocks. As per the report of J.P. Morgan, around 40% of the stocks have been experiencing a huge decline which is appearing to be difficult to recover. At the time of making the investment in falling knives, one should analyze the financial health of the company, closely monitor if the declining trend is a setback which is temporary, and will later on rebound and then start offering gains.
Insider Monkey has shared an example of these falling knife stocks as given below:
“For instance, in December 2013, Luluemon (LULU) shares dropped nearly 20% overnight after investors received bad news from the company. In June 2014, after more bad news, the company’s stocks fell 15%. After a few months in a relatively tight trading range, LULU regained consistency. Investors who caught the falling knife in June 2014 had a 75% gain by March 2015. Today, LULU is one of the 12 Best Fitness Stocks to Buy Now and as of January 14, 2020, the stock price is at $353.”
This article will share the list of the 10 best Undervalued stocks in 2021 in light of the stock reviewed by Insider Monkey in their post. Let’s start with our top pick from the list i.e Emcor Group Inc. This is a construction and engineering firm. In the Q3 of the year 2020, EME has reported $135.49 million of operating income, $270 million as cash flow, and $2.2 billion as total revenues. The next company is Fifth Third Bancorp. The company has reported plans recently for closing its 37 branches during the Q1 of 2021. The plans of the bank are to minimize further costs of $100 to $150 million by the end of 2022. In the Q3 of 2020, the reported net income of FITB was $562 million which increase every year by 6%. The list does not end here, you can read more about these falling knife stocks at 15 Best Undervalued Stocks to Buy Now.