The Rose vs The Squirrel

At 18 Sep 2021, TOPGLOV was RM3.06, GENETEC was RM36.02.

At 25 Dec 2021, TOPGLOV was RM2.19, GENETEC was RM36.66.

3 months later, GENETEC wins hands down in stock returns. 

What can we learn from it:

1) Stocks that face a challenging future outlook usually are in a downtrend.

This is especially evident when TOPGLOV posted back-to-back worse than expected financial results.

In contrast, GENETEC posted consecutive financial results that showed vast improvement, an indicator that it could be a successful turnaround stock. 
 

2) Stocks which have smaller market capitalisation are comparatively easier to grow in market capitalisation.

Whether from 1 year stock return chart, or 10 year stock return chart, GENETEC wins. 

Why? Because it's easier for a 200 million market cap company to double, compared to a 20 billion market cap company. TOPGLOV was also once a tiny company with a small market cap & had had astounding growth in the past. 

3) Dividends are miniscule compared to absolute capital gains. 

Dividends are a good thing. It is a steady form of income from companies. 

However, capital gains triumphs high dividend returns if share price is unsustainable. 

4) Stocks that have great share price boom were previously unwanted by Mr. Market & suddenly caught Mr. Market's eyes.

Before the phenomenal spike in share price, no one knew or wanted to buy Genetec. The Genetec of 2022 will be some relatively unknown stock.

5) Stock price performance does not indicate quality of company. 

Apple Inc. stock rose 500% in 5 years while Genetec stock rose 4000% in 5 years. 

Is Genetec a higher quality company than Apple Inc.?

CONCLUSION:

This article is not to promote Genetec, but rather an analysis of both. It goes to show that at times, investing in current fundamentally strong companies may not generate positive returns to investors in a random time frame of 3 months. 

Once again, I reiterate that the Squirrel has climbed too high from the ground. When support of the tree branches break, the Squirrel will suffer a terrible fall. 

Disclaimer: This article is not tailored financial advice, but mere general stock sharing / observations. Please do further due diligence. The author disclaims all liabilities from readers. The author may have interest in some stocks listed above.