Case against hanging on to stocks

Many stocks listed are undervalued based on projected earnings but many offer attractive potential gains but the likely gains are inadequate to put them into the TOP 15. So attractive is the market that many below the TOP 15 have potential to gain in excess of 50 percent in 2019.
Not all growth companies will deliver the same level of returns, a feature of markets that investors need to bear in mind to optimize return on investment. Expansion of smaller companies can have a far more telling impact on profit that larger ones. For example, Grace Kennedy would need to acquire a large entity to make a big improvement to its profit than the typical Junior Market company that are vastly smaller but could acquire a business that will make a big impact on profits.
The 80/20 Rule in the market suggest that only around 2 out of the Top 10 stocks repeat in the subsequent year, this is the results from nearly 40 years of tracking the market. The data shows that around 40 percent of the worst performing stocks in a year are likely to enter the TOP 10 in the subsequent year. What the data suggest is that investors need to be careful in identifying top performing stocks and that top performers with above average growth are likely to come from the worst performers of the prior year.  The year 2018 was unusual with three stocks repeating their 2017 top 10 appearance from the Junior Market and four in the main market. The Junior Market had C2W renamed SSL Venture Capital repeating and in the main market 5 repeated including Pulse Investments and Palace Amusement.
Half of the Junior Market TOP 15 list have either acquired new businesses or actively expanded operation in the past year or plan expansion in the coming year and a boost in revenues and profit is expected. The average PE ratio for the Junior Market based on 2019 projected earnings is 12 but the market closed out 2018 at 16.5. This is an indication of how far the market may rise as well as the extent to which the top 15 stocks are undervalued.

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