Many investors believe that a falling stock and a low PE ratio are signs of a bargain, but in many cases, this is a warning sign.
Often, falling stocks having low PE are in trouble, and investing in them can be risky. It's important to look at the underlying reasons for the fall.
You don't make profits from the fundamentals of the company or Low PE. You Make Profits From #Stocks when prices move up
Financial Statement and PE show historical data while the market is a forward-looking mechanism
Example 1: Tesla’s Stock Price Witness highest return when its PE Ratio was unreasonably high
Example 2: Meta’s Stock Fell 50% from September 2021 to March 2022 While its earnings were flat:
The forces of demand-supply move the price which is driven by investors' perception of the company’s future performance.
Don't enter into a stock only based on strong historical fundamentals or a low PE Ratio. Rather Focus more on Future Earning Growth outlook.
Fundamentals and future outlook must be confirmed by upward price action, meaning that the stock prices must be moving up in order for it to be a good investment opportunity.
Generally, buying a stock trading below 200 days moving average is a bad idea. Focus on Stocks that showing strength in Price Action