If i bought shares in...?

Question

in a building company i think is called redrow, whos shares have dropped 80% this year. if i bought shares now and held on until the market boomed again and sold, would that be a smart thing to do or would i be throwing my money away (assuming they dont go bust)

Answer 1

What are the chances of them going bust?

How many years will it take the building sector to recover?

How many years will there be in the next boom?

How much money are they likely to make as profit in this next boom?

How much has there capital base been damaged?

Will they have enough or be able to raise enough capital to take advantage of this next boom?

Have they had to lay off good staff?

Will they be able to get these people back?

Answer 2

Well, it's always a great idea to buy a stock low and then sell high.  That's the whole point.  And if you found a company that struggled...but eventually could find its way back to the top...yeah, you'll make a killing.  Of course if they dropped 80% in a year, that's a very high risk with what seems like little reward.

Answer 3

Building and development companies have taken a massive hit with many laying off numerous staff and shelving alot of future developments.

Many are looking at selling of current assets to readdress the balance sheets so it would be worth doing some research on redrow to see what there situation currently is.

One things for sure though that on a whole things are only going to get worse in the immediate future for building companies and alot will go bust in a re-balancing of the market place.

Answer 4

All building firms shares have plummeted of late, so yeah they will go up when the market picks up, but that could be a while and with a recession imminent even the bigger firms could go bust so there's always an element of risk that's why we're all not millionaire stockbrokers!