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Value trap
A share that looks cheap but keeps falling for a good reason.
A value trap is an apparent bargain: the price has fallen sharply and measures such as the P/E ratio or dividend yield look attractive. But the decline has a lasting cause, such as a shrinking business, growing debt or an outdated product. The price therefore does not recover but keeps falling.
Typical warning signs: the share has been doing worse than its sector for months, the lows keep getting lower, revenue or profit is shrinking. DipCatcher's traffic light checks for such signs. How often earlier dips recovered, by traffic-light colour, is shown on the method page.