A Study on the Price Behavior of the Highly Priced Stocks : Cases Studies for Taiwan
Date Issued
2015
Date
2015
Author(s)
Wu, Chia-Che
Abstract
The purpose of this paper is to examine the price behavior of the highly priced stocks in Taiwan during the bull market. The reason for using the highly priced stocks is because the it’s stock prices are more correlated with EPS than with NAV. We will use the highly priced stocks sample from the 2009-2013 bull market in Taiwan, and examine whether the stock’s rate of return significantly increased from previous year’s rate of return, once the net profit exceed the share capital for the first time. Furthermore, we will examine whether the stock’s rate of return accelerate after the stock price exceed a certain market capitalization threshold and discuss the possible reasons for this phenomenon. We found that during the bull market period from 2009-2013 in Taiwan stock market, most highly priced stocks have abnormal rate of return once it break the EPS threshold. And the market capitalization threshold is useful in determine the investment efficiency. This paper discussed the four representative stocks, and observed that the market capitalization threshold often form the support or resistance range for the stock. We could expect abnormal rate of return once the stock price break through the market capitalization threshold, and used fundamental analysis to gain additional insight of the price behavior of highly priced stocks in Taiwan.
Subjects
highly priced stocks
price behavior
stock’s rate of return
EPS
market capitalization
Type
thesis