Bouvet (OB:BOUVET) shareholders are no doubt pleased to see that the share price has had a great month, posting a 33% gain, recovering from prior weakness. That brought the twelve month gain to a very sharp 54%.
All else being equal, a sharp share price increase should make a stock less attractive to potential investors. While the market sentiment towards a stock is very changeable, in the long run, the share price will tend to move in the same direction as earnings per share. The implication here is that deep value investors might steer clear when expectations of a company are too high. Perhaps the simplest way to get a read on investors’ expectations of a business is to look at its Price to Earnings Ratio