What to do when the stock market goes on sale? A smart option would be to double up on some current positions. 🙂 A couple months ago I bought 50 shares of Avigilon Corp for $25 each. However due to the negative sentiments in the overall financial markets recently AVO’s share price is down. But there’s no need to be alarmed because the company makes high definition security cameras and software. Now is the perfect opportunity for me to turn a current paper loss into a capital gain in the future! I noticed over the last week AVO has bounced around the $13 to $14 range but has never fallen below $13, which to me signals a strong support and a good time to average down. So earlier today I deposited $1,500 of savings into my brokerage account and picked up 100 more shares of AVO.TO. 🙂
Here is what average down does. When I bought AVO in August the average cost I paid for each share was $25.64. However the stock was recently down about 40% from my purchase price. 🙁 So now I buy even more shares at a lower price. With the addition of 100 shares today I’ve essentially paid a total of $2,717 to own 150 shares. This drops my average purchase price down from $25.64 to just $18.11 per share. So now I only need the stock to rise back up above $18.11 (plus commission) to make a profit. Lowering the average cost bases (ACB) is a great way to lower risk as long as the company has a good chance to bounce back. Most analysts think the stock will be worth at least $25/share in one year from now. 🙂
AVO’s return on assets, return on equity, profit margin, and revenue growth are all at least twice as high as the industry average. Its forward P/E ratio is only 13 times, which is quite attractive for a company that’s growing its sales at over 50% a year. 🙂 Unlike some other tech companies AVO is actually profitable so investors don’t have to wait to realize additional company value. The risk is if the rest of the stock market continues to fall then AVO will likely be dragged down with it. We’ll just have to see what happens.
Random Useless Fact:
Pandas are the least racist animal because they’re white, and black, AND they’re Asian.