Low price is not a MUST to go LONG for stocksYes, there is still an ongoing trend with the bubble trend in many countries and Baichadao is one new entrant. However, the financial figures indicate that it could be losing market shares from competitors like Starbucks China (global brand and also suffering weakening revenues as consumers tend to spend more).
This consolidation stage can last from weeks to months or years as we have seen in many stocks so do not fall for the trap that low prices means you are scooping in for a bargain. Do your own due diligence.
Is there an economic moat ? In the same mall, if someone is not buying Starbucks but choose to go for Baichadao , then the overall beverage industry is not expanding but merely passing from one brand to another.
Is the reveneue steadily increasing for the last 5 years? It is a new company so it has a lot to prove itself.....
