Big Money Stocks: A How To Plan To Make Big Money!
How do successful investors figure out which stocks are set to make big moves in the market? You don't have to be a money wizard to learn how to recognize the next big money stocks. You just need to know the relevant financial variables that indicate a potential winner.
The first piece of advice for investors is to pay close attention to institutions. There are many institutional investors that manage the funds of states, cities, pension funds, hospitals, and corporations; like any individual investor, they seek maximum return and minimum risk in their stock investments. They can buy millions or even billions of dollars in stock very quickly, which will result in major moves in big money stocks. That means that if an institutional investor is attracted to a company, it will soon see its price run up.
Reputable companies with solid balance sheets are typically behind the hot stocks. Investors are urged to investigate several financial aspects of big money stocks, including strong sales growth. Sales growth is essential for winning stocks because Wall Street significantly favors strong sales growth. Therefore, even if analysts are dissatisfied with a company's earnings, the stock is highly likely to stay in good standing with them if the company's sales growth figures are strong.
Forecasted earnings growth is another very important factor for choosing tomorrow's winners, and there are currently spectacular growth-to-price/earnings ratios in stocks that will attract more buying pressure from institutional investors. Earnings momentum is also important for all big money stocks, especially since earnings momentum is decelerating for the overall stock market. Those stocks that are able to sustain strong earnings momentum will benefit from relentless institutional buying pressure. Stocks poised for big moves show no sign that the profits will slow down.
A stock's growth-to-price/earnings ratio is becoming increasingly important for selecting successful stocks. This is because commodity and energy stocks have had the strongest earnings growth yet still have some of the lowest P/E ratios on Wall Street. Because of China's economic boom, a lot of the world's commodities, such as coal, copper, oil and steel are in high demand.
Earnings surprises are also important for selecting hot stocks in the small- to mid-cap growth sector because, when stocks exceed analysts' expectations, it creates additional buying pressure. While all of these items are important for finding big money stocks, there are other important fundamental factors when selecting stocks, such as improving cash flow (which often results in dividend increases), return on equity and profit margin expansion.
Hot stocks are also typically supported by reputable companies with solid balance sheets. Strong sales growth is absolutely crucial for stocks that will win, as Wall Street has a significant bias toward strong sales growth. Stocks with extremely high growth-to-PE ratios are the most likely to make big moves in the near future. For any big money stocks, it is important to research earnings momentum, even more so when earnings growth overall is declining. That makes it even more likely that stocks in companies with rapid earnings growth will move up strongly. The growth-to-price/earnings ratio of any given stock is becoming more important in the selection of winning stocks.
Published September 3rd, 2007