Deciding to buy or sell a stock is often a challenging task even to professional traders, investors, and brokers. There are many things one should consider. Sometimes, you have to make such decisions in a snap. Here are some tips that will help you make good decisions—whether to buy or sell or totally ignore the stock.
Perhaps the simplest way to gauge whether you need to buy or sell a stock is to see whether the sales are growing or not.
If you see that the company’s sales are growing, the next step is to check whether that growth is sustainable. It will be helpful to skim through the entire sales report.
Afterwards, compare the company’s current sales to its sales in the previous month, quarter, or year. See whether it’s showing an upward trend. If so, that’s a good sign you need to buy the stock.
Companies’ margins usually improve or falter depending on the businesses’ management. For example, you got to think twice if you see that the sales are growing fast but pale in comparison to the growth in costs.
It doesn’t automatically mean that it’s a red flag. It’s possible that the company is investing heavily in something that will pay off in the future.
Meanwhile, it’s also equally possible that something’s going on in the company. In other words, it may mean that the company cannot manage its expenses wisely.
Many companies usually offer a form of guidance or forecast with regards to future earnings. It’s always important to look into these statements, which usually send the stock up or down, depending on how the market absorbed such guidance.
There are times when the company’s forward guidance is much better than what analysts are expecting. The opposite can also be true.
The trick or rule here is to keep your focus on the long term. In most cases, the market is willing to downplay or downright ignore short-term declines if it’s convinced that an improvement is imminent for the longer term.
Whenever a company decides to buy its stocks back, it often means that the management perceives the stock as undervalued.
However, it’s also possible that the management has other reasons. One of those reasons may be that the company wants to reduce the number of the share count in public.
They do that to boost some financial figures or ratios. They may also want to boost earning. When they do this, they also make the stock more appealing to analysts and investors.
In other words, it could simply be a marketing ploy.
New Product Releases
Let’s face it. It’s impossible to predict accurately whether a product will flop or win. However, it’s often a big mistake to ignore the stocks of the companies that make or provide these products.
New products usually gain the attention of consumers and investors. This usually helps move the share price higher in the near term.
But of course, new products don’t automatically equate to better profits.