| Coensio score (1..10) |
Company | Ticker | Buy/Sell/Hold | Reason |
|---|---|---|---|---|
| 9 | Amazon | AMZN | Strong Buy | See TipRanks |
| 10 | Nvidia | NVDA | Moderate Buy | See TipRanks |
| 9 | Microsoft Corp | MSFT | Strong Buy | See TipRanks |
| 8 | Micron | MU | Strong Buy | See TipRanks |
| 7 | Advanced Micro Devices | AMD | Moderate Buy | See TipRanks |
| 9 | GOOG | Strong Buy | See TipRanks | |
| 8 | FB | Strong Buy | See TipRanks | |
| 8 | Bank Of America | BAC | Moderate Buy | See TipRanks |
On this blog I will share with you every single step I take while selecting only the good stocks to buy. Note that ‘buy’ is the main keyword here since this strategy covers only the good stocks that are worth buying and the companies that are worth investing in.
To find the best performing stocks right now, you need to learn the following:
1. Why it is ‘always’ better to buy stocks
It is very simple. There are three main reasons why it is better to be bullish about stock market then to look for selling opportunities (and go ‘short’):
- Looking at the past performance of stock indices like S&P500, Nasdaq or Dow Jones, you can easily see that when looking at the long term period the stock prices are ‘continuously’ rising. The current bull market conditions is 8years old (anno. 2017). Of course this is true for periods ‘out side’ big depressions and markets crashes, which also happen periodically.
- The second reason is that the technology and world wide economy are growing in an accelerating way. And it is much more ‘comfortable’ to think that the best companies like: Google, Amazon or Microsoft will continue to grow in the long term.
- You can enjoy yearly dividend payouts! The majority of the best performing stocks pay out a nice yearly dividend up to 4%!
2. The sources of reliable information
While looking for the best stocks, you can get lost in the amount of the provided information. There are so many websites, paid portals, blogs, smartphone apps..it is hard to say which source is worth to follow and which is pure garbage. So let’s say that I have already been in this situation and I’ve already prepared a list of best places you can go to learn about the best stocks to buy. So below is my top 3:
https://investorplace.com/category/stock-picks/stocks-to-buy/
https://seekingalpha.com/stock-ideas/editors-picks
Those three websites will give you access to the best quality stock market investing ideas and the best stock picks you can get for free. Those investing recommendations are provided by the professional hedge funds managers, Wall Street analysts and also financial bloggers. Now the ‘only’ thing you need to do is to select few high quality companies to invest in;) Reading all those articles will give you a good idea about what are the best performing companies and what stocks you should avoid buying.
So the biggest problem is that most people will get lost in the huge amount of the provided information. Since it is impossible and very unwise to follow every single stock recommendation, we need to do our own post-analysis and see what stocks are really worth buying. See next point.
3. How to do your own stock market analysis
You really do not need to have a master degree in economics to be able to tell if a given company is worth investing your money or not. There are only few key parameters (or indicator) that you need to look for while selecting best stocks to buy. Those are:
- The overall fundamental picture of market mood and future opportunities
- P/E ratio
- Pervious earnings (previous performance) and earnings estimations
- Stock price trends and sentiments (on chart technical analysis)
The overall fundamental picture of market mood and future opportunities:
All experienced traders say: “in order to be successful in trading you need to become one with the market”. This basically means that you need to be fully ‘synchronized’ with the market events and market moods = you need to be 100% up to date. Note that there are two things you need to master in your trading: Fundamental Analysis and Market Sentiments (based on technical analysis). Those two, are the most powerful tools you can use while forecasting the next market movement. You need to learn how to do your own analysis or know where to go to find this information. Lucky for us, there are many places on the net that are providing a full day by day market coverage, my favorite two are:
https://www.bloomberg.com/
https://money.cnn.com/
P/E ratio:
Price to Earnings (per share) ratio is the most basic measure that can tell you if a given stock is cheap or expensive at a given price.
P/E= Market Value per Share / Earnings per Share
There are many places, books and online video’s that are explaining this concept (click here). If you want to know how to select best stocks to buy you need to learn about the basic concept behind P/E figure and how it can affect buying decision. The ‘rule of thumb’ says that a stock with a lower value of P/E is considered ‘cheaper’ than one with a high P/E figure. Just google it if you want to learn more.
Previous earnings and earnings estimations:
Earnings estimations for a given company can be also a very powerful tool you can use to predict the next stock price movement. Previous earnings can tell you if a given company is doing OK or not so well. My personal recommendation is to always invest your money into companies that show a stable grow in quarterly earnings and gross profit. You can go to yahoo finance website to see the previous earning numbers and also estimated figures. Below an example of Amazon stock:
The second way to tell given stock is worth buying, is to look on earnings estimation numbers:
When estimated number is much lower than actual or previous number, there is a chance the stock price will drop during or even few weeks before the earnings date (the date when companies release their earnings numbers). The rule of thumb tells us: “buy the rumor, sell the news”. In practice it means that if you expect good earnings numbers of given company you should buy the stock far before the official earnings date.
Stock price trends and sentiments:
There is one important thing you should know when trading stocks, forex or commodities: fundamental analysis (predictions done by professional market analysts) does not work 100% of time, it works only when market is in a trend. There are many, many reasons for that, but the most important one is that the price movement forecast is always lagging behind the market sentiment. Quote from Seeking Alpha article:
So in order to become successful trader you need to learn how to recognize when fundamental analysis aligns with a market trend or sentiment. The good start would be to master the basics of ‘Elliot wave‘ theory.
4. How to find great stocks just in 5 minutes each day
This is a professional portal (a search engine like google) which evaluates public stock recommendations made by professional financial analysts and bloggers. The search results are ranked by experts based on their accuracy and performance from their past predictions. Below a simple example of how a typical TipRanks search result looks like:
For each single stock you a considering to buy this great tool can tell you the following:
- The current ‘buy/sell or hold’ recommendation of the best market analysts
- The mid/long term price range prediction
- The insider buy/sell actions (extremely strong buy or sell signals)
- Financial bloggers recommendations
- The current recommendation of all experts who have already successfully predicted price movement in the past for a given stock
- Currently trending stocks
- Many many more….
