Whether you are a stock trader or simply an investor, you would always want your stocks to rise fast and give you great returns. Every rise in the stock price is cheered and conversely, every fall can lead to frustration, stress or anxiety. Many people love to believe that the sudden rise or fall in stock prices is insane. However, the truth is that with proper analysis and practice, an individual can judge stock movement in a much better way.
Factors Influencing Stock Prices
Earnings of companies play a very important role in deciding the rise or fall in stock prices. Good earnings are generally followed by an upward rally, while bad earnings can lead to downgrading of a stock and reduced target prices. What matters the most is the net profit of the firm, instead of the gross profit. Earnings determine the performance of a company and are compared with its peers to determine its efficiency.
Domestic Investor Interest
Fast-moving stocks generally have a huge domestic investor interest. Stock prices can rise only when good volumes of stocks are traded on a particular counter everyday. One thing to remember is that investor interest can rise only when the earnings meet market expectations and people are assured of the future prospects of that company.
Foreign Investor Interest
Foreign investors, in this age of globalization, play a very important role in the growth of companies. Significant amount of foreign investments in select companies can increase positive sentiment which would fuel buying activity on a large-scale.
Cheap valuations in certain stocks can lead to systematic and deliberate value buying by large institutional investors, mutual funds and wealthy stock traders. Stocks are bought at dirt cheap prices by these agencies and people, to rake in maximum benefits on an up move. So, if you can understand investor sentiment, then earning good profits in stocks would not be a difficult task.
A company announcing rapid expansion plans can indicate an upward trend in its stock prices. Business expansion and increased revenue can lead to re-rating of a company which will automatically increase its market capitalization. So, as an investor, you should keep an eye on a company's announcements regarding future acquisitions, mergers and expansions.
Overall Market Sentiment
Overall market sentiment needs to be extremely positive for stocks to rise fast. A stock cannot outperform the market consistently, if global as well as domestic cues are negative, and there are concerns about economic growth. The macro economic picture needs to be inspiring and positive for appreciation in stock prices.
Fast-moving Stocks for 2012
- Salesforce.com Inc.
- Sears Holding Corp.
- J.C.Penney Co. Inc.
- Newmont Mining Corp.
- Interpublic Group of Cos.
- Pepco Holdings Inc.
- Washington Post Co.
- Endo Pharmaceuticals Holdings Inc.
- SAP AG
- Exelon Corporation
- New Gold, Inc.
- Google Inc.
- Baidu, Inc.
- TJZ Companies
- Yum! Brands
The following are the points to consider before buying fast-moving stocks:
- Avoid investment at higher levels even though business prospects are good. This is because valuations at this point are expensive
- Buy in parts, to reduce your average buying cost
- Have stop losses close to your buying price; mostly at critical support points
- Consider fundamentals also, apart from technical analysis, to pick the right stocks
You can always consult a stock market specialist to get some useful tips regarding best stocks to invest in. Though there are many fast-moving penny stocks, and the temptation to trade in them is fairly overwhelming, a detailed study and analysis of the company will enable you to take an informed decision about trading in them.
DISCLAIMER: This article is just for reference purposes and does not recommend any stock market transactions.