How to Spot a Bad Stock Before it Drops If you’re like me, you’re probably still stuffed from all of the turkey and sides from Thanksgiving dinner on Thursday. So, in today’s Market 360, I want to take it easy, so to speak and talk about how I find the very best stocks in the market. I’ll share how my system has led me to take profits in a stock before it goes down. And most importantly, I want to tell you about a few overrated stocks that you should sell right away. But first, I want to talk about the recent market action. I’ve been encouraged to see some positive action this past month, with the S&P 500, NASDAQ and the Dowhitting new record highs. This is due to the fact that the uncertainties that were hanging over the market earlier this year have largely been lifted. We are also entering the seasonally strong time of the year, the holiday season, where the cheery mood spreads through Wall Street. But I don’t want you to sit back and get comfortable just yet. With earnings season now behind us, I want to remind you of what you will see happen every quarterly announcement season. The stocks that are the crème de la crème – that is, stocks with superior fundamentals – often beat their estimates for sales and earnings. As such, they get rewarded with strong institutional buying pressure. Meanwhile, the weaker companies – that is, stocks with poor fundamentals – rarely surprise Wall Street. And because of this, they can drop like rocks when they announce results. Now, I’ve been in the market for more than four decades. And during that time, I’ve learned “what works” on Wall Street and what doesn’t. While I don’t claim to have a crystal ball, I believe my Stock Grader tool (subscription required) is the closest thing to it. You see, I purposefully designed this tool to help me distinguish between the two – fundamentally superior stocks and fundamentally weak stocks… before the rest of the market catches on. How Stock Grader Helps Avoid Disaster In a previous Market 360, I wrote in detail about how my Stock Grader tool works – including the eight fundamental criteria that make up a stock’s fundamental “grade.” (You can read that here for a refresher.) But essentially, what I’m looking for are strong fundamentals like good margins, strong sales growth, earnings growth and optimism from analysts. That’s the bedrock of the stocks we select in my Growth Investor service. The other element that Stock Grader helps us find is stocks with persistent institutional buying pressure. This is where my Quantitative Grade comes in. If a stock has a Quantitative Grade of “A,” that tells me that there are institutional investors (money management firms, banks, etc.) who are VERY interested in this stock. This is what Wall Street likes to call the “smart money.” These firms have billions at their disposal to invest. So, when they begin buying, they tend to buy a LOT. As this buying pressure increases, so does the price of the stock. And in turn, you’ll see profits! These things might sound like common sense, but far too many investors neglect them. And I find that’s often the case with growth stocks that are receiving more hype than they really deserve. Sure, we all want growth. But oftentimes, eye-popping revenues can hide a lot of evils and result in much more hype than is really warranted. This sends people stampeding into exactly the wrong names. Luckily, we can also use Stock Grader to help us avoid these stocks. And even better, if we do own them, it can help us sell these stocks before it’s too late. Because the truth of the matter is this... Even if a company looked great before, sometimes disaster can be lurking under the surface. That was the situation with Enron in the early 2000s… How My System Detected the Biggest Financial Fraud of All Time Before Enron became one of the most infamous stocks ever, it was a great growth play. Enron was once America’s seventh-biggest company, but also named “America’s most innovative company” in Fortune magazine (six years in a row). And at one point, it was a big, flashing, A-rated buy in my system. After I recommended the stock, it gained 36%. Then, Enron’s rating started to weaken. This was well before Newsweek declared “Lights out for Enron,” in December 2001. The corruption going on at Enron was yet to be discovered – but according to my system, the fundamentals certainly didn’t justify the hype. So, we took our profits. And it turned out to be one of the best moves of my career! Other investors, sadly, got wiped out. Enron’s employees lost their retirement savings. But we avoided the massacre that ensued a few months later. 
Now, Enron is a pretty extreme example. So let me be clear: It does not take a massive financial fraud to wipe millions of dollars in value from the stock market. When a stock gets into a bubble, even a much smaller prick will do the trick. With that in mind, let’s look at some growth stocks that my system is flagging to sell or avoid. Each one of these stocks has a Total Grade of either “D” (Sell) or “F” (Strong Sell). | ABNB | Airbnb, Inc. | D | | GT | The Goodyear Tire & Rubber Company | D | | DLTR | Dollar Tree, Inc. | F | | ME | 23andMe Holding Co. | F | | TM | Toyota Motor Corporation | F | Again, let me stress that I am not suggesting there is anything untoward going on at these companies. But according to Stock Grader, they are simply not worth your money at this time. As such, I am suggesting that you look elsewhere for great buys right now. Where You Should Look Next By combining a stock’s Fundamental Grade with its Quantitative Grade, we can make sure that we’re avoiding holding ticking time bombs in our portfolio. Ultimately, spotting the right investment is simple with Stock Grader. You buy when the company achieves a Total Grade of “A” (Strong Buy) or “B” (Buy)… and sell when it disappears. This is how we’ve landed winners like 3,000% on NVIDIA Corporation (NVDA), which we still have in our Growth Investor Buy List right now. The fact is that if you are looking for fundamentally superior stocks, you should look no further than my Growth Investor service. Currently, my Growth Investor stocks are characterized by the strongest sales and earnings growth: 23.7% average annual sales growth and a whopping 506.3% average annual earnings growth. So, these stocks remain “locked and loaded” for a strong yearend rally – and for the ongoing bull market in 2025. Click here now to learn more about my Growth Investor service, and how my Stock Grader system can steer you to profits. Sincerely, | .png)
.png)
Tidak ada komentar:
Posting Komentar