It is a difficult task to pick out individual stocks to invest in. If you are investing as a hobby then you may not have access to the information that a professional trader would have. Professional investors also have access to computer programs that read data about the market and give suggestions for investment based on algorithms that monitor past performance.
Earnings momentum is one of the main things that should be considered when you are looking for a company to invest in. If a company has shown strong growth in the last twelve months, then there is a good chance that this trend will continue. Although shares in these types of companies may be quite expensive to buy because they will be in demand, you will see a return on these shares if prices continue to increase.
How To Find Good Stocks?
There is much more to choosing stocks than simply looking at the price. You will also need to do some research into the company itself. Ideally, you want to be looking for companies that are not only doing well financially but also have a low amount of debt. You should also make use of a stock screener, this will help you find shares that are interesting really quickly. Using filters to eliminate companies from your watch list that do not fit your investing criteria. One of the best technical stock screener’s you can try is here, which allows you to monitor 52 week highs, lows and various other technical analysis studies on a huge list of companies.
Short interest ratio is another factor that should be looked at. If traders believe that a company is in trouble and the stock price may fall, they may sell their stocks short in order to try and minimize their losses. If there is a large ratio of stocks that are being sold short, then this may be an indication that this is something that you should avoid.
There are never any guarantees when you are investing in the stock market, but following these tips should give you the best chance of making a profit.