In the stock market only a few stocks make up the majority of long term stock market gains. You can get a lot of alpha by being in the right names during their up trends.
Here are the 10 things to look for to find the stocks that can grow dramatically in price over long periods of time:
- Growing sales is a must for almost every business. Growing sales shows the business is getting the votes of customers and taking sales from other businesses.
- Growing profits traditionally was a great reason to inspire investors to bid up a stock price. However concept stocks can go up for other reasons.
- Expectations of great market share, earnings, or sales in the future can cause the market to price in future possibilities into current stock prices.
- A company with a new edge in technology, business model, cutting operating expenses, new product, or new service can drive a stock price higher on speculation.
- Hope for an acquisition can drive a stock price up if investors think that their stock is a target to be acquired by a big company.
- A sector leader is a stock you want to buy, the stock that is dominating an industry.
- A monopoly stock that is so successful that it is possible that it could be broken up due to antitrust laws as it can almost control prices in an industry due to the lack of competition.
- Your stock needs to have a great visionary and leader as the CEO not a caretaking of the status quo.
- Your company has to be innovating and improving to keep up with competitors and the competition. A stagnant company leads to a declining stock.
- You want to see the company have a high barrier against new competitors coming into the market and competing easily with them.
You can only hold any stocks if the market itself is in an up trend. Moving averages are your guide for price trends not fundamentals. Bear markets and crashes wreck all stocks in the short term. They can set up better buy points for the future.