This question keeps popping up on my web analytics results, so now I am asking my readers:
What Factors Do You Consider The Most When Researching Potential Stock Buys?
Some factors to consider:
- Attractive Valuations
- Positive or Negative Media News
- Close Relationship to the Company
- Speculative Buys
- Positive Technical Indicators
For me, I think valuations and a strong track record are the two most important aspects of a stock. Feel free to agree with me, or completely disregard my stock picking theories.
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Valuation is really the only thing I consider. Since I’m investing primarily in biotechs, I look for companies that have potential products (not FDA approved yet) that are being undervalued by other investors.
I read your posts on SNTA. Thanks for the in depth analysis from the bottom up. Is Synta’s lack of profitability due to a currently dry pipeline?
Valuation is really critical. If you can spot hidden gems, you will make excessive profits. But its easier said than done. I actually look for bargains (when the stock is red), but cross-check any red flags like insider trading and bad news/scandals.
Strong track record isnt much helpful. Buying a stock based on its past performance is not going to work most of the times.
The best thing to do is monitor a stock for a while and understand investor sentiments. How do investors/traders react to good news/bad news.
a strong track record is important if you plan to hold a stock for the long term. Take a stock like IBM. They have been paying dividends on IBM shares since 1913. And except for a few short term declines, the dividend payment has steadily gone up over the years.
Widowers live off of these old blue-chip stocks because they know the dividend will be paid every quarter. Even though history cannot predict the future, it often hints to where the stock is heading in the future.
Yes, Synta doesn’t have any products. They have one about to go into phase 3 clinical trials and another in phase 2.
My whole blog focuses on biotech companies that don’t have any products (yet). The idea is to understand the science enough to predict which ones will likely have their drugs get approved and then buy those (assuming their current valuations warrant it).
I’ve bookmarked your blog, and added SNTA to my watch list. Let’s make some money!