55% of U.S. investors have money in the stock market, and for good reason. Evaluating stock performance turns ordinary people into millionaires. Stock investing can produce life-changing gains, but only if you understand performance trends.
Understanding stock performance assists with portfolio growth. The accelerated growth can help you buy a house or retire sooner. Factors below will help you grow your portfolio and boost your net worth:
Historic Stock Returns
Many investors judge performance by returns. These returns gauge sentiment towards a stock.
Some investors accumulate wealth through momentum investing. They find a stock with short-term momentum and join the crowd.
This risky strategy sometimes pays off. To get the best results, combine historical performance with other key indicators.
In fact, we’ve developed a stock research tool called Ignite which allows you to see detailed historical performance of stocks. Our tool gives you access to a host of information about any publicly traded company.
Revenue and Earnings Growth
A stock will continue increasing if the underlying company grows. Revenue and earnings growth are two stock stats that help you measure growth.
The opportunity to buy exists when a company reports revenue and earnings growth. Of course, it is less desirable if the company experiences decelerating revenue and earnings.
Dividend Growth Rate
A dividend investor measures success by cash flow. These investors seek to produce enough payments to cover expenses.
Assets with good yields and annual dividend hikes help them meet their goal. Review the stock’s dividend payout history to calculate the growth rate. For example, a company that raises their dividend from $1 to $1.10 raised their dividend by 10%.
The dividend payout ratio measures a company’s ability to sustain the dividend. A ratio close to 100% indicates an unsustainable model.
The PEG ratio uses share Price, Earnings, and Growth to determine a valuation. A PEG ratio over two indicates an overvalued stock. A PEG ratio under one indicates an undervalued asset.
Other ratios provide additional details on a stock’s valuation. The PEG ratio incorporates the most information to forecast potential stock performance.
When assessing performance, review the competition. Assess valuations, revenue growth, and other factors. Set your criteria to determine which opportunities you will explore.
You’re probably familiar with the phrase “compare apples to apples”. You’ll definitely want to compare companies within the same sectors. Comparing banks with tech companies will make the latter look overvalued.
Compare banks to banks, and compare tech companies to tech companies. You can also compare valuations to broader indexes such as the S&P 500.
Targeting specific industries within those broad categories will help you reach better conclusions.
Achieving Positive Stock Performance
Are you planning to buy a home or retire soon? Achieving positive performance could help you accomplish such goals sooner. Discovering new opportunities through effective stocks research tools will help you beat the market.
Researching the right opportunities can take many hours. You can either do the research yourself or use stock performance software that does the research for you.
Cut down your research time so you can focus on beating the market and enjoying life.