Watching Your Stocks
No matter how often you prefer to monitor your stocks’ performance, there are certain items you should consider. Here are five things to review as you monitor your stocks’ performance:
- Earnings- Pat attention to the company’s quarterly and annual earnings statements, which include comparisons with the recent past and often review of what management expects for the next quarter and year. Review the stock’s earnings trend and how the company performs compared to analysts’ estimates.
- Price and dividends- Follow the stock’s price compared to its 52-week highs and lows. Examine its trailing total returns year to date and over the last one-, three-, five-, and 10- year periods. Look for changes in the absolute dollar amount of dividends and the current yield.
- P/E and PGE ratio- Price/earnings (P/E) and price/earnings to growth (PGE) ratios are often better indicators than the stock price as to how relatively expensive or cheap a stock is. The P/E ratio is useful for comparing the stock to other stocks and to the market in general, while the PGE ratio is a strong indicator of whether the stock is overpriced or underpriced compared to its projected earnings growth.
- Insider transactions and stock buybacks- A company buying back its own stock or whose senior executives and directors are accumulating more shares is a bullish sign. On the other hand, when insiders are selling off major holdings of their own stock, it’s quite often an indication that the stock price has peaked.
- Sudden and large price changes on high volume- When a stock makes a sudden, high-volume move- particularly when it opens much higher or lower than the previous day’s high or low- it can be a start of a new, long term trend.