10 Signs That Stock Prices May Skyrocket
There are no cast-iron guarantees that your stock (share) prices will increase any time soon, but there are certain indicators that often show up prior to stock prices going up. It is just like seeing dark clouds in the sky and assuming it may rain soon.
1. It has been a flat line for the last five years
A good stock investor is able to look at the stock ticker for a company and see that it has been at the same price for the last five years without worrying. A good stock investor will not be tempted to sell stocks that have been at the same price for years because it is a waiting game. There are plenty of times when a share price stays the same price for years and then starts going up again. More often than not, if the price has been the same for years and the company is not failing, then the price will start to rise eventually (rather than fall eventually).
2. A rise in company earnings
It seems a little shallow and hollow, but investors on mass will tend to follow things such as earnings, and they will use them as predictors of future trends. A rise in company earnings is no genuine indicator that the price of the shares will go up or that the company on its own is worth more, but many investors will use a rise in company earnings as a signal that they should invest, and so the share price will rise. Investor behavior seems to create self-fulfilling prophecies.
3. A lowering of debt
The amount of debt a company is in may not be an indicator of success. For example, most airlines are in a massive amount of debt, and many companies are in debt for years after they have started. However, it is fair to say that if a company is slowly removing its debt, then it is probably going to do okay in the near future to the point where it is a good idea to invest in them. There are very few circumstances where a company lowers its amount of debt and then does badly within the next 6 to 12 months without something catastrophic happening in the interim.
4. Positive publicity in almost any way
If people are excited about a company, then they will buy shares in the company and the price will go up. Positive publicity usually means a company will do well soon. However, there are plenty of times when people try to post positive information on the Internet about a company in order to push up the share price, and people suddenly start selling their shares. This is because people know about scams, and they know why a person may be posting positive information about a company on the Internet. They know this and they start to sell to avoid the scam. So, remember that positive publicity is good, but it is not always good.
5. Heavy insider buying
There are many reasons for insider buying, and most of them are good for investors. Maybe the company has started offering stocks as part of their pension plan or an incentive plan, and maybe their directors know of a great product they are about to launch. Usually, if there is a lot of insider buying, it means good things may be on the horizon, which also means their share price may go up soon.
6. Takeover bids and rumors about them seems to push up stock prices
It is just a trend you may notice if you invest in stocks long enough. You start to notice that takeover bids and rumors seem to push prices up, where in the past they seemed to shake share prices.
7. Common sense indicators that come through personal knowledge
You should always invest in industries and sectors that you know well. It gives you a very deep and powerful advantage when investing in stocks and shares. For example, if you have put money into shares for a retail outlet, and you have just discovered that they are now offering deliveries within 6 hours of making orders, then common sense may tell you that they are going to do well and that their stock price may improve very soon. There is no guarantee that the stock price will go up or that the new delivery idea will work to their favor, but your personal knowledge of the company and people’s attitude towards it may help you predict their coming stock price increases.
8. Powerful demographics
Is a market going to increase any time soon? Or, is a market about to receive more money or more buying power? Is a market about to become very interested in the products that a company is producing? For example, in a world where oil prices are sky high, is there a powerful demand for cheap electric cars?
9. Analysts start paying attention
It is true that you should be careful when paying attention to analysts because they could be running a pump and dump scheme, but they cannot all be in on it (usually). Another downside is that by the time you have read about this “Great new investment opportunity” it is often too late already.
10. Strong or improving bond rating
A poor bond rating and/or one that is deteriorating is often a sign that a company is struggling and on its way out the door. The company’s bond rating is based on the company’s ability to repay bonds. If a bond rating is bad or getting worse, then it speaks to the health of the company itself. Your other key indicators may show that the stock price is destined to go up, but if they are going to fail to repay their bonds, then how healthy is the company in reality?
If you think your stocks may start to decline any time soon, then have a look at our article on the ten signals that indicate your share price may soon decline.