Finding Stocks Poised to Rally
The key to success in the stock market is knowing how to find undervalued stocks that are poised to go up.
Look for stocks that have just made a new low for the past 12 months.
Find companies that are a candidate for liquidation.
In the process of liquidation shareholders may get considerably more than the stock is selling for.
Look for unsuccessful merger candidates.
If one buyer thinks a company's stock is a good value, it's very likely that others may think so also.
Seek out companies that have just reduced or eliminated their dividends.
These stocks are usually hit with a selling wave, which often creates a good buying opportunity.
Financially troubled companies in which another major company has substantial ownership are also good candidates.
If the stake is large enough, the major company will do everything it can to turn the earnings around and drive the stock price back up so that its investment will be successful.
Opportunities also exist in stocks that have been totally bashed, such as situations where all the bad news has been reported.
These stocks usually have nowhere to go but up.
The best way to verify that a stock has been truly battered is to check its trading volume.
These stocks show an extremely low trading volume.
In all likelihood, no Wall Street analysts are following the company anymore.
No newsletters or advisory services are talking about the company.
In many cases, you will find it that the company's management and directors or other insiders have stopped selling the stock.
One of the best signs of a turnaround is that the company plans to get rid of a losing division or business.
Try to find out if the company will be able to report a large increase in earnings after the losing operation has been sold.
Determine if the company is selling off assets to improve its financial situation or to reduce debt.
If a new management team comes aboard, it's a good indication that the company is poised for a turnaround and an increase in its stock price is likely.
Another indication would be if management begins buying the company's stock on the open market.
Also check to 13d statements filed with the SEC.
A company or individual owning 5% or more of a public traded company must report such activity to the Securities and Exchange Commission.
If someone is acquiring a major position in the company, it's possible that a tender offer at a much higher price is afoot.
Look for stocks that have just made a new low for the past 12 months.
Find companies that are a candidate for liquidation.
In the process of liquidation shareholders may get considerably more than the stock is selling for.
Look for unsuccessful merger candidates.
If one buyer thinks a company's stock is a good value, it's very likely that others may think so also.
Seek out companies that have just reduced or eliminated their dividends.
These stocks are usually hit with a selling wave, which often creates a good buying opportunity.
Financially troubled companies in which another major company has substantial ownership are also good candidates.
If the stake is large enough, the major company will do everything it can to turn the earnings around and drive the stock price back up so that its investment will be successful.
Opportunities also exist in stocks that have been totally bashed, such as situations where all the bad news has been reported.
These stocks usually have nowhere to go but up.
The best way to verify that a stock has been truly battered is to check its trading volume.
These stocks show an extremely low trading volume.
In all likelihood, no Wall Street analysts are following the company anymore.
No newsletters or advisory services are talking about the company.
In many cases, you will find it that the company's management and directors or other insiders have stopped selling the stock.
One of the best signs of a turnaround is that the company plans to get rid of a losing division or business.
Try to find out if the company will be able to report a large increase in earnings after the losing operation has been sold.
Determine if the company is selling off assets to improve its financial situation or to reduce debt.
If a new management team comes aboard, it's a good indication that the company is poised for a turnaround and an increase in its stock price is likely.
Another indication would be if management begins buying the company's stock on the open market.
Also check to 13d statements filed with the SEC.
A company or individual owning 5% or more of a public traded company must report such activity to the Securities and Exchange Commission.
If someone is acquiring a major position in the company, it's possible that a tender offer at a much higher price is afoot.
Source...