If you’re very new to investing or have just started to explore the stock market, it can feel like a giant puzzle that’s hard to piece together. Don’t worry — that’s normal. Everyone feels that way at first.
In our last article, we shared “4 Beginner Investing Tips to Help You Avoid the Seven Most Common Mistakes in Investing”. We covered some foundational tips to get you started and avoid the biggest pitfalls. If you haven’t read that article yet, you should start there. It’s a great place to begin and learn about the basics.
Now, if you’ve already read that or know a little bit about investing, you might still have questions: Where do you really start? What are the best stocks to buy or invest in? What strategies can you use to pick high-growth stocks? Is there really a way to find stocks that could double or even triple in value over the next few years?
The truth is: knowing the basics is only the first step. To take your investing game to the next level, you need solid strategies that help you make smarter choices and prepare you for whatever the market throws at you.
Today, we’ll get into the next level of investing. You’ll learn about my methods and strategies for identifying undervalued stocks and high-growth stocks. I’ll share all the secrets and essential insights on how to analyze stocks and choose which ones to invest in.
We’ll cover how to diversify your portfolio, manage investment risk, and more smart investing tips. We’ll also discuss how major events like pandemics or wars can impact the market and how you can stay smart and prepared during market ups and downs.
So, let’s get into how to spot investment opportunities like a pro!
Identifying the Best Stocks to Buy – Serious Growth Material!
When you’re trying to find the best stocks to buy, you’re looking for stocks that could double or even triple in value – stocks that you can rely on to help you grow your money.
To identify these stocks, it helps to have a solid strategy. But what does that mean? Let’s look into a couple of important indicators that you should focus on when conducting a fundamental analysis of stocks:
- Revenue growth: One of the best signs of a promising company is strong, steady revenue growth. If a company’s sales are consistently increasing, it’s a good sign that business is thriving and that it might be a solid investment. Think of it this way: if a company is making more money year after year, they’re probably doing something right.
- Industry Trends: Pay attention to industries that are growing or about to take off. For example, tech and renewable energy have been hot sectors over the past decade. Being in the right industry can make a big difference. If a company is leading the way in an up-and-coming field, it might be worth a closer look.
- Strong Leadership: Great companies usually have great leaders. Check out the company’s management team. If they have experience and a track record of success, it’s a plus. Leaders who know what they’re doing can guide a company through tough times and make smart decisions for growth.
- Financial Health: Before jumping in, make sure the company’s finances look solid. Look for low debt, healthy profit margins, and positive cash flow. These are signs that a company can handle bumps in the road and keep growing.
How to spot these best stocks to buy
- Start with a Screening Tool: Use a stock screener to filter companies based on things like revenue growth and financial health. A stock screener is like a quick search engine for stocks. Here’s a good article with more info on what stock screeners are, where you can find free stock screeners and how to use them.
- Pay Attention to the Details: Once you have a list, take a look at their financial reports. Check their earnings and look for consistent revenue growth and strong balance sheets.
- Compare Within the Industry: Is the company ahead of its competitors? If it’s leading the pack in a growing industry, that’s a good sign.
- Check Out the Leadership: Read up on the CEO and main executives. If they have a good reputation and a history of smart decision-making, that’s a bonus.
Let’s take a look at an example. Let’s say you’re looking at a company we’ll call Green Spark Energy. Green Spark Energy makes renewable energy tech, and their revenue has grown 20% each year for the last three years. The renewable energy market is booming at the moment, and their CEO has a solid background in scaling successful companies.
What do you think? Is this a good company to invest in?
The answer is yes — this could be a promising high-growth stock you might want to add to your portfolio.
The Impact of External Factors on the Market and on the Best Stocks to Buy
Now that you have a basic idea of the investment strategies that will help you pick high growth stocks, let’s talk a little about how external factors, like pandemics and wars, can affect your investments.
Why is this important? First of all, these events can happen anytime, often very unexpectedly. If you are investing for the long term, this can make you uncertain about how your stocks will perform over the next few years, whether they will recover from a crash, and how this will influence what the best stocks to buy are in general.
The reality is that the stock market is like a roller coaster that reacts to what’s happening in the world. Big events like pandemics and wars create uncertainty, which can make the market rise and fall rapidly. Understanding how these external factors impact investments helps you stay prepared.
What does this look like in real life?
Let’s take a look at an example you are probably familiar with. When COVID-19 hit, the market initially experienced a huge crash as panic spread. However, not all companies were affected in the same way. Tech and healthcare stocks actually soared as people adapted to working from home and needed medical supplies. Companies like Zoom and Amazon benefited greatly from the increase in online activities. Chances are, you (and many, many other people) found yourself hopping on Zoom calls or ordering items for home delivery from Amazon during that time.
On the other hand, other stocks and entire industries, such as travel and hospitality, struggled to stay afloat. It’s understandable why — there was minimal traveling and limited activities outside the home.
Geopolitical issues like wars can also disrupt the market. They can cause supply chain problems or raise costs for certain goods. This, in turn, impacts companies and entire industries. For example, conflicts in oil-rich regions can push energy prices higher. This affects everything from transportation to manufacturing.
Is there anything you can do?
All of this might sound scary and make you wonder if you’d be better off stuffing your money under a mattress. After all, who wants a sudden political conflict or another pandemic to erase their savings?
The good news is that there are strategies to protect your investments. And no, I wouldn’t recommend stashing your cash under a mattress or leaving it in a bank account. Investing is still a very profitable and generally safe way to grow your money over time — if you know what you’re doing.
So here’s what to do:
- Diversify Your Portfolio: Don’t put all your eggs in one basket. Spread your investments across different sectors so that if one area takes a hit, others might hold strong or even grow.
- Stay Informed: Keep an eye on the news. Being aware of global events can help you make smarter decisions about when to buy, sell, or hold. It helps to read up on known investors’ opinions as well. But don’t trust a single opinion too much and don’t sell all your stocks because one person said that the market (or a certain industry) might crash.
- Think Long-Term: Even if the market dips due to major events, remember that it typically recovers over time. Panicking and selling everything at the first sign of trouble can lead to locked-in losses.
Know the difference between a correction and a crash
It helps to know what’s “normal” and what’s an actual crash. The stock market moves in cycles of growth, correction, and recovery.
Corrections are usually small drops (around 10%) that are normal and even healthy for the market. Crashes are more severe and can happen due to major events like financial crises or global conflicts. Knowing that these cycles are a natural part of investing can help you keep calm when things get rough.
How Bear vs Bull Markets Influence The Best Stocks to Buy (and WHEN to buy)
Before you click away from this article, there’s one more factor you should keep an eye out for: whether the market is bullish or bearish. If you’ve been following the stock market even for a short while (or if you’ve read our last article), you’ve probably heard the terms bull market and bear market.
To repeat in simple terms, a bull market is when stock prices are on the rise — think of a bull charging forward with its horns up. On the other hand, a bear market is when prices fall, usually by 20% or more from recent highs — just think about a bear swiping down with its paw.
Understanding these cycles is important because the market will swing between these two phases over time.
Here’s how that should influence your investment decisions:
In a Bull Market:
- Stay Grounded: When prices are soaring, it’s tempting to get swept up in the excitement. But make sure you’re investing based on research, not just hype.
- Take Profits Smartly: If a stock has gained a lot, you might want to consider taking some profits and reassessing your portfolio.
In a Bear Market:
- Look for Bargains: Bear markets can be a great time to buy quality stocks at lower prices. It’s like a sale for investors.
- Hold Your Ground: It’s natural to feel nervous when prices drop, but selling in a panic can mean missing out on gains when the market recovers. History shows that markets bounce back, so patience is better than impulse selling.
How to Find The Best Stocks to Buy
Finding the best stocks to buy is all about knowing how to analyze stocks, how to diversify your portfolio, and how to deal with different market situations.
The most important thing you can do is diversify your portfolio. That means that you should spread your investments across different sectors and asset types. This will reduce the impact of a crash on your entire portfolio.
Also, make sure that you invest for the long term. Market crashes are tough, but they don’t last forever. When you have a long term investing outlook, you can ride out the lows and benefit from eventual recoveries.
You should always build an emergency fund before you invest heavily. Why? This is to make sure you can weather any financial storms without having to sell your investments at a loss.
In general, educate yourself. The more you know, the better prepared you’ll be. You can build a strong knowledge base through resources like the Smart Investing Starter Course, which is our course for beginners. For those who want an in-depth look at the best investment strategies, we offer our Smart Investing Boot Camp. This 90-day experience includes insider knowledge, the best strategies, and a complete road map to investment success.
Alternatively, you can also register for our next webinar to get all the information on where to start! Reach out to us if you have any questions regarding our courses, webinars, or general investment questions.
Great job for getting to the end of this article! This knowledge is already a great start for your journey to becoming a pro at finding the best stocks to buy and letting your money work for you. Keep it up!
