Here are two primary ways to find and own monster stocks:
1) Identify Shared Characteristics
Before you can find the next monster stock, it is important to understand the broader concept of what characteristics most monster stocks share before their explosive moves. Let’s look at Starbucks for example. The idea is to find and own shares of this company’s stock when it only has a few hundred locations, not after it has built an empire of thousands and thousands of stores.
Another important trait that monster stocks share is that they breakout from bullish technical patterns. The earliest being a bullish IPO base. These bases come in many different shapes and sizes but catching these big winners near (or shortly after) an IPO base is a great way to find the next monster stock. Remember not every monster stock has strong fundamentals or technicals, but most of the biggest ones do.
2) Look for New Merchandise
Another key way to identify a monster stock is to look for new merchandise and identify the right IPO (Initial Public Offering). In order to do this, you need to understand the importance behind why companies go public.
Let’s start from the beginning. A new company is just formed and, after time passes, it finds itself growing. One popular way to finance that growth and take the company to the next level is to go public. In practice, the company sells shares to the public and in exchange uses the money to help grow its business. Then, after the IPO, the stock is publicly traded and investors are able to buy shares and own a piece of this growing business.
As the company continues to grow they begin posting strong sales and earnings growth, quarter after quarter, and year after year. This, in turn, attracts many investors who begin buying the stock. As more and more people buy the stock, the shares inevitably rally and it attracts even more and more investors. This is how a monster stock is born and is one reason why astute investors look for new merchandise. Finding the right IPO will help you catch monster stocks nice and early.
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