two stocks at $12 per share.
stock A has a $2 EPS & P/E of 6
stock B has a $4 EPS & P/E of 3
people are willing to pay more for stock A they are for B based on current numbers.
(no P/E ratio meaning the company has no earnings or is losing money)
-is stock A overpriced compared to B?
- is the market willing to pay more for stock A because it believes the stock will be more successful in the future?
- is stock B better because it’s “cheaper” & can grow value in the future?
Large Cap- market capitalization of $10 billion or more. these are the biggest traded value companies which are considered safer, operate globally, usually pay dividends and have a lot of historical data to analyze from (apple, google)
a ratio of 1 indicates that investors and lenders are equal in terms of the companies assets.
The 52 week high and low is the highest and lowest price of the stock in the past year. these two prices can be good indicators to compare where the stock is trading now.
when a stock hits its 52 week low or high
-trading volume increases
-exit or entry points are created
-can indicate major change in company
investors can not sell their shares for 90-180 days from the IPO date. this is called the “lock up period”
every company that’s trades publicly is required to file a yearly 10-K report. This will include their business operations, financial statements, analysis and risk factors.
Read the disclosures which explains why the numbers were what they were, and what strategies the company is using to increase profits.
this is another way to make money from the stock outside of the direct appreciation of the stock.
I have dedicated a thread on dividends which is linked below.
*I am not a financial advisor and this is not financial advice*