HANS was another stock that went up over 1,000 between 2004 and 2006. These are amazing stocks that if timed right can make you a fortune. But how do you spot them?
1) These stocks are doing something new, exciting or dramatically changing an old industry. It has to be exciting. The potential for future growth has to be massive. Expectation has to be enormous for the future.
2) NEW: These companies are usually fairly new. Forget yesterday's "blue chip" stocks these are today's high growth new stocks.
3) Watch the volume. Institutions are not stupid. They have teams of well paid analysts who know these stocks before we do. Watch for huge increases in volume indicating big money is flowing in. Without this even the best stocks will not move.
4) Overall Market. The best stock in history will be flat if the overall market is going down as well. It takes a bull market to create super stocks. So be aware of the what the averages are doing as well.
5) Return on Equity. R.O.E. is the measurement of how much the company can grow without borrowing cash. ALL the best super stocks have R.O.E's greater than 20%. It basically means this company is cash rich and is making a load of profit. Just the kind of stock you want to be looking at.
6) Be aware of fundamentals. Great stocks usually have great fundamentals that carry on for years. Earnings and revenues growth are way above 25% per quarter.
7) You have to chart these stocks. Even the very best stocks can go through periods of overextension. Where the stock is pushed up in price too far in the short term and will correct. You have to be aware of this so you do not buy in at the wrong time.
8) Watch the insiders. The insiders know there company more than anyone and if they are dumping shares on mass you have to wonder why. More often than not it's because they know the game is almost over.
You have to be very selective. The fact is these kind of stocks do not show up too often. There are so many variables involved. It is not some "black box method" to pinpoint huge super stocks.
Article Source: http://EzineArticles.com/?expert=Mark_Crisp
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