Investing is not about making quick gains. Investing is a long-term game that requires a lot of patience and discipline. That being said, so it is always wise to look for which stocks have the best potential to reward investors with the biggest gains.
We want to take a look at five stocks that are currently poised to make big gains, but it is very important to remember that we are not suggesting these stocks will rise quickly, just that conditions are right for each stock to build on recent gains and continue to trend higher.
There are a couple factors that come into play when looking for stocks with high reward potential. The first thing you want to make sure of is that the stock does not appear to be trading in overbought territory. You can determine this by looking at where the stock is currently trading in relation to its earnings, but to get the full picture you need to look out into the future for how strongly the company is expected to grow earnings moving forward. A company that grows earnings will enjoy stock appreciation as shares move higher to maintain the stock’s P/E valuation.
You also want to look at recent performance. While it is tempting to jump into stocks that have been beaten up in hopes of a quick return, more often than not stocks move lower for a reason, and they do not always bounce. The better approach is to look for stocks that have recent strength, with potential for building on recent gains.
A final piece to the puzzle is to look where analysts see shares going. If you can find stocks with recent strength, good future growth estimates, and bullish price targets, you have the perfect recipe for stocks that are poised for big gains.