Finding the best stocks to buy is never easy. It’s probably the reason you’re visiting this website.
But determining which stocks to buy isn’t just about the “what”. It’s also about when to buy them.
Take Apple (AAPL), for example. Everybody knows Apple. It’s the world’s richest and perhaps most visible company. If you had bought shares of Apple when started trading at roughly $0.50 in 1981, you’d most likely be a millionaire by now. More realistically, if you had bought the stock at any point in the last decade, you would have also made a hefty profit.
However, say you bought Apple when it reached its peak at $700 a share in August 2012 and sold it out of frustration after it plummeted 40% over the ensuing nine months. For long-term investors in Apple, that steep decline looks like little more than a brief hiccup on the road to major profits. But for those who got in at the wrong time, you actually lost money on Apple.
At Cabot Investing Advice, we try to provide our subscribers with the “what” and the “when”. The right stocks to buy now may be very different from the right stocks to buy in a year or two. Thus, when people ask us, “What are the best stocks to buy?” our answer is inevitably, “that depends.”
Like human beings, every stock goes through its ups and downs, its good times and bad. The best stocks – the Apples, the Googles, the Exxons – rise over time. But that doesn’t mean they’re the best stocks to buy at any given moment.
In reality, the best stocks to buy depend on your personal preference as an investor. No one stock, or even group of stocks, is right for every investor. Much depends on your risk tolerance, how long you like to stay invested in a given position, and what you want your investments to do for you.
For example, if you are a growth-oriented investor, you naturally seek out companies whose earnings are growing faster than the market’s, and that appear primed to continue doing so well into the future. These companies generally have steady cash flow and upward-trending stock charts.
On the other hand, if you are a value-oriented investor, you look for companies that are undervalued – stocks that haven’t necessarily been rising because they have fallen temporarily out of favor. Value investors search for bargains based on low price-to-earnings or price-to-book ratios. Their charts and earnings growth may not look good now, but there’s reason to believe they may in the future.
Growth stocks and value stocks are two very different things. Dividend stocks – or stocks that pay an ever-increasing dividend but don’t necessarily have the same share-price appreciation as a growth stock – are another investing avenue, generally favored by income investors.
The right stocks to buy depend on what stocks you’re looking for – and when you’re looking for them. Fortunately, at Cabot Investing Advice we have something for every type of investor. Our 12 investment advisories include value newsletters, growth newsletters, dividend newsletters, emerging-market newsletters – even two options services.
Each write-up features commentary on the picks from one or more of our expert stock market analysts, as well as company details and a stock chart.