Stock Prices 2020 | What Drives Stock Prices Up?

Stock Prices 2020 | What Drives Stock Prices Up?

Daily Stock Prices

Stock market volatility is by no means over, as we enter the end of the imposed economic shutdown. This week’s corporate earnings reports weren’t as bad as many anticipated.

And don’t feel bad if your portfolio sunk recently. Warren Buffet also took a bath and he has all the stock loss evasion tools at his disposal.  Stock market forecasting isn’t easy. Winners and losers change places almost on a daily basis and expert forecasters can’t figure this market out.

Here’s this weeks top stock price gainers:

Screen Capture courtesy of Yahoo Finance.

Yet, it’s quarter 2 that we’re in that’s a big concern. The emotion behind the anti-shutdown protest shows that most Americans are aware of how dangerous a prolonged shutdown is.  You have the strong positive and negative emotions from both political parties tugging at stock prices.

Where will stock prices be in 1 month, 3 months, 6 months or 1 year? The 2021 stock market forecast is bright. Corona Virus pandemic aid should provide a nice boost. If we believe this recent euphoria is over, then we’ll take a dip this next month, followed by a consistent return with higher stock prices. The second dip in the W won’t be as deep.

Have you wondered why, and then sought out the very best stocks? Let’s get right to the 20 factors below which drive stock prices up.

While investment experts announce they have the situation under control and cite technical indicators, stock buyers lose a lot of money every day. Which stocks are at bottom right now? Check the Dow Jones, S&P, and NASDAQ reports and review the best sectors, before you choose the best stocks. Also, review what the AI stock prediction tools are saying.

Fang Stocks: Earnings Reports Not So Devastating

But those painful losses are never reported on business media. They might celebrate and interview a few of the winners, but nothing is ever mentioned about those who invested in losing stocks. And they were well aware of the stock market outlook and index futures. Of course some smart investors hedge against potential losses.

Why do stock valuations rise and then plunge so severely? Is it the latest news, or is it because of the real underlying confidence in that company? Let’s take a look at some of the micro and macro factors that actually do drive stock prices.

Top Gainers by Price

Top Gainers in Price, November 14 – Screen capture courtesy of Yahoo

Stocks in Some Sectors Are up In Smoke

For instance, investors in some of the pot stocks are taking big gambles. Despite what we now know is a defined and slightly growing demand for marijuana, investors joined in the frenzy to buy pot stocks. Many of the pot growers in based in Canada.

Should you buy pot stocks? There is no short term returns in pot stocks. The long term value is simple, when the US legalizes pot there will be a big win fall. However, US growers would want first dibs on that big market.

And zero tariffs into the US for Canadian exporters might be a reach too. Pot stocks have lost half their value in the last 3 months.

Experts only see 4 pot companies surviving which means the others won’t do well. After so many disappointing earnings, investors are dumping their pot stock. The point is that there are many reasons why pot stocks won’t be profitable. Their potential was overestimated even by professional investment advisors.

Even Jim Cramer says these “company’s eyes are too big” and the overproduction is killing prices. And of course, users can grow the stuff at home.

Stocks that Are Rising

For stocks that are rising, and have the characteristics most investors look for, see the Facebook stock price, Google stock price, Tesla Stock price, Amazon stock price and Apple stock price pages. Also please check out the Russell 2000 forecast for the best small cap opportunities.

What is it that Drives Value in the Best Stocks?

That leads us to the key discussion in this post. What are the top 20 forces that move stock prices and generate real value?

  1. market factors: is this type of product in demand now and beyond 2020?
  2. competition: how intense is the competition and do they erode market share?
  3. cost factors: can they produce the service/product more cheaply than competitors?
  4. branding: have they established their brand to consumers
  5. new technology: are they riding on a tech wave which floats all boats?
  6. monopoly? are they trying to be a market leader and generate a monopoly?
  7. what is their P/E ratio history?
  8. what is their earnings each quarter?
  9. what is their valuation multiple?
  10. are they impacted by international trade tariffs?
  11. how much debt do they have and what are the interest rates?
  12. what is the demographic target in the marketplace?
  13. how is their industry trending in sales?
  14. what do the experts say about their stock value?
  15. how liquid is the company and what is their cash flow like?
  16. what is the market sentiment about the sector and that company?
  17. who is trashing the company and are they effective at it?
  18. are they growing, flat or decaying?
  19. do their customers need an upgrade to stay competitive?
  20. are the stocks underwriters able to make money off its stock plunge?

Which Market Sectors are Hot?

Hot sectors show up when company’s earnings reports take a big rise. That might happen just after announcing new products. Apple and Disney just announced their new subscription services and product arrays for streaming TV. Market sentiment has always been negative toward streaming. But these companies plus Roku, and Youtube Live, and others are viable entrants too.

Suddenly all of the streaming technology is in place and consumer demand is changing. Disney, Apple and Netflix are competing in the space. They’re all providing a new value proposition with more content available. And the content from the TV networks is very negative (CNN) and poor quality. A big shift to streaming subscriptions is the result.

They’ve announced their new subscription numbers and they’re off the charts. It seems to be a big success but are their value propositions solid?  ESPN was offered as part of a streaming service and only a few million subscribers wanted it. It basically failed.

What Does a Bad Stock Look Like?

Freshii Inc Closing Price: $2.71  (now in April, it’s fallen to $1.36)

Freshii Foods came on strong when it appeared on the TSX, but from there it’s all down hill, losing 75% of its value since its IPO. It arrived on the fanfare of fresh health food which was a trend. However, competitors have also moved to fresher foods. Freshii’s value proposition and branding simply isn’t up to par.

It recently announced its plan to open 760 stores from the current 400 locations, citing problems with new franchise time delays. It’s same store sales dropped. It’s stock just plunged 50%.

“Freshii’s results and rescinded guidance reflect a clear and substantial deceleration from already slower growth evidenced in recent periods,” John Zamparo, director of institutional equity research with CIBC Capital Markets.

Stocks can be rated low for a lot of reasons. But a good company is one that has a market leader or monopoly position, big earnings, potential new markets and customers, are leveraging a new technology, and riding on a significant cultural trend (such as streaming TV). That can generate high stock prices.

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22 years of experience as a content researcher, strategist and SEO expert for marketing agencies and his own company. Gord's investigation into housing markets, stock markets, and AI marketing strategy helps clients achieve market dominance. Some of Gord's blog posts have achieved half a million pageviews with over 7,000 social media shares, revealing Gord Collins special talents for building reach and impact. Visit the AI Marketing website for an introduction to the AI marketing era. Artificial Intelligence is lending extra benefit to the power of marketing software which is enhancing SEO, Copywriting and Sales. Gord offers a new brand of SEO services and to regain his reputation as a leading SEO expert. See his 2nd book which describes the powerful relationship between SEO and Content Strategy. Gord's passion is researching algorithms, trends, forecasts, and market statistics to establish clients at the top.

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