Daily Stock Prices
The Dow, S&P and NASDAQ indexes are above or near their all time peaks. A few stock prices jumped this year despite the economic slowdown. Amazon first and now Disney. There’s always opportunities.
Why would so many people buy stocks vs gold, bonds, or invest in the housing market? It’s all in how the economy could continue on a bull run in 2020 to 2024. Many believe this hot economy has plenty in the tank. Millions of investors pour trillions of dollars into the stock markets every year, with earnings growing, they may be wise.
While investment experts announce they have the situation under control and cite technical indicators, stock buyers lose a lot of money every day.
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
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. These are reliable performers in 2019.
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?
- market factors: is this type of product in demand now and beyond 2020?
- competition: how intense is the competition and do they erode market share?
- cost factors: can they produce the service/product more cheaply than competitors?
- branding: have they established their brand to consumers
- new technology: are they riding on a tech wave which floats all boats?
- monopoly? are they trying to be a market leader and generate a monopoly?
- what is their P/E ratio history?
- what is their earnings each quarter?
- what is their valuation multiple?
- are they impacted by international trade tariffs?
- how much debt do they have and what are the interest rates?
- what is the demographic target in the marketplace?
- how is their industry trending in sales?
- what do the experts say about their stock value?
- how liquid is the company and what is their cash flow like?
- what is the market sentiment about the sector and that company?
- who is trashing the company and are they effective at it?
- are they growing, flat or decaying?
- do their customers need an upgrade to stay competitive?
- 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
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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