How to tap into potential stocks?

High quality potential stocks are stocks with high growth potential in the future. In the short term, the stock price may not perform well, but in the long run, there is a lot of room for growth in the future. If we enter the layout before growth, we will definitely be able to obtain rich returns in the future. So for value investors, how to tap into potential stocks is a very important issue. Below, we will teach you how to find high-quality potential stocks from five aspects.

1、 Number of shares

Choose small cap stocks with a relatively small number of shares, while paying attention to the ratio of outstanding shares to total share capital. Lastly, it is important to consider the overall share capital of the sector in which the stock is located. Because the linkage effect of market sectors is very obvious, often a sector needs to rise and fall together, so we not only need to pay attention to the number of shares of individual stocks, but also the number of shares of the overall sector cannot be ignored. A smaller number of shares in a sector is more likely to be favored by funds.

2、 Heavy individual stocks, light overall market

When participating in small cap stocks, we don't need to overly focus on the overall market index, but rather on the trend of individual stocks. The market situation of small cap stocks is often different from that of large cap stocks, which can directly determine the rise and fall of the index. If we buy large cap stocks, we need to pay attention to the overall market, and the rise and fall of small cap stocks have little impact on the index. This is also why many times the overall market does not rise but many individual stocks continue to rise, because small cap stocks contain many opportunities.

3、 Follow the distribution of shares

We need to constantly follow up on the distribution and performance of the stocks we are concerned about, because as the market continues to develop, small cap stocks that are only hyped up by certain concepts often gradually fade away. Only stocks with excellent performance and frequent dividends will have the potential for continuous upward growth.

4、 Buying timing

The timing of buying high-quality potential stocks is also important. No matter how good a stock is, if we buy it at a high price, we may not make money or even lose money. The best time to buy is when the stock price starts to gradually increase in volume after hovering at a low level for a long time. We need to compare the highest price within a year with the historical high to determine the current position of the stock price. After buying, we can hold it for the medium and long term and patiently wait for the profit to run.