How to Predict Future Price of Stocks
Stock prices are highly volatile and can be affected by the company's performance as well as many other factors. To make a lot of money in the stock market, you should learn how to predict future stock prices. Stock predictions can be based on the following methods:
1) Use price earnings (P/E) ratio and predicted earnings per share to predict the future price of stocks. If you have the predicted future earnings per share then you can use the P/E ratio to predict future prices because a stock will tend to trade within a certain P/E range.
For example:
Assume that the share price of Company XYZ is $20. The earnings per share (EPS) of the stock for the last 12 months is $2. Based on the formula (Price Earnings Ratio = Market price per share / Earnings per share), the P/E ratio of the stock XYZ will be 20/2 = 10.
Now, we assume that the EPS in future will be $3.00. Also assume that P/E ratio will remain the same at 10. Then, the price of the share will be: 3 * 10 = $30. This will give you an indication whether the stock of Company XYZ is a good buy or not. However, investors should be aware that this is not the sole criteria for stock prices going up or down.
2) Find reliable market related news: Following the latest news, you will be able to predict whether it will have a positive or negative impact on the share prices. Most of the times, stock price will go up when good news is announced.
3) Study the stock chart patterns of a company to analyze and forecast future price movements.
4) Observe the volume growth: Increasing volume is a sign of positive growth in the stock due to some positive news, and this implies a rise in its value in the future.
5) You should be able to predict the earnings of a company. The growth of a company's earnings is the most important factor to consider when analyzing a company. Good financial results will increase investor confidence and this implies an increase in trading volume and price.
* Featured Articles:
Technical Analysis of Stock Trends
How to Calculate Price Earnings Ratio
Evaluating Potential Stock Investments
How To Find Stocks With High Dividends
1) Use price earnings (P/E) ratio and predicted earnings per share to predict the future price of stocks. If you have the predicted future earnings per share then you can use the P/E ratio to predict future prices because a stock will tend to trade within a certain P/E range.
For example:
Assume that the share price of Company XYZ is $20. The earnings per share (EPS) of the stock for the last 12 months is $2. Based on the formula (Price Earnings Ratio = Market price per share / Earnings per share), the P/E ratio of the stock XYZ will be 20/2 = 10.
Now, we assume that the EPS in future will be $3.00. Also assume that P/E ratio will remain the same at 10. Then, the price of the share will be: 3 * 10 = $30. This will give you an indication whether the stock of Company XYZ is a good buy or not. However, investors should be aware that this is not the sole criteria for stock prices going up or down.
2) Find reliable market related news: Following the latest news, you will be able to predict whether it will have a positive or negative impact on the share prices. Most of the times, stock price will go up when good news is announced.
3) Study the stock chart patterns of a company to analyze and forecast future price movements.
4) Observe the volume growth: Increasing volume is a sign of positive growth in the stock due to some positive news, and this implies a rise in its value in the future.
5) You should be able to predict the earnings of a company. The growth of a company's earnings is the most important factor to consider when analyzing a company. Good financial results will increase investor confidence and this implies an increase in trading volume and price.
* Featured Articles:
Technical Analysis of Stock Trends
How to Calculate Price Earnings Ratio
Evaluating Potential Stock Investments
How To Find Stocks With High Dividends