Veteran investor Jim Cramer reveals the secret to finding “good” stocks before they go up
Finding a good stock is sometimes as simple as liking a company and its products, and then doing some research to see if the stock is worth the investment, Cramer says.
Take for example from Cramer’s own daughter’s experience when she decided to invest in electric car maker Tesla. In 2019, she drove from Oregon to LA and decided to rent a Tesla. Cramer said his daughter had never been a fan of cars before, but was surprised by Tesla’s electric car. As a result, she fell in love with the electric car, feeling how easy it was to “fuel” it.
“My daughter says it’s the funniest car in the world,” Cramer said.
Although Cramer himself remains skeptical of the company and thinks the stock is expensive, Cramer’s daughter believes in Tesla CEO Elon Musk. She also said that Cramer was prejudiced against the company because he was too old to see the potential of electric cars.
“I’m saving up to buy a Tesla and I want to buy Tesla stock,” Cramer recalls her daughter’s words.
And sure enough, my kids bought and watched Tesla’s stock go up 10x. “She had faith, researched and bought that stock,” he said. When investing in a company’s stock,” the thing to know is do you like it?”
If the answer is yes, you should “do your research” to decide if it’s a worthwhile investment, starting with checking the company’s filings with the Securities and Exchange Commission. Translate. These reports will provide information on key metrics such as revenue, net income, debt-to-equity ratio, and cash flow.
You’ll also want to learn as much as you can about the company and its competitors. You can do this by reading news stories, perusing the company’s website.
No matter which company research you choose to research, picking one you like can be a great way to identify stocks with growth potential. That’s why it’s important to understand your preferences as a buyer, says Cramer.
“When you want to invest in a good growth stock, you need to know yourself,” he said.
Plus, if a company makes an innovative product that you like, it’s more likely to continue making good products even as consumer needs change, Cramer said.
He cites Alphabet as an example: Like Google, it first started as a search engine company, before dominating ad sales. Similarly, Netflix was a business that ordered DVDs by mail before moving into streaming.
“We’re buying shares of companies here — not speculative rentals — and a lot of people get that wrong,” Cramer said. When you believe in a company and its potential, you’ll be able to ignore the short-term decline in that stock’s value and hold them for the long-term, he said.
“When [cổ phiếu] If the price drops and you don’t believe in them, you sell,” says Cramer: “It’s the same thing as buying high and selling low – it’s a mistake.”
(According to CNBC)
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