This is the fourth article of Mark Minervini’s Growth Stock Investment series.
If you missed the previous article, please read it from the link below.
For more information on Minervini’s investment method, please actually purchase a book and chew it firmly.
Trigger for the Rise
In this article, I will introduce the trigger for the rise among the five major elements of Mr. Minervini’s growth stock investment method “SEPA”.
As with the surprise of the earnings announcement mentioned in the previous article, there are various triggers for stocks whose stock prices rise by an extraordinary amount.
Institutional investors are indispensable for a sharp rise in stock prices, so it is important to keep an eye on the news that institutional investors are paying attention to.
To summarize the points, it is important to find various triggers for stock price increases that are of interest to institutional investors!
Surprise of Financial Results Announcement
As I mentioned in the previous article, the happy surprise of the announcement of financial results greatly contributes to the rise in stock prices.
Especially when EPS and sales far exceed analysts’ expectations, it tends to attract the attention of institutional investors and increase the sign of buying.
Leading Stock
Minervini emphasizes buying leading stocks where most investors look for bargain stocks.
Most investors think that the price of leading stocks with high PER has risen too much, but PER does not need to be given much importance on the SEPA, and conversely, even if the leading stock has a high PER, the leading stocks are much cheaper than late-starting stocks. Removing the leading stocks from the investment list just because they have a high PER can lead to missed catches on the next big wins in the stock market
The characteristics of the leading stock are the competitive advantage of the company and the expandability of the business model.
Innovation
It is not always necessary to belong to a strong industry in order to find a stock that shows a dramatic rise. Performance gains can be triggered by having special technologies in a new industry or company, or by making positive changes throughout the industry, such as deregulation.
Others
The announcement of new products and services, FDA approvals, new contracts, or even news of a CEO change can be a catalyst for previously sluggish stocks.
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