3 Large Cap Stocks You Should Watch
Dear Penny Stock Millionaire,
When I convinced my parents to let me trade the roughly $12,000 I was given as a bar mitzvah gift, I initially began by trading large-cap stocks. Obviously, that didn’t last long once I discovered my love for penny stock trading, but everyone starts somewhere. And it makes sense, right? After all, large-cap stocks are what first spring to mind for most people when you talk about the stock market.
There is a reason for that. Large-caps are well established companies that have stood the test of time and are relatively stable that have low volatility. That makes them a safe investment for most people looking to grow their accounts over a longer time span while keeping their money safe.
That’s not what I was looking to do when I started trading, I wanted to make money much faster and the high volatility that penny stocks offered gave me that opportunity, and I haven’t looked back since.
But enough about me. If you aren’t looking to do short term penny stock trading, large-cap stocks might be just the type of investment that you are looking for.
But how do you find large-cap stocks that have good growth potential?
These tips will point you in the right direction.
#1 Large-Cap Stock Indicators
Stock indicators are the perfect way to kick off your search for large-cap stocks.
Most trading platforms will allow you to filter on various criteria. Yes, you can filter by market cap size, but that won’t tell you if a trade is a good idea. You need a little bit more information.
So, for instance, you might consider starting by searching for the biggest percent gainers for the day, and then filtering the results by market cap size.
From there, you can look at other indicators like the PVT (price volume trend) indicator, which helps you determine volume. Volume is important because you want enough shares in movement so that it will be easy to enter and exit a position.
#2 News Catalysts
Now that you’ve identified a few contenders for large-cap stocks to trade based on your indicators, it’s time to start digging and doing a little research.
Start looking around at what is making these stocks move, and why. Are there any big news catalysts that you can identify? For instance, was there an earnings report just released, or did the company just announce a merger or a hot new product?
High volume plus a news catalyst is a great combo when it comes to finding stocks to trade. If the shares are moving at a rate that makes a trade easy to enter and exit and it seems like something promising is on the horizon that could affect the price, it may be the right time to hop in and buy.
News catalysts can be an invitation to dig deeper in terms of fundamental research, too. It can help you determine if the news has merit. In looking at the financials of the company and their success rate in the past, you can better gauge their success in the future.
#3 Stock Chart Patterns
If you want to make calculated, intelligent trades, you’ve got to get wise about technical analysis.
Technical analysis is where you carefully review charts to see if there are any noticeable patterns in the stock price.
I love patterns. As I discussed earlier this week. It’s one of the pillars of my teaching. I call myself a glorified history teacher because I’m all about mapping out the past in hopes of predicting what could happen in the future.
You can never know exactly what will happen, of course. But if a stock has shown the same pattern over and over in the past, the chances are higher than not that it will follow a similar trajectory in the future.
Looking at stock chart patterns will help you determine if it’s a good time to buy a large-cap stock, and help you figure out appropriate entry and exit points.
This is a great skill to develop overall because it can be used for all trades, whether it’s a large-cap, small-cap, or a penny stock.
#4 Trading Plan
Repeat after me: You must have a trading plan. Every. Single. Time.
Plenty of traders don’t think that having a trading plan is important, or they think it’s fine to keep it all in their head. WRONG.
A trading plan is key in helping you map out your trade and stick to it.
The simple act of making a trading plan forces you to think about what you hope to gain from a trade. It also forces you to think about what could go wrong in a trade.
This is extremely valuable because it makes you think about when you might want to enter a trade, and at what point you’ll cut your losses.
In the heat of a trade, it can be easy to adopt a “hold and hope” mentality or to make bad decisions. Your trading plan will keep you on track.
#5 Stock Screener
Indicators? Technical analysis? Filters? If you’re new to trading and wondering where you can find these resources, the answer is simple: You need a great trading platform so that you can screen stocks.
The key is to choose a platform that has plenty of tools to help you do the stock research you need.
A great platform will allow you to filter down stocks to choose from. From there, you can delve into fundamental and technical data to make a more informed decision.
Many will also link to relevant news articles which can give you insight to potential catalysts.
Examples of Great Large-cap Stocks
Now that you understand how to find large-cap stocks, how can you determine which ones might be right for you? Here, I’ll go over some large-cap stock examples that offer growth potential.
#1 Apple (AAPL)
Plenty of traders think that it’s too late to profit from Apple stock. However, instead of lamenting the fact that you didn’t buy shares before the iPhone was introduced, consider what the company could offer in the future.
Apple is undoubtedly a large-cap stock and an established company, but the question of whether or not Apple is a growth stock remains the subject of some debate.
Let’s look back at where Apple has been this year as a case study. iPhone sales were, and arguably still are, down. They’ve been up against a pending monopoly lawsuit. Both of these things have brought down the price of the stock. This means that it’s been available at a good price. But was that an indicator that you should buy?
In taking a longer view of the stock, you’ll see that in spite of the negative catalysts, overall earning are great, the company is highly valued. Only you can answer whether or not it’s a worthy trade for you, but there are factors that make it a compelling large-cap stock.
#2 Facebook (FB)
Facebook is a massive company, but that doesn’t mean that it doesn’t still have room to grow.
Again, looking back, Facebook had a weak second quarter, the stock price took a dive. Among investor fears? Concern that increased spending in the future will make the stock decrease in value. However, this massive sell-off may have been short-sighted.
Overall, Facebook is still on the up, as the average revenue generated per user is increasing, and it has continued to acquire social tools to expand its offerings.
Yes, the spending may continue to rise, but so will potential areas for expansion for the company. With more and more users joining each quarter, it still has plenty of potential for future growth.
#3 Amazon (AMZN)
Many traders don’t even consider trading Amazon stock, because they figure it’s already peaked. Not so fast!
Amazon didn’t become an industry leader by accident, and they’re certainly not resting on their laurels. In this year alone, the company’s revenue has grown 39%. That’s impressive for a company of any size, but pretty amazing considering the size of Amazon.
They continue to innovate and offer new services and products, so there are plenty of different ways in which the company can continue to grow. This makes it a large-cap growth stock worth checking out.
The Bottom Line
Large-cap stocks offer potential for growth if you know where to look for. So if that sort of investment appeals to you, don’t be afraid jump in.
But before you do, make sure you do your research. You still need to do technical and fundamental analysis on large-cap stocks, like you would for any penny stock that you would purchase.
Tomorrow, I’ll go in depth about all the benefits of trading large-cap stocks if you still don’t know if that is the type of stock that you want to trade.
Editor, Penny Stock Millionaires