Investing- My other passion besides research-
Why I like investing so much? Well, you need to do some research to invest well-
Of course, the optimal balance between prudence and decisiveness matters.
You do too much due diligence and the opportunity gone.
Especially, these days, I sit on the idea whether to buy a stock that got hammered 15% and the next day, it already recovered 7%….
Need to be decisive as well-
Anyway, today I would like to introduce one of the tools that I use for investing: Tipranks
Tipranks shows the consensus price of the analysts and you can see which analysts with good track record recommend the stock.
So good track record means that the analyst’s past price forecasts were accurate.
The reason why analyst consensus is important is because analysts are smart and have some influence over institutional investors.
Hence, it is an important piece of information to consider when you are investing.
Of course, analysts have issues. They have some conflict of interest because they can’t always speak the truth or else the investment bank won’t get the fees. Also, they tend to herd, meaning anyone who is too bold might shorten their career.
Still despite these setbacks, analysts provide important information to the market.
So how do I use tipranks? I always look for stocks that are trading way below the analyst consensus. Analysts tend to be optimistic so you want more margin of safety. I get more excited when the stock price trades below the lowest price forecast. The logic is that if the stock is way below even the most pessimistic analyst’s price forecast then it is likely to be undervalued.
So do I pull the trigger as soon as I see a stock trading below analysts’ consensus price?
Nope- Remember, in investing, you use all kinds of information to make your decision, you don’t just rely on one.
Also, I tend to like stocks that are not covered by analysts because it is likely to be more inefficient, meaning more opportunity to make money.
But time to time, I look for stocks that are so battered that it trades below the most pessimistic analyst’s forecast and the consensus price is high.
Today, I introduce you Evolution Petroleum (EPM).
Trading below the lowest forecast (<$3.00) with 86% upside-
What I like about EPM is that it has no debt- So it can’t go bankrupt 😀
Plus, it has a 3%+ dividend yield.
So we can wait-
I am always skeptical about firm’s presentations because management always says the good things but in case of EPM, the downside is limited. They don’t have debt. They are conserving cash. And oil and gas prices will rise sometime in the future.
Hence, I am long EPM. But I am also swing trading-
You can definitely see the volatility- So 1-2% here and there helps while I wait.
My core position is still underwater and waiting. The dividends really help. But small profits from swing trading also helps a lot-Never thought I would swing trade but thank You Jesus for teaching me a new skill.
So today, I reviewed how Tipranks is useful for investing and I showcased how I used it to invest in EPM.
Thank You Jesus for helping me invest. Let us not be greedy but share Your treasures with others. Amen!