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If you are looking at many companies with equal risks which ones will have the highest stock prices?
Wiki User
∙ 2011-09-12 21:44:13
That's the nuts and bolts of stock trading.
To know which stock will trade the highest, you'll have to know where the market as a whole thinks risk is the lowest, but return the highest.
But it really isn't that simple. sometimes, the riskiest stocks are those whose prospects for growth are out of this world.
The take away here is to think in temrs of valuation, not price.
Most people rather buy 100 shares of a $5 stock instead of 5 shares of a $100 stock.
If the underlying fundamentals of the $100 stock/company are better, go for the latter.
In fact, it may be that the $100 stock is CHEAP -- how can this be, you ask?
simple: if the $100 stock/company is expected to grow its earnings 20% year to year but trades at only 10 x future earnings (profits), you may actually have a DISCOUNT on your hands.
books I recommend:
1. how to make money in stocks - William o'neill2. how to read a financial report - john tracy3. morningstar's guide to successful stock investing4. fire your stock analyst - Henry domash
Wiki User
∙ 2011-09-12 21:44:13
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