This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Five Rules for Buying Stocks

3 - Buy Stocks for the Future, Not the Past

Sifting through quarterly reports and past performance for a company can provide insight into the health of a prospective investment. But whenever you look at these numbers, it's important to realize that they are lagging indicators. When you look for the best stocks to buy, you should put a premium on future growth trends over previous successes.

Consider changing demographics, such as the fact that China is now the No. 1 automobile sales market in the world, thanks to an emerging middle class in the People's Republic and flagging consumer confidence in the United States during the recession.

The result has been wild profits for China auto parts stocks such as China Automotive Systems (CAAS - Get Report) and Sorl Auto Parts (SORL - Get Report), both of which are up over 225% in the last year.

This goes for product life cycles and market relevancy as well. Major pharmaceutical companies may still be seeing decent earnings and sales, but investors in Merck (MRK - Get Report) had darn well better be aware that as much as 30% of Merck's sales could dry up due to patent expirations and generic competition in the next few years.

Obviously, if investors could tell the future than it would be easy to play the stock market. There is no crystal ball that will provide easy answers as to which companies will see success and which ones won't. But if you want to invest wisely, your rules for buying stocks should include focusing on future trends more than past successes.
4 of 6

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $95.18 1.64%
AMZN $671.32 -1.83%
CAAS $4.23 -3.67%
CL $71.85 -0.72%
F $13.43 -1.40%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs