Popular stocks provide better profit opportunity than under the radar names. This phenomenon exits due to the amount of competing parties in these stocks. In unpopular, illiquid names, spread is wide and risk is elevated. Additionally, community support and research is readily available in more popular stocks.
What makes these names popular? This article provides information on how to trade popular stocks, also how to identify them. These are liquid names in which real size can be traded without adverse fills. The amount of buzz around a name generally dictates how drastic the move is.
Popular Stocks Today
Stocks become popular for a variety of reasons. Some provide valuable business to consumers, giving them name recognition. Others are simply the flavor of the week. Furthermore, other popular stocks have a “cult” following. Whatever the reason for gaining popularity, these stocks offer tremendous profit opportunity.
Facebook, Inc. (NASDAQ : FB) . provides various products to connect and share through mobile devices, personal computers, and other surfaces worldwide. This company changed the game in the social media landscape. It had a rough IPO, falling on its face for some time before rising as a market leader. The stock gained extreme popularity once it was clear CEO Mark Zuckerberg was capable of leading a company. He silenced doubters, and has grown sales by 50% over the past 5 years.
Furthermore, the company recently announced efforts to clean up the platform. It came under pressure recently due to political and election tampering concerns. The stock initially dropped. However, like all other selloffs, proved to be a great buying opportunity. This popular stock enjoys both a cult following and market leading headlines.
General Electric Company (NYSE : GE) operates as an infrastructure and technology company worldwide. This is a very old company, being founded in 1892. This alone makes it a popular stock. Additionally, this conglomerate experienced recent management changes.
Furthermore, popularity does not necessarily mean positive attention. This company was chided for having a second corporate jet, that would follow its main one, just in case. Shareholders of this under-performing stock expressed their concerns. Consequently, new management exists. GE is gaining value investors attention with its price-to-sales (P/S) ratio of just over 1. At these prices, many believe a generational buying opportunity exists in this popular stock.
New Popular Stocks
Each year, new technology comes to the market. Many investors understand it, still more pretend to understand. Regardless of investor knowledge, these names become popular because of their cutting edge presence. These investors begin to vote with their dollars. Consequently, price moves and liquidity increases. This results in profitable trading opportunities.
Square, Inc. (NYSE : SQ) is a mobile payment service provider for small businesses. This stock went from irrelevant to darling in a short time. They gained popularity when earnings increased steadily. The company proved their new credit card reading technology had demand.
Furthermore, this popular stock announced a blockchain presence. Blockchain exploded in popularity over the past 24 months. This added fuel to the fire, and the stock showed returns over 150% last years. This stock still has doubters- it has over 10% short interest. This makes moves higher amplified. Finally, the stock shows strong sales growth quarter over quarter (Q/Q) of over 30%. This popular stock is a tremendous trading vehicle for savvy participants.
Chipotle Mexican Grill, Inc. (NYSE : CMG) operates fast casual dining facilities. This company was one of the first of its kind. Investors and customers alike could not get enough, driving the price up to $500/share. It turned into a momentum name as it gained popularity.
Additionally, the stock is popular for a number of reasons. It shows an extremely high price-to-earnings (P/E), making some believe it will fall. This is show by its 11% short interest. Furthermore, the company recently garnered negative headlines about the cleanliness of its raw materials. Individuals reported crippling food poisoning after eating at the restaurant. However, the company recently hired a new, proven CEO. Investors believe this will turn the company around, and the stock moved higher.
Popular Infrastructure Stocks
The Trump Administration shed new light on their infrastructure initiatives. Recently, they mentioned tariff news on steel companies, causing a dramatic pop in the sector. This type of government involvement causes entire industries to be repriced.
Steel Dynamics, Inc. (NASDAQ : STLD) engages in the steel products manufacturing and metals recycling businesses in the United States and internationally. This is a relatively newer company, being started in 1993. However, the company recently moved much higher on the heels of the Trump Administration’s announcement.
Furthermore, this stock shows a price-to-earnings (P/E) ratio of 11. This is a tremendous discount to the market. Now that the stock is popular, value investors are wiling to buy until it reaches full valuation. Given these regulatory changes, there is no telling what value traders will give this popular stock.
United States Steel Corporation (NYSE : X) produces and sells flat-rolled and tubular steel products primarily in North America and Europe. This popular stock dates back to 1901. Given this company’s domestic presence, it has the most to gain from such government initiatives. Additionally, it shows almost 10% short interest. This causes up moves to amplified, as recently seen.
In addition, the stock had a P/S of under 1. This shows extreme value to investors. Furthermore, the stock did not meet market expectations, only rising ~15% last year. This gives investors all the more reason to pile in. This popular stock looks ripe for an explosion higher.
Popular stocks always have enough volume flow to trade directional moves, and with size. A trader must follow news and abnormal volume activity to catch these names. Luckily, these are not one day events. Once a stock becomes popular, it remains popular for weeks, or in the case of FB, years.
In conclusion, popular stocks are a more efficient profit tool than dead names barely trading each day. These names are more exciting, and more intuitive. Investors do not need to guess if company news is met with enthusiasm or disdain. It will be clear based on price movement and volume.