When should you sell your shares?

When you buy a stock, your goal is to make money. To do that, you need to sell the shares at the right time and at the right price. This is a difficult decision as you never know when a stock price will rise or collapse.

There are times when stocks are overvalued and there are times when they are undervalued. When investing for the first time, it is important to understand all the factors that help decide whether a stock is a good buy or not. This way, you can avoid the moments when you have to sell your shares at a price that is lower than you paid for them.

How to decide whether to sell your shares

When deciding whether to sell your shares, there are a few factors you should consider. The first is the company’s current financial position.

  • Does it have enough money to meet its obligations?
  • What is corporate debt?
  • What is the company’s revenue?
  • Are the costs too high?
  • Is it with profits or losses?

The second factor is the company’s future prospects.

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  • What do analysts think about the company’s future?
  • Is it growing?
  • How strong is the industry?
  • What are the prospects for the sector as a whole?

You should also take a look at the stock chart to see if there have been any sudden increases in trading volume. If so, it could be a sign that someone has released new information about the company (or one of its competitors) that will affect the stock price.

Price-earnings ratio

The price-to-earnings ratio (P / E) is a quick way to get an idea of ​​how expensive a stock is. It compares the price of a share with earnings per share. share, which is an indicator of how profitable the company is. P / E is calculated by dividing the price of a share by its earnings per share.

A P / E ratio that is above the industry average may mean that investors expect the company’s earnings to grow faster than other companies in the same industry. However, a high P / E ratio can also mean that market expectations are too high and there is a risk of a crash in the event of a crisis. When a share’s P / E is below the industry average, it can mean that the company’s earnings are declining compared to other companies. However, the stock may simply be undervalued at the moment and therefore cheap.

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P / E ratios can be very useful when you need to decide if you want to sell your shares as it provides a quick way to compare P / E ratios for different stocks.

Price-earnings-growth ratio

The price-to-earnings-to-growth (PEG) ratio compares a stock’s P / E with its earnings growth. The thinking behind this is that a stock with high earnings growth should also rise in price. The PEG ratio is calculated by dividing the P / E ratio by the expected earnings growth. A stock with a low PEG ratio is generally seen as a more attractive investment than a stock with a high PEG ratio because it seems cheap.

However, the PEG ratio can be misleading, as it only takes into account the current P / E and earnings growth. A better way to determine if a stock is overvalued or undervalued is to include historical P / E ratios and growth rates. However, this is not possible for new shares due to lack of data.

Dividend yield is the return an investor receives from the profits that a company pays to shareholders in the form of dividends. It is calculated by dividing the total dividend paid by a company by its share price (which includes both the share price and the price of the dividend). Dividends can be a useful yardstick for deciding when to sell your shares, as it can give you a sense of how healthy a company is.

Rule of thumb: All shapes and sizes

When you start investing, you probably do not know what a good price for a stock is or how to see if it is undervalued or overvalued. It is best if you use a rule of thumb. When a stock appears to be overpriced, there is a strong argument for selling it. If it appears to be underestimated, a favorable entry point may occur. However, there are no exact formulas or calculations to determine if a stock is a good investment. The only way to find out is to do your own research and come to your own conclusions.

Summary

When you start investing, it is important to understand all the factors involved in deciding whether or not a stock is a good buy. This way, you can avoid having to sell your shares at a lower price than you paid for them. The price-to-earnings ratio, PEG ratio, dividend yield and earnings growth can help you decide when to sell your shares.

Buy, hold or sell – your Rheinmetall analysis from 21.07. gives the answer:

How will Rheinmetall develop now? Is a post worth it, or should investors rather sell? Find out the answers to these questions and why you should act now in the current Rheinmetall analysis.

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