This following are common signs that a stock is in trouble. These are basic signs that do not always guarantee that a stock is going to lose money, but these are points that suggest investing in a stock would have a harder time producing a profit for your investment.
- A stock might have been trading above $10 per share for a long time but has just recently decreased to $10 or even below it.
- A stock had a big decrease of about 15 to 25 percent of its value in a short period of time. Try to find out why the stock fell in value so quickly. It could be from one of the aforementioned reasons.
- The stock’s value seems to have reached a plateau. In this case, the stock has increased to a certain total and has not been able to get beyond that value.
- The earnings on that stock are declining in value. Any business where the earnings are consistently dropping every year is a real problem. It is one thing for earnings to go down in a year, but it is even more concerning when this is happening more often.
- The total volume of debt within the company is growing.
- The sales numbers and other financial factors for a business pale in comparison to its competitors.
- The P/E ratio is much higher than what it is like for other businesses in the same sector but you cannot find a reason for why this ratio is going up in value.
