If you have been waiting for the perfect time to get some holdings in the energy sector, now may be the perfect time to do so. I know I will.
Over the last week or so, almost all of the stocks in the energy sector have hit a slide to almost a record low. Although at one point, it may have seemed that these stocks were starting to recover, they got hit with another hard one yesterday.
I don’t know about you but I plan to take full advantages of these attractive prices when the market opens today. At these prices, it is almost impossible for me to pass up this opportunity to get into the game and to invest in some of the companies that I have been looking out for. The stocks that I will be looking into include:
- Canadian Oil Sand Ltd. (COS)
- Suncor Energy Inc. (SU)
- Canadian Natural Resources Ltd. (CNQ)
- Chevron Corp. (CVX)
- Exxon Mobil Corp. (XOM)
- BP PLC (BP)
My Process in Selecting Stocks
As someone who is relatively new to trading stocks, I have created a process for myself when it comes to selecting stocks. Initially, I was introduced into the stock trading world through the method of technical investing. I saw stock trading as a formula of buying low and selling high.
However, after investing in some not so good stocks, I began shifting my perspective more towards fundamental investing. Instead of just simply buying low and selling high, I am now more interested in the long term growth of my stocks and the value each companies hold.
Even though I am definitely no expert, I gave myself the following guidelines when it comes to choosing which stocks to invest in. I have learned not to just invest into any random companies the hard way and I believe that setting some guidelines for myself will help me improve my stock trading.
- A modest P/E ratio: A P/E ratio between 10 and 20 is usually a good indication that there is room for growth in the company.
- Good Reputation: Before selecting stocks, I would like to do some research in the company. I like to ask myself the following questions.
- Is the company well known and reputable?
- Is the company undergoing a split, take over or being taken over?
- How well is the company doing financially?
- Is the company holding a monopoly in its industry? Who are the competitors?
- Who is the CEO of the company?
- What is the future outlook for the company?
- Dividend Yield: Dividend investing is something that I have been looking into more and more recently. As a result, I now like to consider the dividend yield ratio and the reputation of maintaining their dividend rate over the last few years.
As a last thought, I would like to end with something that I have been entertaining. I have recently been looking into some of the popular mutual funds/indexes and have been analyzing their top holdings. I can’t help but wonder if their top 10 holdings are good for the banks to invest into; shouldn’t it be good enough for us too?
That is it for now. I am sure that this guideline will get more extensive as my journey to financial freedom progresses. In the meantime, I will be waiting to see how the market opens today in terms of the energy stocks and will be ready to make some purchases.
If you have been in the market longer than I and have something to contribute to my list and would like to share it with the ME community, please don’t hesitate to do so in the comment!
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