6 key concepts for physicians to make the right investments

Laura Dyrda - Print  |

Busy physicians don't always have time to do all the research on companies before making purchasing stock; however, they still want to make the right investments.

Medscape recently published a report outlining the most important factors to focus on when making investments:

1. Earnings per share, which shows the value of earnings relative to each share of stock. Better-than-expected earnings per share means price will go up.

2. Forward-looking statements on earnings include earnings estimates for the next quarter; a company that beats estimates but reports a potential struggle to meet estimates for the next quarter could mean the stock price will fall.

3. Price-to-earnings ratio shows the amount investors are willing to pay for one dollar's worth of earnings; companies with high P/E have investors expecting big future results. Exceedingly low P/E is a red flag.

4. Free cash flow, which is the cash companies produce from operations minus necessary expenses and could return to shareholders as dividends if the company decides not to grow in the future. It's a red flag if the company has low cash flow because the company may not be able to pay bills in the future.

5. The average share volume to sustain upward movement is at least 500,000 shares; stocks with lower volume may not have a reputation, profit or could have experienced financial issues.

6. The 50-day moving average can indicate price of the stock overtime and indicate when to buy or sell. Trading below a short-term moving average can suggest momentum is shifting downward; on the other hand, moving above the market suggests likely upward momentum.

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