Last Updated on January 15, 2019 by Zane Foley
By MS Author: Zane Foley
“Invest in Apple, invest in Tesla,” these were the stocks people, parents and professors were telling me to invest in after working my first salary position after college; but I wanted my first step into the larger world of stocks to be more than a learning experience on alternative banking. Instead I thought, “I don’t want to just invest, I want to make real money.”
As a college graduate and someone confident in my perceptions of growing trends, I put my abilities to the test and hit the internet following top investors on twitter, picked up the latest Wall Street Journal, and started researching. After a few days of filling up a notebook and watching YouTube videos I invested in my first two stocks. Nine-months later both my investments had nearly tripled. I wasn’t lucky, I was diligent, and you can too: Here’s how.
Initial Points of Investment Interest
I “hit the books” and what I came to learn about stocks and finance was astonishing and changed the way I view wealth. Here are just a few general Stock Market facts:
There are 11 sectors to the market with Tech being the largest. According to TIME Magazine the richest 10% of Americans own 84% of the Stock Market, while roughly half of all households have no investment in stocks.
What did this mean to me? Owning even one stock automatically puts you into a refined category of wealth and as it turns out my parents and professors were wrong; buying stock in a company already established most likely won’t birth significant wealth. Especially when I was only investing a few thousand or hundred dollars at a time.
Instead I knew I had to find emerging companies and industries ready to boom–and that’s exactly what I did. If you are up to investing the time (no-pun intended), with some potent research maybe you can nearly triple your investment as I did with my first two stocks:
Advanced Micro Devices (AMD)
September 12th, 2018
YEXT Inc. (YEXT)
Jan. 10th, 2018
September 7th, 2018
Age of Advantage
It is said youth is wasted on the young, but being a young investor in 2018 elevates your age to your advantage. As technology continues to evolve so does its functions in our lives; from smartphones to virtual reality, to self-driving cars and robotics, tech grows into our lives as we grow–whereas it grows out of reach to the elder men and women struggling to connect their Bluetooth printer to their iPad.
What does this mean? As young adults we have an intuitive grasp on how tech will evolve since we’re living knee deep in it. So, upon my research, I felt confident in my decision to buy my first stock in tech, the largest sector of the stock market. But here is where we get down to the nitty gritty.
Artificial Intelligence, The Real Deal
I felt that many major investing experts and analysts agreed Artificial Intelligence is an industry that is only going to grow. It’s difficult for to disagree when research firms like Tractica forecast artificial intelligence revenue will reach $59.8 billion worldwide by 2025–up immensely from 3.2 billion in 2016. And IDC, another market research firm, similarly forecasted that AI revenue will grow to more than $47 billion in 2020, with about half that total being software-related.
Even companies like Netflix (NFLX) use AI to make program recommendations to subscribers; payment processor PayPal (PYPL) uses AI tools in fraud detection; social media leader Facebook employs AI in targeted advertising and facial recognition tools which drive, among others things, photo sharing apps.
Yext is a fast-growing tech company that enables restaurants, banks, doctors, and other businesses to centrally control online data in near real-time. On November 5, KeyBanc analyst Brent Bracelin assigned a buy rating to Yext with a $16 price target. Given that the stock was trading at just $12, this suggested an upside of 33 percent over the next 12 months. “Voice search and AI are under-appreciated positive factors that could sustain high revenue growth for Yext in excess of 30 percent for an extended period of time, in our view,” the analyst said. Yext had received three recent buy ratings from top-ranked analysts. However, analyst recommendation was not the only reason I invested in Yext. Several lines of evidence including YEXT’s finances, market need/demand for its service, and management’s ability to execute converged on a common conclusion: Invest in YEXT.
AMD had a lot of hype surrounding it after gaining over 200% between 2016 and 2017. Some argued that the ceiling had been reached and the company was overvalued. AMD caught additional scrutiny from analysts for its long-term debt. However, by February of 2018 AMD had already cut its long-term debt down by 7.7% year over year (YOY), about $110 million. At the core of investment decision was because AMD’s primary proprietary asset was, and still is, data center chips–which boasted a 40% increase in sales from the year before. Couple that with the fact that AMD was known as a preferred graphics card for cryptocurrency (which was the latest fashion at the time, and still a hot topic), all the stars seemed to align to provide AMD with longevity and growth. The company was from its ceiling as far as I could tell and it turned out I was right.
Finding and picking stocks to invest in takes time and diligence, but the reward is worth the work. In my case I set out to find companies in the tech sector poised to grow in 2018 and beyond. However, everyone has their own niche that they are knowledgeable about whether it be through schooling, life experiences, or a combination of both. Passion too should not be overlooked. For example, at MS we have a passion for biotech stocks. That fire and zeal partnered with a strong background in the sciences has led to great success. What’s your predisposed strengths? Where does your passion lie? Answer those questions and be willing to roll up your sleeves and conduct some through research into your sector and you too can triple your investments in 2019.