- Share markets are very volatile, and one must consider the risk factors before investing their hard-earned money.
- To minimize the risk factor, one should opt for diversification.
- Solely looking at price movements is not advisable, one should also consider the volume.
- Several technical analysts consider volume as a crucial factor before making investing decision.
Have you ever wondered what are share markets and what shares are all about? You might have heard from somebody that Mr. X has been investing in ABC company. Also, there are several articles saying how to turn your savings into an investment opportunity.
Young people having the enthusiasm and interest in trading in the stock market are the ones lacking the basic domain expertise. As a result, they end up making losses. Therefore, it is necessary to gain some knowledge about basic tools and necessary training to make the right decisions.
In this article, we will learn some basics of share market and what things you should consider before investing in the stock market.
What is a share?
If you own a share of the company, you can consider yourself a shareholder and you can also expect dividend payments. Being a shareholder, you have the right to vote on decisions influencing the company. Revenue growth, profit growth and outlook of the company are some of the basic factors to consider before investing.
How is the share price affected?
The share price of the company is generally affected by the recent announcements or any information about the industry in which the company is operating. Investors tend to buy the stock when the broader industry is expected to benefit. However, many externals factors, like political events and economic events, also influence the share price of a stock.
While looking at the share price movement, one should also consider the volumes. Volumes play a critical role when it comes to conducting technical analysis.
Also read: Tips for Monster Returns from Equities
Is there any risk involved in investing in shares?
Investing in the stock market is generally riskier than many other investments. It is generally because share prices are very volatile, and they are sensitive to the changes in macro-economic environment. However, higher risk involved also means that you have an opportunity to make a greater profit. It is necessary to understand that investment in shares is a long-term process and patience is the key. To minimize the risk, one should always diversify their investment.
Earlier, in the article, we talked about the movement in share price and, considering share price movements, one should never ignore trading volumes.
It is generally said that higher the trading volume, higher is the liquidity on the stock. Most of the technical analysts rely on trading volumes and they try to base their decisions on it. Therefore, while movement in the stock price is utmost important, its volume is equally crucial.
In this article, we are going to look at the following three stocks:
Fisher & Paykel Healthcare Corporation Limited
On July 20, 2020, the stock of Fisher & Paykel Healthcare Corporation Limited (NZX: FPH) closed the day’s trading at NZ$35.760 per share, a decrease of 0.53% on an intraday basis.
Strong Performance in Second Half
Before COVID-19 impacted sales, FY20 was on track to deliver robust growth. As a result of increased demand for Hospital and Homecare products, the second half of the 2020 financial year saw the company deliver better-than-expected financial performance.
Operating revenue stood at $1.26 billion, up 18 per cent over last year, or 14 per cent in constant currency. Net profit after tax stood at $287 million, up 37 per cent over the previous year. The increase in revenue was largely driven by growth in the use of Optiflow™ nasal high flow therapy, demand for products to treat COVID-19 patients, and strong hardware sales throughout the course of the year.
In the Hospital product group, revenue increased 25 per cent, or 21 per cent in constant currency, to $801 million for the year.
Results in Brief (Source: Company Reports)
Metlifecare Limited (NZX: MET)
Metlifecare Limited (NZX: MET) has recently advised that, on July 5, 2020, it received on a without prejudice basis a non-binding indicative offer from APVG (or Asia Pacific Village Group Limited) to acquire all Metlifecare shares for NZ$6.00 per share under the Scheme of Arrangement.
On July 20, 2020, the stock of MET closed the day’s trading at NZ$5.900 per share.
The a2 Milk Company Limited (NZX: ATM)
On July 20, 2020, the stock of ATM closed the day’s trading at NZ$20.530 per share, a decline of 0.82% on an intraday basis.
Because of the current situation of COVID-19, the company is uncertain about its future. The company’s full year EBITDA margin is expected to be above that was advised in the month of February and between 31% to 32%. This assumes that planned marketing activity for FY 2020 of $200 Mn, weighted to 2H FY 2020, would be fully expended prior to year-end.
The company’s 2H FY 2020 EBITDA margin is expected to be higher than previously expected. This is mainly as a result of:
- Higher revenue, and higher gross margin, from greater margin nutritional products, in part because of the consumer pantry stocking in 3QFY20 compared to anticipation;
- Positive impact arising from exchange rate movement in USD: NZD effecting China segment revenue and earnings; and
- Lower than anticipated costs for travel, and other costs as a result of a delay in planned recruitment, due to coronavirus restrictions.