Millennial Stock Market Tip #3: Find The Cheap Opportunities That Nobody Wants
The stock market ebbs and flows. Many lists of stock market tips will tell you to follow the sheople. They say to take a look at market trends and ride the wave up. It makes sense, and it can lead to gains. But it’s not what Millennials should be doing.
Instead of following the heard, take a look in sectors that nobody wants to be in. This is where you find the cheapest stocks and the largest long-term opportunities.
For a good example, take a look at the financial services sector as it stands today. The sector is being battered due to interest rate decreases and fears that a recession may be around the corner.
As a result of these fears, the financial services sector is currently trading with a price to earnings ratio of around 14. Compared to all other sectors, this is as cheap as it gets! The next lowest cost sector is the energy sector at 17.2 times earnings followed by communications at 21.3 times earnings.
This means that investing in financial will require an investment of 14 times what you can expect to see in earnings per share over the course of a year. That’s much cheaper than paying 17.2 times earnings in energy and 21.3 times earnings in communication.
Interestingly, the most recent earnings reports in the financial services sector have shown that these stocks are resilient. They are continuing to generate growth in both revenue and earnings.
While no one wants financial services stocks, millennials can be snapping them up cheap. Should a recession happen, we know that the banks will make it through and will easilly generate growth for investors in the long run. This is the type of stock that millennials should be paying attention to!
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