Stock Price Predictions

robertbanking

Hello you very wonderful and amazing individuals that make up this forum. I sincerely hope you are having a pleasant week.

Something i have never really understood is how sites like Tipranks can make price predictions for stock. For instance they mention Firstgroup PLC has an average price target of 191.67p. There must be some formula that goes into these price predictions. I kindly wondered please if anyone knows what information or calculations on the company is carried out to get these price predictions please? Lastly can i kindly ask how reliable you think these might be please? If anyone kindly had any thoughts on this i would be forever grateful and thankful for your support with this, it would mean the world to me. 

A very sincere very best wishes to you all and thanks to all the wonderful people who post very informative and helpful posts on this forum. I truly hope your investing continues to go amazing. Hope things continue to go well for you. Take care. 

wmb194

robertbanking said:

Something i have never really understood is how sites like Tipranks can make price predictions for stock. For instance they mention Firstgroup PLC has an average price target of 191.67p. There must be some formula that goes into these price predictions. I kindly wondered please if anyone knows what information or calculations on the company is carried out to get these price predictions please? Lastly can i kindly ask how reliable you think these might be please?

They just take the analyst price targets and average the number.

george4064

wmb194 said:

robertbanking said:

Something i have never really understood is how sites like Tipranks can make price predictions for stock. For instance they mention Firstgroup PLC has an average price target of 191.67p. There must be some formula that goes into these price predictions. I kindly wondered please if anyone knows what information or calculations on the company is carried out to get these price predictions please? Lastly can i kindly ask how reliable you think these might be please?

They just take the analyst price targets and average the number.

Just to elaborate on this: analysts will use various valuation models based on projected earnings, dividends etc to come up with a price target.

Since FirstGroup PLC pay a dividend, the valuation model will be based on projected earnings/profit growth, forecast dividend payouts and a discount rate (usually this is intrinsically linked to the company's expected growth).

coastline

Share price forecasts are explained on this link. I'd rather concentrate on the actual forecasts . Sales , profit , earnings and dividends can be seen in green blocks. Going up is what you need to see. That doesn't mean the share will rise if bought today. What's priced in is key as sometimes a share can get ahead of itself . You can buy and it goes down very often . Ain't easy.

FirstGroup PLC (FGP:LSE) Share price, analysis, charts, news, dividends, EPS forecasts, annual reports and RNS - Investors Chronicle

FirstGroup PLC, UK:FGP Advanced Chart - (LON) UK:FGP, FirstGroup PLC Stock Price - BigCharts.com (marketwatch.com)

pedrodelgado

Take no notice of analyst predictions. They mean nothing. Do your own research and please bear in mind that ANY share price can go up or down for no apparent reason and it's all a bit of a gamble. 

Linton

pedrodelgado said:

Take no notice of analyst predictions. They mean nothing. Do your own research and please bear in mind that ANY share price can go up or down for no apparent reason and it's all a bit of a gamble. 

And even if they did mean something the price could well have moved against you by the time you decided to trade.  Small private investors should assume they are the last people to hear any news.

aroominyork

pedrodelgado said:

Do your own research

Alternately, don't. Who was it that said, a fortnight ago, "i am trying to find a perfect setup, screening stocks, then running the most beneficial realistic calculations and then going into further research into a company... i could be alot better with a Fund." So buy a global index fund; you'll then have more spare time to earn extra income.

robertbanking

Thank you very much for getting back to me on this, your posts really are amazing and i am very thankful for your opinions on this very much.

george4064, i am very grateful for your response on this. I understand analysts will use various valuation models based on projected earnings. However, since First Group PLC pay a dividend, the valuation model will be based on projects earnings/profit growth, forecast dividend pay-outs and a discount rate. Thank you so much for your feedback on this.

coastline, thanks again for your fabulous and helpful post it really means alot. I understand you concentrate more on the actual forecasts like sales, profits, dividends and earnings. Can i kindly please ask is there anyway to work out what is priced into a share price? Lastly can i please ask regarding strong business fundamentals, is there anything further such as sentiment, other factors that could help drive a share price higher please? If you kindly had any thoughts on this i would be forever grateful and thankful, it would be highly appreciated.

Sending you lots of good wishes and i truly hope your investing continues to generate massive returns. Have a fantastic week and all the very best to you as always. 

coastline

robertbanking said:

Thank you very much for getting back to me on this, your posts really are amazing and i am very thankful for your opinions on this very much.

coastline, thanks again for your fabulous and helpful post it really means alot. I understand you concentrate more on the actual forecasts like sales, profits, dividends and earnings. Can i kindly please ask is there anyway to work out what is priced into a share price? Lastly can i please ask regarding strong business fundamentals, is there anything further such as sentiment, other factors that could help drive a share price higher please? If you kindly had any thoughts on this i would be forever grateful and thankful, it would be highly appreciated.

Once you've done your research and highlighted possible growth stocks you can either buy or wait for a pullback in price. There's no guarantee a pullback will occur . On the other hand you buy and unfortunately the share price falls . That's the way it goes short term. So what's priced in is hard to predict. One way is to compare the stock with similar stocks in the sector. Even compare it to the general market. Here we are talking about valuations and P/E ratios. So your share trades on a P/E of 20 and the sector 15 . The general market might be 13 ? Your research should tell you the forward earnings forecasts which I constantly go on about. If growth in earnings is forecast , usually 1 or 2 years ahead , then maybe that's why the share is trading at a premium ? So you could argue much is priced in ? Still hard really. Again if very little or no growth is forecast then the share has a much greater chance of returning to average sector and market valuations. In other words the share has a much greater chance of falling in price. This usually happens and sometimes overnight after a company statement or analysts forecast. As I've mentioned in your other threads share performance is based on company fundamentals and general market sentiment especially the direction of the US markets. Maybe have a look at your technical analysis thread where I've posted a few times for exit and entry points. At the end of the day most investors will buy a stock with good growth prospects and something stable. Maybe simple stuff like Unilever or Next. Nothing wrong with that. As been mentioned by others you're trying way too hard to find answers. Maybe buy a global tracker and a few shares alongside and see how you go. Good luck.

LHW99

Try reading up on technical analysis (eg https://www.investopedia.com/articles/active-trading/102914/technical-analysis-strategies-beginners.asp - other sites are available).

Generally I have found that if a stock is tipped it will lose money for me, so I avoid, but that could just be my luck ......

coastline

LHW99 said:

Try reading up on technical analysis (eg https://www.investopedia.com/articles/active-trading/102914/technical-analysis-strategies-beginners.asp - other sites are available).

Generally I have found that if a stock is tipped it will lose money for me, so I avoid, but that could just be my luck ......

I'm no expert with TA but I use it in general . Article has a chart with 50 and 200 day crossover but notice where that point is relative to price. It's selling near the bottom of the move in both cases. That's the reason I never use a wide variation in moving averages they're not accurate enough. Many tools in TA and I've picked ones which follow the waves of the market or share that way I make much better calls.

dotdash_Final_Technical_Analysis_Strategies_for_Beginners_Sep_2020-01-412a1ba6af834a74a852cbc32e5d6f7c.jpg (750×748) (investopedia.com)

My first alert the lower indicators have possibly peaked but the SP 500 is still above the tight moving average . If both are confirmed that's SELL to me. That's my short term system , no better or worse than many on twitter and youtube etc. It's all opinions really. Hope that helps. Blogs etc want you to pay $100 a month for this stuff .

 S&P 500 Index, SPX Advanced Chart - (S&P US) SPX, S&P 500 Index Stock Price - BigCharts.com (marketwatch.com)

For example I'll take the two shares I mentioned at random in my previous post. All research is done and prospects for both companies are decent. So we buy. ? Buy and hold or apply a bit of technical analysis. I've set a long term chart in the monthly timeframe and as a guide a 5 month moving average . MACD as a lower indicator .UNILEVER. Until early 2022 the orange MA was pointing down and price below most of the time. MACD was also negative blue below red and histogram in black negative. Then the share rallied and the indicators looked positive. In recent months things are negative again but there's a possibility that is about to change.? So Unilever is on the BUY radar but not confirmed.

Unilever PLC, UK:ULVR Advanced Chart - (LON) UK:ULVR, Unilever PLC Stock Price - BigCharts.com (marketwatch.com)

NEXT has been positive all year after being negative in 2022..So Next would be HOLD for now as it's positive.

Next PLC, UK:NXT Advanced Chart - (LON) UK:NXT, Next PLC Stock Price - BigCharts.com (marketwatch.com)