Buying and selling stocks is the oldest form of investment. The first recorded stock exchange dated back to the launch of the Amsterdam Stock Exchange in 1602.
Since then, the stock market has delivered generous returns to investors. Today, stock trading still reigns as one of the most profitable investments due to its numerous benefits.
However, this increasing number of publicly traded companies has made it difficult to choose a specific stock that’s bound to yield high returns. In this article, I’ve listed the benefits of stock trading and the best stocks to trade in 2024.
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What is Stock Trading
When you buy and sell shares of a certain company, you participate in the stock market through stock trading.
Stock trading usually follows the primary principle of online trading: Buy low, sell high. Essentially, you buy a stock at the lowest possible price and sell it at its peak before depreciating.
However, to each their own. As cliché as it sounds, this principle applies when looking at the behavior of stock traders.
Value stock traders don’t sell their shares when the company shows a negative outlook. They hold onto their share even when the company’s value depreciates as they consider its long-term and intrinsic value or ability to recover.
But what makes the stock market so popular? Here are the two primary appeals of stock trading.
Trading stocks allows you to hedge inflation
With stock trading, you can rest assured knowing your investment is safe during inflationary times. Unlike other investment portfolios, stocks are resilient because these instruments are directly affected by their respective company.
The idea is that the company addresses inflation because it directly affects its operations and earnings. Also, there are companies that thrive during inflation due to increased interest rates, like the ones in the financial sector.
Ultimately, dealing with inflation can lead to higher revenues and stock prices. With this, investors and traders deem stock trading safe and beneficial in an inflationary environment.
Trading stocks lets you capitalize on economic growth
When you trade a share of an American company, you’re also concerned with the US economy. Essentially, as the US economy grows, the earnings of all US companies follow suit.
This applies to any stock market. Thus, it’s only profitable to trade stocks based on the economic outlook of the country where they’re operating.
5 Best Stocks to Trade for 2024
As per the World Federation of Stock Exchange, around 55 thousand companies are now open publicly for trading in 2023. Considering that huge number, it’s surely difficult to pick the best one to invest in.
But don’t fret; I’ve compiled the best stocks and the reason why they’re the best among the thousands of assets in the market.
Best Performing Stock: Microsoft Corporation
The software giant Microsoft (MSFT) is the best-performing stock by market capitalization. As of 2024, MSFT stock has reached a market cap of $3.133 trillion and is forecasted to increase further in the coming years as its Office 365 and Xbox continue to grow.
The dominance of Microsoft Azure in the cloud computing market and the introduction of its AI service can be a significant mover and stabilizer for MSFT price growth.
Most importantly, its long and solid track record made many investors confident in the future of this stock. Most of its services are subscription-based, and this monetization strategy has created a steadily growing and recurring revenue stream.
Second Largest Stock: Apple Incorporation
Apple’s strong business model, consistent innovation, and impressive brand loyalty made it the best momentum stock for 2024. Overall, Apple is the second largest stock worldwide, with a market capitalization of $2.620 trillion.
Today, many investors don’t see Apple as a buy due to the market sentiment and preference for AI tech providers like MSFT and META.
However, stock analysts are still optimistic about its outlook for next year. In fact, Wall Street forecasted the Apple stock price to reach an average of $200.
Most Active Stocks: Tesla Incorporation
Despite the significant decline it has been experiencing since the beginning of 2024, Tesla still stands as the most active stock market today.
Many investors and traders know its potential to recover, considering its historical revenue growth from 2017 to 2022. Elon Musk and his team have managed to impressively transform its $2 billion net loss (2017) to $13 billion net income (2022).
With its impressive growth, the market capitalization of Tesla is now at $565.84 billion, making it the 14th largest company.
However, what makes the market active considering its continuous decline?
Well, that’s simply because investors and TSLA fanatics are looking forward to the market introduction of Tesla’s Full Self-Driving (FSD), which allows vehicle operation without any involvement from a driver.
This upcoming market event makes the TSLA investors optimistic and bullish about the market. With this, the TSLA stock market has an average trading volume of around 103 million, compared to MSFT’s $22 million.
Best Momentum Stocks: Amazon
The multinational tech company Amazon (AMZN) reigns as the most improved stock market thanks to its skyrocketing gross margins. The primary reason behind this improvement is the expansion of offered services, which introduces the booming Amazon Web Service (AWS) to the market.
As of writing, AMZN remains a standout among all momentum stocks, with most analysts viewing its market as a strong buy. Today, the AMZN market is the 6th largest company by market capitalization, which stands at $1.852 trillion.
Its position as the leader of the e-commerce industry draws a clear path for its long-term and stable growth.
Best Inflation Stock: American International Group
The American International Group (AIG) is the best stock if you want your investment to thrive during inflation.
AIG is a financial service provider in the USA that primarily provides insurance plans and retirement products to individual and commercial clients. Its company share can be traded on the New York Stock Exchange (NYSE), and currently, its market has reached a capitalization of $52 trillion.
But the question is, why is it considered a safe stock to trade during inflationary times? Well, that’s because AIG operates in the financial sector.
Remember, rising inflation results in an increase in interest rates. This rate appreciation only means one thing: insurance providers like AIG will enjoy higher investment income, which will result in an increase in its stock price.
With its ability to raise premiums despite the rising prices, AIG stands among the top stocks that will likely withstand inflation.
Best Practices in Picking Stocks to Trade
The ‘best’ stocks to trade or invest in vary from investor to investor. A certain stock may be ideal for someone, but it may not be for you. Remember, traders have different trading experiences, capital, risk appetite, and style.
Here are the best practices you need to master when you’re choosing which stock to trade in based on your specific trading style.
- Know your financial goals. Having a clear idea about your goals saves you time from choosing assets and even investment losses due to potential irrational trading decisions.
- Monitor market volatility. Looking at the volatility of the stock gives you an idea of the amount of money flowing in and out of the market. A high amount of money coming in opens you up to profitable opportunities.
- Analyze the technical and fundamentals. Knowing the market pulse puts your stock trade or investment in an optimal market position. With fundamental analysis, you identify the company’s financial and growth outlook. Meanwhile, technical analysis gives you insights into optimal entry and exit points.
- Do your own research. Ignoring the power of knowledge can put your investment at significant risk. You should be aware of all the benchmarks that affect the stock market you’re about to enter to ensure profitable trading.
Final Thoughts on Choosing the Best Stocks to Trade
Stock trading is not only for economists or professional traders. If you’re a beginner trader, you can also participate in the stock market and profit from it.
Make sure you know how to choose the best stocks to trade and invest in to up your investment game and the potential for great returns.
Interested in learning more about stock trading? CommuniTrade has a dedicated space for stock traders to talk about anything related to stocks. Start mastering stock trading with your fellow stock traders!
