Things to Look Out for When Investing in Stocks.

• Major percentage (25 per cent or more) increases in current quarterly EPS
• P/E ratios – high P/E ratios for growth-investing and low P/E ratios for value-investing
• Annual EPS growth over 3 to 5 years (20 to 25 per cent).
• New highs, new products, new management as well as other indications of anticipated positive change

Cyclical Stocks
This is a stock that rises quickly when economic growth is strong and falls rapidly when growth is slowing down. An example is the automobile market; as economic growth slows, consumers have less money to spend on new cars. Another example is the housing market.

Defensive Stocks
These are also called non-cyclical stocks. They are stocks that tend to remain stable under difficult economic conditions. Defensive stocks include food, tobacco, oil, and utilities.

Earnings Season
These are the months in which the majority of quarterly corporate earnings are released to the public. In general, each earnings season begins one or two weeks after the last month of each quarter (December, March, June and September).