When Should Investors Buy a Stock?

Stocks, bonds, ETFs, straight out of downtown Chicago. This is Zach's Market Edge. Welcome to Zach's Market Edge, the podcast about investing in your life. I'm your host, Tracy Reinick, and this week I'm going solo to talk about a question that someone who listens to the podcast sent in to me. When do you know when to buy a stock? We've talked a lot about when to sell one, but when do you know when to buy one? And you can get kind of frozen a lot of times, especially in a market that is either very hot or kind of cold. You can kind of get cold feet yourself on when to buy. Now, I do think that there's a difference between the traders and the long-term investors. the traders know when to buy because they're using their trading strategies. It's uh you know following the chart. Maybe it's a 50 moving day, it's a 200 moving day or you're looking at Fibonacci levels or you have some other kind of strategy with the chart that tells you or gives you a signal on when you should be buying and maybe when you should be selling. So, they have it a little bit easier. But what about the long-term investor who's just out there trying to find good quality companies to buy and they have their list and then they get kind of frozen again uh when they go in to buy even if they've got the cash on hand. And then there's a second question on when to know when to buy and that is do you deploy all the money upfront? do you dollar cost average in? There's a lot of emotions involved in investing, especially um on the buy and the sell side of things. And so, we're going to talk about the buy today. Uh when do you buy? When do you jump in there? If you're a longer term investor, not the traders, I'll leave that up to them. Now, some of the reasons I do like uh the Zach's rank actually is because it can give you some guidance on when to know when to buy, but it's not foolproof, but it can get you off of uh the couch, so to speak, if you're looking at something and you've kind of been sitting there on the sidelines because we do have the ranking systems of strong buys, the buys, the holds, the strong sells. cells and the cells. So, um, if you're looking, you can use that as a little bit of a guidance. Even though it is a shortterm recommendation of just one to three months, but as I've always said with the strong buys and the buys, something good is usually going on at the company to have that kind of rank. And if you've been watching a stock for a while and you're unsure whether or not to get in um or you know to dollar cost average or should you just put it all in at once, having a high Zach rank can kind of give you the impetus to be like, okay, something good is going there. The analysts are raising their earnings estimates. This is the type of stock I do want to own, so I'm going to get in here. Now, I'm going to take a look at five different examples of why it's so difficult to know when to buy a stock. Uh these are well-known stocks and uh they each have different scenarios going on right now. And we're going to talk about, you know, when when do you know when to get in on some of these. So, the first one I wanted to look at is McDonald's, ticker MCD. I haven't covered McDonald's on the podcast in years. I if even ever, I'm sure I have at some point over the last 11 years talked about McDonald's. But why am I talking about it now? So, you can see I brought up the page here on zach.com. It's a number three hold. So, this isn't even if I'm thinking about buying McDonald's. The Zach's rank isn't really telling me anything because most of the stocks are in uh the number three holds. In fact, 80% of the Zach's ranked stocks are in the number three. So, that's not going to help me get off the couch. Uh, but just scrolling down and looking at this chart, this is why I brought up McDonald's as an example. So, this is an example of a stock that's making new multi-year lows. And many long-term investors like to track companies that are at the lows looking for deals, right? So, just even looking at this, you might be like, "Oh, should I have gotten in? Should I have gotten in after this first big downdraft in 2026?" Then it kind of meandered a little bit, but now we're falling again. And this is one of the more difficult scenarios on when to buy if you're not using any kind of charts or uh like a strategy in that way like a strategy of oh if this stock pulls back 20% then I buy it or um you know just even looking at like a 50 or 200 day moving average might give you an area where then you feel okay to get in. But on this one, if you're not using any of this, you just see it falling and then you get really freaked out like, "Oh, I'm glad I stayed on the sidelines because it's gotten even cheaper. But now what do I do? Cuz what if it keeps falling more? What if it goes back to 2022 lows way back here? Uh, that's still a ways to drop. So maybe I'm getting in too soon." So, this type of stock, um, you know, I usually look at other kind of fundamentals. What type of investor are you? If you're looking at McDonald's right now after this big sell-off, it's because you're probably a value investor of some kind. Obviously, this is not momentum because it's going the wrong way. And even on the growth side, let's scroll down and look, the growth side is on the single digits and it has been for a couple of years now. So, you're not really buying a growth stock here in that way, like the double digits, you know, AI revolution type of growth. Uh, so you're still getting the single digits. So, what I would need to get is real cheap on this if I'm going to get singledigit growth. And McDonald's, great brand and great uh name recognition. It pays a dividend. You can see up here, dividend is $744 yielding 3%. That's pretty good yield now with this selloff. But the forward PE here is at 19. The PEG ratio is 2.7. None of this is cheap uh as a value investor. And then scrolling down, price to sales is 6.3. That's really high. So we have a lot of still higher valuations here even though the stock has fallen. So, if you were thinking or you already in McDonald's and maybe you are thinking about adding to your position, um I would look at the price consensus and surprise chart. You can see a little bit of weakness here going forward on the earnings. It's not terrible, but a little bit of weakness is now expected by the analysts into 27 and 28. Um but again, not terrible and we do have earnings growth right now. But, uh, everybody who's following McDonald's knows that they've been struggling a little bit on the affordability side. They've always had that great value menu. They do have a lot of good items on the value menu, even today, but consumers are still kind of pulling back on eating out even at these value locations for food. And so, uh, same store sales down a little bit for McDonald's now or weakening I should say a bit a little under what is been expected because McDonald's has always been such a good value play. So, um, I'm looking at all of this and I'm not seeing um, you know, a value reason to necessarily jump in, but you can use the dollar cost averaging method here. This isn't one where I'm like I have to go full throttle in with all of my money, but it's nearly impossible to market time a bottom on a stock that's falling like this. So that's why dollar cost averaging might be a good technique here. And um if you are really looking to get it really cheap, the uh fundamentals that I just read off are telling you it's not there yet. So when should you buy this stock? Um, if you're a true value investor, it's not cheap enough yet. So, I would still be on the sidelines on this stock. But anyone else who is just interested or wants to add to a position, then nothing wrong with dollar cost averaging here because the estimates on earnings and even sales are holding up fairly well here. But uh doesn't mean we might not go lower here because momentum is to the downside right now on this stock. So that's McDonald's MCD and that represents a stock at lows, certainly 52- week lows, but even multi-year lows. And this is one of the more tricky ones because we all think we want to buy a stock on sale, but in reality, we really don't. we'd rather buy the skyrocketing stock than the one that's at multi-year lows. That's just how it works in stock investing. Um it takes a strong stomach to ignore the danger signs that are flashing when you see a stock sell off this much. So um some people can do it, but this is the most difficult on the buying side of things. So again, that's McDonald's MCD. So let's mix it up. Uh let's talk about one of the ones that does have the momentum, SanDisk. This is one of the big momentum stocks of the year, but looking down um at the chart, you can see the huge sell-off we just had over the summer here in 2026 in these shares. And now we're getting a rebound. So, if you were on the sidelines and you were waiting because you thought, "Oh, this is outrageous earlier in the year when it was hitting new highs seemingly every day." Now, we had the big selloff, but you might have been paralyzed into buying because it could it could keep going lower. So, you stayed on the sidelines, but now we're getting the rally. So in this type of stock, the momentum stock, um I really do look at fundamentals because I want to know are the earnings still expected to rise? Are do we still have a good story here? Are sales still rising? Um those are the reasons I want to be a longerterm investor in this company. So just scrolling down, yes, memory is still in demand. So, while last year we had this incredible growth, we had 175% on the sales and over 2,000% on the earnings, this year we're expecting 143% on the sales and 200% on the earnings. And then maybe it comes down next year, but still 18% on sales and earnings for next fiscal year. It's still cheap with the PE of 8.2, too. But a lot of value investors probably are a little scared of this one because of the chart, not the valuations and um they're concerned that maybe there's just too much speculation in there. But everybody else, momentum and growth investors, um the story is still there. So, how to buy a stock like this? You miss the bottom, at least this temporary bottom. We don't know if it will be the bottom, but you missed the recent bottom. Um, so on a stock like this, you uh again, look at the fundamentals. Is the story still there? Is the reason you were tracking it still there? Uh, is memory still in demand? It is. And yes, it's getting quite a bid right here, but this is when um the fundamentals are leading you into starting your position. Um you can dollar cost average this. A lot of people don't like to on stocks that are kind of speculative like this and having these big runs because you're going to miss a lot of the big runs if you're dollar cost averaging. So some of these are the types of stocks that a lot of people like to just go all in with a big position and then come what may. So that's SanDisk. It's a a momentum type of trade. Ticker SNDK for that one. Then I wanted to cover one I just covered for Zach's bull of the day. Nvidia. We talk about it all the time, but this represents a an old company. Let's call it old now. It's from the 90s. It's had an amazing run over the last 25 years and certainly over the last decade and then over the last couple of years. So, isn't everything already priced in? That's the problem with this type of stock. um the old mainstay, the magnificent seven stocks, isn't it all priced in? Uh isn't it too late to get in? And then the stock like Nvidia has kind of lagged. But I did want to use this as an example because it's become a Zach's number one ranked strong buy again and that means those earnings estimates are being revised higher once again. So for those looking at these older mainstay large cap companies that have been great performers in this century basically um and wondering is it too late to get in? It's good to use the rank to see what's going on with the fundamentals because something good is still going on at Nvidia because it's got that SAX number one rank. And scrolling down, um, they did just report a couple weeks ago. So, you can see analysts have been raising across the board for this year and next. Um, nobody's cut and the earnings estimates are higher once again. And again, this is a company I've talked about where we've said we'll never see it again. And here's the sales and EPS growth rate chart this year. This uh this is a fiscal year but this fiscal year up another 93% after 59% on the earning side last year and then another 65 expected for next year. Everybody keeps thinking oh this will slow down kind of like what we saw with SanDisk back down to like 18 or 20% growth but so far we're not seeing that at all with Nvidia. Uh forward P has actually come down quite a bit. It's at 24 now. Uh some of their other valuations are still stretched a bit, but I took a look at the price to sales ratio and it's around 17 times now. And it was trading as high as 40 times when the AI revolution broke out in 2023 as everybody just piled into the stock then. But those sales have been keeping pace with these shares. And we've had a little bit of a timeout, a pause over the last year or so. This year, the shares are up, but only only 20%. Um, that sounds sounds a little lame when you're talking about Nvidia only 20%. Uh, but this is why as it's trading again near its all-time highs, many of you are asking, should I still be buying this here? And it's hard to pull the trigger once you see a chart like this one, this price consensus and surprise with uh these just these big steady gains over the years and you're wondering how much longer can this last. So sometimes the rank can get you off that couch and in this case I believe the strong buy rank uh is trying to tell you something here with Nvidia and um it should move some of you even though it's a short-term recommendation into these shares. So I'm still bullish on Nvidia here um even after this long run. So this is the type of stock where you might not want to do a dollar cost average because it is just slowly grinding higher but um we have seen in the past where after these pause periods it does have uh some nice rallies in there. So I would be taking a big position if I had extra cash on the sidelines in a stock like Nvidia right now. Ticker NVDA. Then let's talk about cyclicals. Although SanDisk is among a cyclical, but I used it for momentum trade instead right now because we're in the bull cycle on that one. Um, but let's look at some of the commodities. These are pure cyclicals. These are difficult ones to know when to buy. Hopefully, you buy early in the cycle, and that's before the stock has really run up. But in commodities, the cycle lasts usually more than just one or two years. It can last a decade or more. So, you really have to know where you are in the cycle. And I'm bringing up Pumont, a gold miner here. It's the largest gold miner in the world. So, I'm not getting fancy with this one. Ticker NEM. It's a number three right now. But look at this chart. So, the cycle began back here in 2024. Nobody really knew it began back there. you'd have to be uh a real gold bug to have been buying gold in 2024 back there. But um even if you got in last year in 25 as gold hit new highs here in early 26 in January of 26, these shares just kept going higher. But we had a pause in gold. It pulled back off those all-time highs. And the commodity stocks usually move in tandem with the commodity and the shares came uh way down. I was telling everybody to buy on this kind of pullback in a cyclical stock and in a commodity um if you're in a commodity bull, which I believe we are now in gold. And we have had a rebound after gold prices bottomed and then had a little mini spurt higher again. They're It's not back to its all-time highs yet, though, but the gold miners are. So, what do you do about this one? Um, earnings should still be good because gold remains elevated and they're going to have very good free cash flows. And scrolling down to look this year, earnings expected to be up 31%. And, uh, next year they're starting to price in next year, up 10 already for next year. Uh, Ford P is just at 13 for Newmont. So the PE will decline as those earnings rise um because usually the stock can't really keep up. We are trading right near the highs. So on something like this, I like to dollar cost average in now that we're a few years into this bull on a cyclical stock like this. You can see we've had pullbacks as the price of gold has pulled back. So I'm thinking we will continue to see that. But ultimately, I believe the price will be higher as gold continues to hold these levels over 4,000 and hopefully moves a little bit higher through the end of this year. So, I would dollar cost average into these um because they can have these kind of crazy swings and it is hard uh for a lot of long-term investors to deal with. You know, putting a big position on and then you see a 20% pullback, which is pretty common in a lot of the commodity stocks. We're seeing it right now even with the oil producing stocks. um a nice pull back here even though crude remains over $90 a barrel. Um so you have to have a strong stomach on these commodities and then uh get in early in the cycle and I do believe we are early for um the commodities in general but uh we will have these pullbacks which you have can see right there on the screen. So this is pneumont NEM. I would be dollar cost averaging into these. Um and then I wanted to look at a uh value stock that maybe has taken off but it still remains cheap. This is also a tricky one on when to buy. So you know as a value investor that it's cheap. But then you go and you look down here at the chart. So this is Cityroup ticker C. I own it in Zach's value investor portfolio. We bought it a couple of months ago. So up here, it's just been trending sideways with a little bit of weakness actually. Um it was cheap when we bought it and it remains cheap right now. So what do I mean by cheap? So remember on banks, it's not really forward PE at all. Although the PE here is at 12, it's on price to book with the banks. So, scrolling down on sachs.com, we have a price to book here of 1.18. And for banks, you buy at one on the price to book and you sell at two. So, City Group is still very cheap here at the 1.18. It's at the lower end. So, it's not stretched on valuation. That's why we bought it in the value investor. But the stock is kind of going nowhere and and it's still kind of trading near its all-time highs or recent highs, five-year highs. I'm not sure if this one is an Alzheimer. Um, let's look. Let's look. Is this an all-time high? Um, some have been in the banking sector once again, but a lot of them still are not able to be back. No. No. looking back. Okay, I just put the all chart up for those who are listening in and that 27 decline there is just brutal and we're not even halfway back it looks like. Um so but it is still a multi-deade high for sure. So, we still have a breakout here in the shares. And so, um, just even looking at the price and consensus chart, we have a very nice outlook on the earnings. So, if I'm looking at fundamentals and I'm like, should I be buying this now? It's had this massive rally off the 2023 lows and even the 2025 lows and now it's going sideways. But your instinct should be what are the valuations if you're a value investor and the valuations are saying this is still cheap. This is why even buying is difficult um not just the selling of a stock. So looking at the earnings estimates um this year earnings expected to be up 40% to 1120 from 797 and then another 15% for next year which is also nice growth given what we're paying for the shares. So I'm liking all of this and um they are really growing this business right here and so it's still cheap. So this sideways action is giving you an opportunity to kind of dollarc cost average into these shares. Um I would be doing that on something like this because it really doesn't have any momentum right now. But on this next earnings report we may see uh you know further upside here in some of the banks the cheaper ones. Uh its rival JP Morgan Chase is one of the expensive banks. So, I'm staying away from the more expensive ones that are trading near their highs, but City Bank or Cityroup as it's called. City Bank is just the the banking part of it. Cityroup is still really cheap. Uh, one thing to watch is what's going on with the uh treasuries and interest rates because that can affect all of the banks and what happens with their earnings. So, we'll see moving forward. I feel like that's why we're seeing some of the weakness in the banks here after the Fed raised those rates. So, um, this is just people jumping out after a couple of years. So, I would be dollar cost averaging here. We did just buy our position in in the value investor portfolio, but this sideways action and being a little bit out of favor here probably into the end of the year here is giving you an opportunity to put smaller positions on and just build your position at uh relatively good prices here. So this is the type of stock that value investors would look at and that's why you have to really focus on the fundamentals of the company. Why are you interested in owning it and kind of ignore what the chart is doing? Because the fundamentals are all saying that this is a cheap stock here. And I know some of you are looking as I'm looking on zach.com. It has a style score of D um for value. So, that is telling me that it's not that cheap, but it really is on a price to book basis. I'm going back to the quote overview to see what else is going on. Uh, I'm not sure why it's got the D there. Price to sales is just 1.3 and then the PE is at 12. Even if you look at those things, it's pretty good and pretty cheap. So, and then we've got the double digit um earnings growth this year. Double digits on sales up 12.1 um and then next year just 4.3 so far. But again, we are getting it cheap and we're getting a dividend yielding about 2%. So, these stocks uh are good for value investors to be looking at because hopefully the valuations will be enough to get you off the couch here and to start those positions. But you're never going to be able to time it correctly on any of these. You're never going to get it at the very bottom and cheapest of the cheap that you want to get it at. You just kind of have to deploy what Warren Buffett has done over the years. when he finds a company that matches all of his criteria, whatever that may be, whether or not it's growth or in his case, value, um, or maybe you're a momentum trader, whatever your strategy is, then you do just need to trust your strategy and um, trust your instincts and get into that position because you're not an owner until you're actually owning the stock. And again, we can get paralyzed on the buying side. I've been there myself where you think, oh, maybe we're going to get more of a pullback here or it's going to keep going lower or in McDonald's case, it's going to retest those 2022 lows, but it may not. Um so market timing is very difficult thing to do but uh you do uh do better if you have some kind of strategy. So that's why whether or not it's charting, whether or not it's the Zach's rank, whether or not it's fundamental investing, um, have a strategy because it'll keep you from going a little bit more crazy in your buys and also your sells where having a strategy also works as well. So, um, keep these things in mind as you're looking to buy. There are a lot of deals out there right now and um the market is a little bit uncertain. So people are hesitating on what it is they should be looking to get into. Hopefully this gave you some tips and some ideas to use going forward in your own portfolio. Let me recap again the stocks we talked about. So there was McDonald's which was a stock on the lows. Those are among the most difficult ones to know when to buy because that is kind of market timing obviously and nobody feels good buying a stock and then having it decline even further. So that's why those stocks usually do decline further because people uh just don't like buying stocks going down. But uh the second one, SanDisk, ticker SNDK, is the momentum play, the stock going higher and higher and higher. Those aren't as difficult because we do like to buy stocks as they hit new highs, but leaves us wondering, is this too much? Is it too hot? Um then we had Nvidia. It's been grinding higher for several decades. These are also a little bit difficult. How much longer can it be doing it? The Zach rank can help you on some of these companies. Nvidia stills got that Sachs number one rank strong buy. Then we had the cyclical plays especially in the commodities and that would be Numont on the gold mining ticker NEM. You've got to get in early in the cycle. And so you've got to know what's going on with that underlying commodity to know are you early in or are you late? Um and so you can dollar cost average if you're earlier in in the cycle. And then uh just looking at the actual fundamentals like as being a value investor that can help those investors. If the stack is really cheap and the earnings outlook still looks good, like it did with Cityroup, ticker C, then um it helps you feel confident in getting uh into a position in that company. Of course, you should be doing more deep dives in any company that you own. follow those uh conference calls, listen in or read the transcripts and know what's going on at your companies because anything can change at any time. Management can change, the uh business climate can change. And so you have to stay on top of all this stuff when you're buying and selling stocks, at least as a long-term investor. And remember that nothing uh nothing does stay the same. And even for the uh golden companies like a McDonald's, you do have to stay on top of what's going on in the business model with everybody. So um I'm going to have to do an an episode on the se selling again sometime soon, I think. But I know many of you are having trouble on the buying side given what the market conditions are like. I'm still bullish on the market heading into the end of the year once we get past the elections. So, I'm looking around for a lot of stocks to buy and I'm going to be bringing them to you every week here on the Market Edge podcast. So, be sure to subscribe. Get us on YouTube. Get us on zach.comyoutube or put in zachinvestment research and subscribe over there. Get us on Apple. We're on Spotify. We're on Amazon Music. We're on Soundcloud for the audio podcast. Get us somewhere. And I'll see you again next week with some more stocks.