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Best Swing Trade Stocks to Buy in 2021

Top 10 Swing Trade Stocks to consider this year

Last Updated July 23rd 2021
7 Min Read

Some people think that day trading stocks is an easy way to earn a living. However, the truth is that like any other job, it is not easy for new traders to do well in the market. It needs a lot of effort and you must be vigilant to locate stocks with potential. 

You might need the help of high-tech stock scanners to locate such stocks. All this makes day trading a more challenging process, especially for a newbie. Also, the FINRA (Financial Industry Regulatory Authority) has strict rules putting on limits as to who can day trade.

Accordingly, if you don’t have an account balance of $25,000, you will be allowed three day-trades during a rolling five day period. It means that if you complete 3 day-trades on a Monday and open a new position on Tuesday, you’ll have to hold that position overnight. If you don’t, you will be flagged with a PDT (pattern day trader) violation. However, most brokers won’t allow a 4th-day trade execute, leaving you stuck.

Best Swing Trade Stocks in 2021:

  1. Facebook (FB)
  2. Microsoft (MSFT)
  3. Apple (AAPL)
  4. Salesforce.com (CRM)
  5. Netflix (NFLX)
  6. Advanced Micro Devices (AMD)
  7. Starbucks (SBUX)
  8. PayPal (PYPL)
  9. Amazon.com (AMZN)
  10. Alphabet (GOOGL)

 

Swing trade – the best way to trade?

One of the ways the traders use to avoid the FINRA restrictions is swing trading. It is a type of trading that tries to secure short to medium term gains in a stock over a few days or even several weeks.

Swing traders mostly use technical analysis to find trading opportunities. If you are a swing trader, you might wish to use fundamental analysis in addition to analysing the price trends and patterns. Swing trading is a short-term trading strategy where stocks are held overnight mainly to avoid the PDT rules. Swing traders hope to profit from high volume swings like short squeezes or earnings improvements.

Although it is a common way to avoid the PDT tag, swing traders expose themselves to extremely volatile moves by holding overnight. However, the chance of earning a profit is exponentially higher, especially if using options, making this a rather attractive option.

Which stock to buy for swing trading?

Generally, the best stocks for swing trading are the ones with proven catalysts, high volume, and adequate volatility to render short-term trading profitable. Swing trading prospects do not depend on sectors. Sectors mean little, as do fundamentals.

As it is a short-term investment, the technical signals are more important than price ratios and debt loads. Hence, even if a company has a massive amount of long-term debt and dry cash flow, it can still be a perfectly lucrative stock for swing trade.

Profitable swing traders must be quick with their decisions. You’ll need a variety of strategies to ensure and enhance profits, but the swing stocks generally share some common characteristics.

Features to look for in swing trade stocks

While searching for swing trading stocks, you don’t have to consider debt levels or price to earnings ratios because they are not relevant for a short-term trade. Here are some of the features to look for if you are looking to get into swing trading.

Catalyst

Locating a catalyst that could trigger a strong move-in is the best way to start a swing trade. A catalyst could be anything such as an announcement of ground-breaking technology, clinical trial of a new drug, or even the replacement of a CEO or top-level executive.

Volume

You cannot expect to make big moves in a short time without a significant volume. Although lightly traded stocks can be forced into big moves without much volume, most swing traders look for stocks with a larger volume.

Volatility

The greater the volume, higher the volatility. Volatile stocks are ideal for swing trading stocks as they can help you profit from high-volume, short-term moves. If a 5% move occurs, you’ll find plenty of opportunities for swing trades. Best Swing Trade Stocks for 2021

Now that you have understood how swing trade works, here is a list of stocks suitable for swing trade.

You must remember that although the usual holding period for a swing stock is short, you can make substantial gains if you capture the moves early. This is an indicative list, and you should bear in mind that stock market conditions are susceptible to change, and hence, you must decide according to prevailing market conditions.

Best Swing Trade Stocks to Buy in 2021:

1. Facebook (FB)

Social media giant Facebook is valued at $760 billion and is S&P 500's sixth-largest company. It recorded a 12% revenue growth along with a 40% boost in its net income in 2020.

The reopening of businesses post-pandemic and the huge influence of social media in everything around us (including economy, politics, sports, finance, and family) makes Facebook an ideal swing stock.  

2. Microsoft (MSFT)

The Covid-19 pandemic saw a paradigm shift from traditional methods of conducting business to greater adoption and integration of cloud and internet-based collaboration software.

This has resulted in more growth for companies such as Microsoft. The overall year-over-year climb in the sales figures and per-share earnings have improved drastically with the commercial cloud revenue growing a huge 34% in the last year.  The gross margin increased 4% the same year, making it an attractive choice for swing traders.

3. Apple (AAPL)

Apple is yet another tech company that seems to have benefited from the ongoing stock market rally. Apple Inc. has had a tremendous run last year and became a $2 trillion company in August 2020. Swing traders find Apple an interesting option as it has strengthened its position in almost all its product categories.

4. Salesforce (CRM)

Swing traders might not look at Salesforce as a good option, especially when higher-growth stocks that trade at much higher valuations are available. But recent moves like the $27.7 billion takeover of Slack or the Covid-19 "Vaccine Cloud," makes this an interesting choice to consider.

With a $200 billion market cap and good prospects in cloud computing Salesforce.com, Inc. is a tech stock to consider for swing trading. 

5. Netflix (NFLX)

With a price rise of 53%, Netflix stock should be on your list of swing stocks. It is one of the companies that has been able to turn the covid-19 mayhem in its favour. It has turned itself from a cash burner to a cash earner, piquing the interest of swing traders.

6. Advanced Micro Devices (AMD)

AMD has made one of the most noteworthy tech comebacks in recent times by focusing on the niches where it can excel. The change in strategy led to a change in prospects too as AMD has been converted from a penny stock heading for bankruptcy to a high growth stock.

The change in momentum during the past year is likely to spill over to 2021, thereby making it a favourite of swing traders.

7. Starbucks Corporation (SBUX)

A global coffee chain with china and the US as its biggest markets, Starbucks continues to be a stellar investment option despite showing a mixed bag of results. Swing traders can achieve positive returns from this stock if they plan their moves correctly.

8. PayPal Holdings (PYPL)

The ongoing growth in digital payments and PayPal’s innovation has made it a worthy stocky for swing trading.

9. Amazon (AMZN)

The e-commerce giant has seen an extraordinary share price rally, thanks to the changes in buyer behaviour because of the pandemic. Apart from the service quality, the additional revenue streams, such as advertising have contributed to the longevity and consistency of Amazon's potential for growth. All these make it a good swing stock.

10. Alphabet (GOOGL)  

The world leader in digital advertising and internet search, Google is always a good stock to trade.  Its parent Alphabet is amongst the FAANG stocks, making it a good choice for swing trading.

Conclusion

There are several stocks you can choose for swing trading. As you can see from the list above, these stocks do not belong to any specific sector. It doesn’t matter as swing trading is not a long-term investment strategy. It is a short-term strategy that requires precision and quickness, but you also must be able to forget and forge ahead. Chance of a trade blow up is high while swing trading. But the secret to success is how you react to it.

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