Investors should pay just as much attention to a company’s fundamentals after they buy a stock as they do beforehand. If you see earnings growth slowing down, that may be the time to sell. A company that has been increasing earnings at 20% per year commands a certain stock price; a decline in earnings growth to 15% or even 10% may cut that price sharply.
If a company’s revenues are up going up 10% per year but its accounts receivable are increasing by 20%, that may be a bad sign.
Customers aren’t paying their bills. Another danger signal is a buildup of inventory, which means the company isn’t selling all the goods it’s producing.
