Forecast stock price using this simple method
- Sanzhi Kobzhan
- May 19
- 11 min read
Updated: May 22
Table of contents:
Before I start sharing one simple method for forecasting a stock price, it's worth mentioning that you cannot forecast the price accurately, as there are many factors that can affect the stock price. Some of those factors are contradictory in nature and you often don't know when the company publishes some 'surprising' things, like worse than expected earnings or financial investigations against the company, leading to a sharp stock decline, or when unexpected positive things hit, like an 80% earnings surprise led by boosted sales in one segment. When I worked as an investment analyst, I tried to build a model that would accurately predict the stock price at the beginning of my career, but this fell apart since unexpected things happen and also you never know when larger stockholders will start selling this stock, provoking panic selling, or when some larger fund decides to buy the share, leading to the price increase. These are very important things you should have in mind. But if we don't see unexpected, 'surprising' things, we can forecast the stock price with some accuracy. But still, don't think that you will be able to always win, relying on your forecast as unexpected things happen. To manage risks better, you can use options, or learn portfolio management, to smooth your market risk. Now when I made this important introduction, let's start with the price forecast method.
Things we need for the analysis.
For this example I will be using Ovintiv, a company with the stock ticker OVV. It is a U.S. petroleum company. We will be using several indicators for the analysis, and see how different important things affected the stock price in the past, and by doing this, you will be able to draw valuable conclusions on what the stock price could be in the future, if no unexpected things happen.
For our analysis we would need to draw support and resistance lines, to see where the stock can bounce back and what can be its trading corridor. We would also need to see the stock target prices forecasted by different investment analysts (from the lowest to the highest price provided by those analysts), social sentiment, stock volumes and events line to see the most important company events like dividends and earnings.
Use any charting tools, like TradingView, input the stock ticker OVV and draw simple support and resistance lines like shown in the picture below (red lines). Support and resistance show where big players (buyers and sellers) may be placing their orders, and when the price is approaching the resistance, it is encountering some resistance. When the price is approaching the support, it is seeing larger buying activity and the stock bounces back.
After drawing those lines, add the social sentiment, to see how social mentions affect the stock price. Also make sure you have volumes. When the stock is approaching its support or resistance levels, if you see the volume spike, this can tell that there is a big player with his limit order. Then make sure you have events line, as shown in the below picture, where you see E (earnings) and D (dividends) to see when the company published its earnings and dividends. And of course the stock target price, that shows what investment analysts think of the OVV stock. After you added all your indicators your graph should look similar to mine. The below picture.
Things affecting the stock price.
Now let's see how the stock was trading in the past and what events affected the stock price and then we will try to forecast the stock price for the weeks to come.
The company published its financials on 26th of February (highlighted red). Although the EPS was better than analysts expected, a 19% earnings surprise, the stock experienced a 12% decline from the 26th of February to the 6th of March, due to worse than expected revenue, a 4% negative surprise. Also you see that the social sentiment started declining, the red histogram at the bottom. It means that people started mentioning the company (OVV) in a negative key, which led to low sentiment which resulted in stock selling.
Then the company paid a dividend of 0.3 per share on 25th of March and as a result the stock price gained in value a bit. Shares usually go up in value a bit when the dividend is about to be paid. But as you can see the social sentiment is still low, that's why the stock did not gain in value a lot, but stopped in the middle, between the support and resistance level (the below picture).
Then we saw a huge price drop of 25% from 2nd to 4th of April (the below image). Ovintiv’s stock price is closely tied to oil and gas prices. The stock price dropped sharply amid recession fears and progress in U.S.-China tariff negotiations. Also you see that social sentiment started declining on that date indicating rising uncertainty and pessimism towards OVV stock. Then we see that the stock started trading flat, due to low investor confidence (sentiment). (the below image)
Then the stock started gaining some confidence (rising social sentiment) ahead of the company's financial report. And on 6th of May the company published its financial report with revenue and earnings beating analyst estimates (positive surprise). As a result, the share price gained in value 14% from the date of report publishing to the 13th of May (5 trading days). Then the stock started falling a bit, this may be connected to shorter-term (speculative) traders, closing their positions. The image is below.
The next step is to see the stock target price, a forecasted stock price based on the company's forecasted financials and analyst expectations. These target prices are calculated by different investment analysts and then the website (TradingView) provides the minimum, average, and maximum price assigned by different investment analysts. As you can see, the stock price is expected to grow and there is a higher probability for a stock upside than a downside, some analysts believe that the stock is fairly valued and will be trading flat, while others see a growth potential (the below image).
Initial conclusions: Stock price forecast.
Now let's draw some conclusions based on the information that we saw. The stock can be very volatile. Based on the stock trading history we can conclude that the stock can experience sharp declines, losing 25% in value driven by bad news, or when it shows a negative earnings surprise. Also it tends to decline fast when social sentiment declines leading to panic sell-offs. Positive earnings can lead to a fast price rebound +15% and analysts think that the share is undervalued, as they imply some growth potential. So from what we say, this stock can be a good choice for risk-seeking or intraday traders. The stock can reach 42 on the shorter term (closest resistance level). If it breaks the resistance driven by good earnings results, it can stop near 46 (next resistance level). Now let's dive deeper to see if longer term investors can also hold this share.
Diving deeper into stock price forecasts and fundamentals.
Now when you know how to manually undertake this analysis, which can be time-consuming, let me show you a very quick way of analyzing a stock to understand if it will go upwards in the near term. To do that you need to download the Stocks 2 Buy iOS app from the App Store. After registering, confirming your email address and logging in, go to the Main Screen as shown in the below image and input the stock ticker (OVV)
And then press the Show analysis button. By the time of our analysis the stock had 0.25 sentiment or 25% meaning that it has a lot of negative mentions on social media like X (Twitter), only 25% of mentions write about the OVV stock in a positive key, which can imply some shorter-term downside or a flat movement. The equity rating is Neutral, meaning that the majority of analysts are not assigning a Buy or Sell rating. A neutral rating may indicate that you should wait before buying a stock, maybe its fundamentals will improve, or if you are already holding this share, a Neutral rating may indicate that it may be too early to sell this share yet. The stock has a 62.28% earnings surprise from the last earnings report. As we saw from the graph, the stock gained 14% driven by a great earnings surprise (actual EPS was 62% better than analysts expected). Since the company has a great EPS surprise, and a neutral rating, the overall recommendation is to Buy this share. Although the majority of analysts are neutral on this stock, the Stocks 2 Buy app has another opinion that is based on its unique algo
The next step is to extract the stock's growth potential, see its dividend payout, and growth dynamics. For that, inside the Stocks 2 Buy app, go to the Stock Type screen as shown in the below picture, input the stock ticker (OVV) and hit the Analyze button.
The stock is a Value stock as defined by the Stocks 2 Buy app, since it is very strong fundamentally. A Piotroski score of 8 tells us that the company is amazing from the fundamental standpoint (strong financials) and can have great longer-term growth, as stocks with strong fundamentals attract a lot of attention from investors. The recommendation is Long-term hold, meaning that it can be a good idea to hold it for a longer term. The growth potential is 25%, which is almost in line with analysts' average target price and growth potential. The Stocks 2 Buy app calculated the target price using the DCF valuation model with conservative assumptions, and 25% growth potential implies some good space for upside. The dividend yield is 2.07%, this would be your reward for holding a stock for a longer term. The 6-month return indicates that the stock lost in value a lot in the past 6 months, and given high growth potential, the stock still has great space for upside. 3-month growth of 12% indicates that the stock is not very volatile in the 3-month period, although we saw on the graph that the stock may experience sharp downsides and upsides driven by earnings results or external factors (oil prices, geopolitics).
Final conclusion: Shall you buy the stock and its price forecast?
Overall stock recommendation based on the Stocks 2 Buy and TradingView analysis. The stock is ideal for risk-seeking investors if you are planning to trade in on the shorter-term time intervals, because it is very volatile on the shorter term, however this high volatility is smoothed on the longer-term interval. Moreover, the stock is fundamentally strong with high growth potential of 25%, which makes it a great choice for a longer-term hold. If the stock breaks its resistance at 42 as discussed earlier, it can stop near 44, its target price, based on the Stocks 2 Buy app, and then if the company publishes a good earnings report (with a high earnings surprise), it can stop at near 46.
Consider this share if you like oil and gas companies. Find 3-4 close competitors and do the same analysis to find the strongest company (from the fundamental standpoint) and less volatile. Smaller volatility means higher predictability.
Short-term price prediction: What can happen to the stock price in the nearest term?
Now let’s go a little further and see what can happen to the stock price within the next 2 months. We already know what the support and resistance levels are and if you should consider this stock as a shorter-term and longer-term trader. But now let’s do a small scenario analysis to see where the stock can go under positive, neutral, and negative scenarios.
Neutral scenario (Grey line). The stock can keep trading flat till the next dividend date, June 13th, with the slight decrease given current low investor confidence. Then, as we saw in the past, the stock can start raising on the dividend date. Since the stock has good growth potential and looks strong fundamentally, it can start attracting investors’ attention and go up to $42 until the next earnings date on July 23. Next, you can download the Stock News and Forecast Extension from the Chrome Web Store to see Financial Statements Estimates. Those estimates are assigned by top investment analysts. You can see the number of analysts and their average Revenue and EPS estimates. According to the extension, analysts expect EPS to be $1.08 (23% decrease from the last EPS) and Revenue of $1.86B (21% decrease from the last Revenue). We know from the history that the stock can experience a 25% fall driven by bad news, and this can send the stock to its local minimum of $31. The scenario is below (Grey line)
Positive scenario (Yellow line). The stock can keep trading on its support level, going up every day. Let’s assume that it will keep going up on the dividend payment date and will cross its target price level of $44 (green line). Since investment analysts have good stock target prices, with the last target price of $50 set by Devin McDermott from Morgan Stanley, the stock can reach that level (or near $46, to its upper resistance) on its next reporting date on July 23. And then if the company beats its earnings as was in the last reporting season, the stock can gain 10%-15% more from $50, as it is a value share and analysts remain optimistic. Maybe they will raise their target prices on that date, leaving even more space for an upside. To see stock target prices assigned by different investment analysts, you can use the same Stock News and Forecast Extension, find the Stock Price Target News field, input the stock ticker, and hit the Show Analysis button.
Negative scenario (Red line). Monitor news surrounding the stock to forecast investor sentiment and understand if the panic selling is close. To monitor the most important company news, the same extension Stock News and Forecast Extension will help. Find the Stock News field, Input the stock ticker, hit the Show analysis button, and see the most important news affecting the stock. If you see bad news like, oil prices getting lower, analysts downgraded the stock, earnings forecasts declined, or other important company news, this can result in a stock sharp decline. In this case, it may start sliding lower, even overpassing its local minimum and then heading to new lows. Also, pay close attention to the company's actual earnings on July 23. If it posts worse-than-expected earnings, it can trigger a sharper price drop.
I hope my scenarios revealed some valuable picture to you and now you know where the stock can head under different scenarios. If it starts falling sharply and starts trading under a negative scenario, you can wait a couple of months before picking this stock at its new local minimum. As you saw above, the stock is strong fundamentally and a sharp decline will make this stock even more attractive. If the stock will trade followed by the positive scenario, investment analysts may increase their target prices, creating even more space for an upside, especially if the company will show better-than-expected earnings. But as we saw above, the stock is very volatile on the shorter term and can experience sharp 20-25% declines, that’s why keep monitoring the most important company news, to close your position if you are a short-term trader and if you start seeing lots of negative company news. The neutral scenario is also possible, and you still have some time to hold the stock before selling it, as it has around 25% growth potential from the current level and if no negative news happens, it can start its upside trajectory until the next earnings date, and then everything will depend on actual numbers and if the company will beat estimates.
I hope my analysis was useful, and now you know how to analyze shares quickly and forecast the stock price. I hope now you know if this share is a good choice for you and your strategy, and you have a clearer picture of how the stock may trade in the shorter term. But please do your own research before buying stocks and consider multiple sources including analyst research, management vision, your custom models, and of course employ valuable stock analysis apps that I showed you in this article.
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