What Are Stock Analyst Ratings, and How Can They Shape Your Investment Strategies?

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If you've recently begun your investing journey, it’s normal to seek guidance about how to select stocks that are likely to pay out. While there are no guarantees about market performance, experts do have time-tested methods of predicting which stocks are likely to do better than others. They compile relevant data and create recommendations that are published with stock analyst ratings.

These stock ratings, in essence, advise investors whether to buy, sell or hold certain stocks. They can also sometimes predict whether a company's stock is underperforming or outperforming similar stocks, based on both past and forecasted data. Last but not least, stock analyst ratings often include price estimates based on how much or how little various analysts believe a stock's price will dip or grow. Here, we'll delve into stock analyst ratings, what they mean and how seriously you should — or shouldn't — take them.