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24-year-old Austin Hankwitz is one of TikTok's biggest investing influencers with nearly 500,000 followers. He told us his 3 strategies for picking the most rewarding stocks, and his top picks right now

Published by Business Insider on Mon, 07 Jun 2021


<p><img src="https://static3.businessinsider.com/image/60ba156b93c6fa00195e51d5-2400/Austin hankwitz.jpeg" border="0" alt="Austin Hankwitz" data-mce-source="Austin Hankwitz" data-mce-caption="Austin Hankwitz TikTok investing influencer"></p><p></p><bi-shortcode id="summary-shortcode" data-type="summary-shortcode" class="mceNonEditable" contenteditable="false">Summary List Placement</bi-shortcode><p>Austin Hankwitz began his career as a financial analyst at a healthcare company. But what he enjoyed most was explaining financial concepts to an audience. The only issue was that he was lacking the skills to create and edit high-quality videos.&nbsp;</p><p>It wasn't until he came across TikTok, a platform that allowed him to create simple videos in a matter of minutes, that he began to regularly post about personal finance and investing. People enjoyed his content, and over time his audience grew until he reached <a href="https://www.businessinsider.com/tik-tok-stock-market-investing-creators-explaining-new-generation-investors-2020-12">about 500,000 followers.</a>&nbsp;</p><p>The topics of Hankwitz's videos range from how to file taxes made on capital gains to what's going on in the market and how an investor can benefit from the information he's sharing. One of his most-watched videos<a href="https://www.tiktok.com/@austinhankwitz/video/6959280750910803205'lang=en&amp;is_copy_url=1&amp;is_from_webapp=v1"> pulled in over 4 million</a> views.&nbsp;</p><p>"I think people appreciate my content because I try and explain really complex topics in small, bite-size, digestible pieces that anyone can understand. And, I also try and provide the resources and where I found my information in most of my videos. So people know where to go after they watch the video to learn themselves," Hankwitz told Insider.</p><p>In an exclusive interview with Insider, Hankwitz shared his advice for how to find great companies that have good long-term growth potential.&nbsp;</p><h2><strong>1. Look around you&nbsp;</strong></h2><p>Hankwitz recommends starting off simple, by paying attention to companies that everyone knows and loves.</p><p>While Hankwitz's popularity stems from his ability to explain a company's growth potential by using a combination of news and digging into its financials, he doesn't suggest trying to find the next Amazon or speculating about what the FDA will approve next.&nbsp;</p><p>"Instead of being overwhelmed and getting sort of flustered if they're wrong or have a jaded mentality towards the stock market because they lost their money and they didn't predict the winning stock, just use the stock market as a tool to build wealth by investing in the companies you understand, companies you use and that you consume products and services from," Hankwitz told Insider.&nbsp;</p><p>The success of some of the biggest US companies is in large part due to the American consumer, which is why observing what's going on around you can be a great starting point, Hankwitz says. He's constantly paying attention to products and trends that are gaining popularity amongst his friends.</p><p>If your favorite brand of beer has been sold out the last couple of times you hit the grocery store, that might be a signal that the manufacturer is experiencing an uptick in demand or a shortage of supply, he adds.&nbsp;</p><p>Since he's a content creator, he understands the importance of platforms that cater to the growing popularity of videos and the creator economy. He told Insider one of his top stock picks is Alphabet (<a href="https://markets.businessinsider.com/stocks/googl-stock" target="_blank" rel="noopener">GOOG</a>) because of the rise and continued popularity of YouTube, an Alphabet subsidiary.</p><p>While this may sound trivial, having your ear to the ground can help you identify trends before they hit Wall Street, and before consumer behavior is reflected in a<a href="https://markets.businessinsider.com/news/category/earnings"> company's earnings release</a> or stock price, says Hankwitz.&nbsp;</p><p>He adds that you may even be able to identify the disparity in information between what's going on with a<a href="https://www.businessinsider.com/what-is-ipo"> publicly traded company</a> in real-time and what Wall Street thinks is happening.&nbsp;</p><p>Hankwitz says one example of an early observation he made happened after he watched a<a href="https://youtu.be/d2AlT1YUUW0" target="_blank" rel="noopener"> YouTube video on the channel Dumb Money Live</a>, that talked about Build-A-Bear's (<a href="https://markets.businessinsider.com/stocks/bbw-stock">BBW</a>) new brand collaborations and digital initiatives.</p><p>He then went and looked at the company's Facebook page and saw that it had millions of followers. He also checked TikTok and found that the company had started a page in January and was already hopping on popular trends.</p><p>Hankwitz made a note of the company and kept track of it over time, suspecting that these trends would translate into profits down the line.&nbsp;</p><p>As it turns out, Hankwitz's hunch was correct. When Build-A-Bear released its first quarter earnings on May 26, the report stated that e-commerce demand expanded by 87%, and revenue increased by 96.7% from the same period last year. The news caused its stock price to spike by 39%, and shares have continued to climb since then.&nbsp;</p><h2><strong>2. Read the earnings reports</strong></h2><p>Once you've identified a company you'd like to invest in, read its quarterly earnings reports, says Hankwitz.&nbsp;&nbsp;</p><p>Here's what he looks for in these reports:</p><p><strong>Revenue growth:</strong> If the company is growing its revenue, that's a good sign, he says. Hankwitz adds that while Wall Street might have qualms about how much or how little growth there was in any given quarter, revenue growth, in general, is always positive.&nbsp;</p><p><strong>Operating margin or pre-tax income:</strong> This is important because if a company has increased operating margins over time it means it's operating with a more efficient business model.&nbsp;</p><p>High margins are one of the main reasons Hankwitz's second top stock pick is Roku (<a href="https://markets.businessinsider.com/stocks/roku-stock" target="_blank" rel="noopener">ROKU</a>). The digital media company reported an impressive 56.9% total gross margin for Q1 2021, well up from 44% in the same quarter a year earlier. He also likes the stock because of the secular growth trends of digital advertising and over-the-top media.&nbsp;</p><p><strong>Cash flow:</strong> All businesses exist to make a profit, and when you're looking at earnings reports you want to see that the cash this business is generating is increasing over time, Hankwitz says.&nbsp;&nbsp;</p><p>If a company is publicly traded, it will release annual and quarterly earnings reports that can be found on its website. The numbers mentioned above are usually found at the top of an earnings report.</p><h2><strong style="color: #000000;">3. Read the company's Form 10-K&nbsp;</strong></h2><p>"This part is a bit more mundane and boring but I promise you it's worth it,"&nbsp; Hankwitz told Insider.&nbsp;</p><p>The Form 10-K is an annual report required by the US Securities and Exchange Commission. The document provides a comprehensive summary of a company's financial performance.&nbsp;</p><p>The document can turn into a never-ending scroll journey if you don't know what to look for. Hankwitz shares a list of things he thinks are the most important bits of information.</p><p><strong>Business:</strong> This section is a detailed overview of the company and how it generates profits. It also lists the various divisions based on the different products or services the company provides.</p><p>Hankwitz recommends keeping an eye out for the 'Our Customers' section because it explains who the business makes its money from, and the 'Our Competition' section so you understand how fierce the competition is within the sector.&nbsp;</p><p>"Inside of this is everything I need to know to understand how the business operates and what this business is," Hankwitz said.&nbsp;</p><p><strong>Risk factors:</strong> This section details specific risks that may negatively impact the business or the industry it operates in for the long term. Understanding this section will help an investor make a more educated decision about the company, he says.&nbsp;</p><p><strong>Management's discussion and analysis of financial condition and results of operations:</strong> Like an earnings report, this section explains the company's financials, but it's more extensive and has historical data as well.&nbsp;</p><p>Speaking of management, Hankwitz says that the final stock he currently has his eye on is Upstart (<a href="https://markets.businessinsider.com/stocks/upst-stock" target="_blank" rel="noopener">UPST</a>). He's impressed by the incredible leadership of the team, especially its founder and CEO, Dave Girouard, who was the former president of Enterprise at Google. He adds that Upstart's recent entrance into the automotive financing space through their acquisition of Prodigy Software is also a plus.&nbsp;</p><p><a href="https://www.businessinsider.com/one-tiktok-investing-influencer-shares-his-strategies-for-picking-stocks-2021-6#comments">Join the conversation about this story &#187;</a></p> <p>NOW WATCH: <a href="https://www.businessinsider.com/scorpion-venom-most-expensive-liquid-in-the-world-2018-8">Why scorpion venom is the most expensive liquid in the world</a></p>
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