How To Select Stocks For Investment
How To Choose Stocks For Investment
While investing long term, most of the investors have only one problem that how to choose stocks while investing and this is the reason why most of the people are afraid of the stock market, they think that if we do not know how to choose stocks, then how will we earn profit? And this is also true, if you do not know how to do technical and fundamental analysis of stocks, then there will be very little chance that you will make profit in your investment, so today we will tell you how to choose stocks for investment.
How To Choose Stocks
Choosing stocks is a very difficult task, if you choose the right stocks, then 70 percent of your work ends here, you have to decide patiently while choosing stocks. You can use best platform like ticker tap and screener to suck stock.
• Build your watch list on those platforms and add some of the best companies from them.
• After adding companies, you compare the added companies with each other.
• Must read about fund management and manager of companies and look at their ups and downs in companies.
What To Consider While Buying Shares
• Make sure to check the face value of the company.
• (EPS) “Earning per shares” of the Company.
• The business model of the company should be simple which can be easily understood and explained by anyone, for example coco cola, Gillette, MRF etc. The business of these companies is simple and plays an important role in daily life.
• The company pays dividend.
• Make sure to check whether the company is increasing its value growth every year.
• Focus on the company’s sales growth for the last 5 years or all time.
• Buy shares only when the stock is below its intrinsic value or following the intrinsic value and formula to calculate the intrinsic value.
EPS=earning per share
8.5=assumed fair p/e ratio of stock
g=assumed future growth rate (7-10 years)
4.4=interest rate of a corporate bond in USA and figure 1962
Y=interest rate of a corporate bond in USA as on today
Pay attention to the balance sheet of the company in which you are taking shares.