SHARETIPSINFO >> Important tips to bear in mind while buying stocks in stock market
Don’t Follow The Trend, Remember Its Your Money That You Are Investing
Investors invest in stocks for gain that is for sure, but for that it is important that you invest in the right stocks. There is no surefire formula that will let you identify the stocks that will get you maximum return that is for sure. But there are surely some proven techniques that will help you to choose the stocks that have the potential to earn you big money. In fact there are certain factors that make a stock potentially profitable.
Sales Revenue – Sales revenue is the amount of money that a particular company makes in a financial year. Though the relatively young companies do not have the sales revenue to offer, for the older companies that are in the market for some years do have sales revenue that covers other costs and some portion of loss, if there is any. It is a crucial factor for judging the financial health of a company.
Earnings: This figure shows the net income of a company and reveals whether the business is losing money or making it. This is another indicator of the company’s financial standing and its potential in the market. It is quite obvious that wise investors will always invest in companies with better earnings as the stocks of these companies always give more profits.
Debt: It is the amount of money that the company owes in different ways. It is understandable that if the company is in debt, the major portion of its earnings will go to pay for the debts. So it is always better to invest in companies with no or relatively lower debt levels.
Liquidity: Liquidity of a company reveals the cash holding position of a company. A cash rich company is more likely expand its area and volume of business and offer better benefits to its stock holders. So, while buying stocks, it is always advisable to invest in companies with better cash position.
Valuation: Valuation is the worth of a company and there are so many ways to determine that. The most widely used and easily available information that you can use to determine the worth of a company is the P/E ratio. It is wise to invest in stocks that have a P/E ratio between 5 and 50.
All these information are instrumental for buying profitable stocks and you have to do your research well to get the information about a company. You can either find them on the internet or you can get them from financial publications or quarterly and annual reports that the companies publish from time to time.
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