Invest In Which Company ?

The main issue with the new traders is of finding sound companies to invest in.
You may have heart about fundamental analysis & technical analysis.

The fundamental analysis help you to select five to six and chart reading (technical analysis) helps you identifying buying & selling time of stock.

Fundamental analysis is the process of clarify the basics of business or fundamental financial level. This type of analysis examines key ratios of a business to determine its financial health and gives you an idea about actual valuation of stock & business.

Apply the following simple criteria to the list of top 100 companies, you find that it will reduce your list of companies to a dozen or so. Now it will be easy to observe this list to get accurate entry / exit time in stock with the help of technical analysis.

Market Capitalization: Eliminates very small companies, or penny stocks your list & look for the company with the market capitalization of more than 250 crore.

Trading Volume: It is always advisable to avoid the stocks with low trading volume.

To be in our watch list a company should be in top 50 companies in terms of earnings per share (EPS) 

sales growth and earnings growth per quarter. Without sales it is impossible for a company to make earnings; so both sales and earnings growth better be growing more than 25% quarter to quarter .

Earnings growth over time and return on equity should at least be 20% or higher. Management should still have a significant stake in ownership (20% or more), and an increasing number of institutional shareholders is also something to look out for.

Finally, my personal preference goes to companies that produce a product or service you understand. I stay away from companies that produce services or products that I do not understand. This does not mean I stay away from all technology. For example, I understand what a 4G system is system is how much useful for telecom companies.

In the companies with cyclic business the profits also move up or down depending on the business cycle.
This is commonly seen in commodity companies, where a shortage or sudden rise in demand helps prices to move up, resulting in super normal profits for a while.
Once the cycle is reversed, it becomes difficult to get out. Commodity prices are interlinked globally, and any demand-supply mismatch in one corner of the world can disturb prices all over. As per my opinion as far as possible don’t trade in these stocks.
HAPPY……..TRADING……..

If You Have Something To Add, Plz Write Or Mail Me At

singh.neeraj06@gmail.com

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