Hello friends, once again welcome to expand wisdom. Today I am going to talk about “How to pick best stocks? Stocks for long term Investment”. Earlier I told you about the introduction of share market.
Now you will know how to choose Stocks. In this article, we will go through the complete methods of how to choose stocks, which stocks to buy and which are not and lastly, we will know about the conclusion.
If you want to know more about the stocks then stay with us till the end.
What are stocks?
Whenever we buy shares of any company through the stock market then the group of share is called Stocks. The share market is also known as the stock market.
Which stocks should you never invest in?
Often people are very confused and upset before buying stocks. So before going into how to buy stocks, we will know which type of stocks not buy.
Do not invest in new company – If you are a trader or not an investor, then never invest in the company. When any company launches its IPO, when that company is growing very fast.
In such a situation, to counter that company, many old companies start selling the goods of the emerging company, due to which many times its IPO takes the form of penny stock. Then it takes a long time to get to the big start.
Don’t invest in Penny stock in high quantity – Sometimes people buy penny stocks by looking for cheap stocks. But even a slight decrease in the price of these stocks can cause a lot of loss. It takes a long time for these stocks to rise. Therefore, never invest a large amount on these stocks.
Do not pick stock on tip – Sometimes people buy stocks on tips by asking friends from families to relatives. But never do this, always buy the stock right with your understanding and your own analysis. Which you will get a chance to know about the company and the stocks and you will be able to invest even further.
Which type of stock you should invest in?
Invest in blue chip company stock– Blue chip company means a company that always appears in blue chip, that is, if there is any downfall in the company, then it recovers again. If the overall performance of that company is seen, then it remains in the increasing order. Such stocks are called blue chip stocks, always take only blue chip stocks.
Invest always in innovative company stocks– If any company changes its company’s goods and product score over time and brings different types of innovations in it, then that company is very good for investing.
If we look at a company like Apple, Google, then it first works on one of its company’s products and makes it very good. Launches different types of products according to the need of the people. The stock of a company that changes with the times and brings ideas to fulfill needs of different types of people stock very good for investing.
How to choose Stocks Sector?
We do not need to think much to choose the sector of any stock. It is more accessible and easier for us to invest in the sectors which are used in our daily life because we are aware of it.
We can take an example from our daily life. For the settlement of any city, first of all the structure is needed which the steel industry fulfills. The steel sector comes here.
Then cement cement sector to build roads. Real estate will provide real estate here for build a building. Telecom sector for connectivity. Vehicle sector for transport. Oil and gas sector for petrol. We can make profit by investing in stocks of this type of sector because we are talking about these stocks in general news etc.
How to extract best stocks from sector?
If we want to choose good stocks from any sector, then we should be well aware of some of the steps given below about the stocks.
Market capitalization– Market capitalization determines how big a company is and to what extent it is spread in the country. If the market capitalization of a company is high, then that company is large and has the potential to give good profits going forward.
Cash flow– If a company had a good cash flow then you chosen a good is company stocks. Because due to cash flow company is growing every year.
Return to equity– return to equity decide how much your investment in stock give you returns on your investment. If a company give high returns then it’s return to equity is very good.
Three steps to choose best stocks
Fundamental analysis– To know about history, introduction, sector and insider information about company is known as fundamental analysis that is very needy for any company stocks.
Valuation– After doing fundamental analysis we have to check this company is undervalued or not undervalued.
Technical analysis – Technical analysis is very important for any company to invest. To see the graph of 2 year 5 year 10 year and overall lifetime graph if the graph is increasing all over the time within a small gap. Then the company is a very good invest.
How many stocks should Invest?
It’s depends on your capacity how much you on stocks investment. If you are investing in stock market then you must have a good amount for investing. You can choose various sector to investing. A good investor always invest in various stock and best stocks buy it’s own analysis.
So this is all about “How to pick best stocks? Stocks for long term Investment”. Share market is not really complicated that many people thinks about it. If you do on analysis with various websites and YouTube channels then you become a good investor easily. To know more about stocks and share market continue with us.
Thanks for visiting expand wisdom.
What do you mean of stock?
Ownership certificates of any company
Is a stock an asset?
Stocks are financial assets, not real assets
Is stock an equity?
What are the main types of stocks?
common stock and preferred stock.
What is a stock example?
100 shares of Tata motors