How to Choose the Right Stocks to Invest
in for Long-Term Profit
investor starts his journey in the stock market with the expectation of good
returns. However, his success in the market depends on many factors. The most
important factor is his decision making regarding the selection of stock for the
long term. The beginners and even the experienced investors are always confused
about how to select stocks that would be profitable in the long run. In this
article, we list down some important pointers that will help you in becoming a
successful long term investor.
Companies Worth Investing
a strategy to find out companies that have the potential to generate high profitability
in the future with their business. Follow the performance of the sector and its
indices. In case you prefer any sector or industry, you may filter out
companies and study their fundamentals. The most important aspect of finding
companies good for investment is having the knowledge to study balance sheets,
profit loss statements, etc. If you are not good at the fundamental analysis of
a company, you may seek the help of a financial advisor.
News and Latest Developments
must closely follow the financial and market related news. When you track the
latest news and events you will know what to expect in the future and which
companies can perform better in coming times. Listen to the interviews, read
informative blogs and articles to find good stocks for the long term. Doing
research based on news and events may even help you to find hidden gems in the
sector that may give high profits in the future.
the Fair Price of Stock
down companies that are good for investment in the long run, check the prices of
the stocks. Evaluate the fair value of the stock and find whether the company
is under, over or rightly valued. You may use different ratios to evaluate the
current price of the stock. Some of the parameters that you may use include
price to earnings ratio, price to sales ratio, discounted cash flow modelling,
dividend yield, etc.
you pick a stock for investment always check what is the margin of safety you
are getting. Suppose you estimate a fair price of a company and you bought it
as it was trading at a lower price than your estimation. In case there is a
fall in stock price, it would not hamper you much as it was already below the fair
price. This is called the margin of safety. Stocks that have stable earnings
and a positive outlook require a small margin of safety.
· Check Corporate
investing in any stock for the long term check the corporate governance of the
company. A company with clean promoters and good corporate governance is always
a safe bet for investment. While a company having unethical management and
board of directors should be strictly avoided.
above mentioned are some of the tips that may help you in selecting the right
stocks for investment in the long term. When the investment period is for the long
term, always remember that it will require you to be disciplined and patient.
By using the economic as well as fundamental indicators, you will be able to
find hidden gems in different sectors. To learn the art of finding stocks and
educating yourself on various aspects of long term investing, you may join
webinars held by Indira Securities. You may even consider opening a demat
account with us. Stock market Webinars held by our experts and professionals will help you
in learning the skills and knowledge required to become a successful investor
in the long run in the stock market.