How to Identify a
Stock to Buy or Sell?
Investing in stocks can be a daunting task.
While building a portfolio or investing in the stock markets, selecting the
right stock is very crucial. Selecting the right stock at the right time can
turn out to be the most lucrative deal and one can make good profits from the
wise decision. Similarly, it is very important to time the stock while selling
it. Selling the stock at the appropriate
time can be equally rewarding.
Investing in a wrong stock can be a
painful experience. It can lead to losses or take years to break even. Stock markets
are definitely not for the people who cannot cope up with ups and downs associated
with it. With vast information available in the market, you can analyse a company and take a decision of buying
or selling. In this article, we shall understand
how to identify stocks to buy or sell.
for Buying and Selling
Select the Company or Industry with which
you are Familiar:
When you start investing in stock market,
select the industry you like the most. This will make you more interested and
you will be able to take the decision in a much-informed
way. When you are aware of the industry and company, you will know what hype or information should be ignored. Thus, it
is always advisable to start identifying stocks or companies you know well.
Consider Valuation and Price:
Before purchasing or selling any stock,
it is important that you consider the price and valuation of the stock. If the
company is trading at PE multiples of less than 20, it is considered as
undervalued and hence a good buy. On the other hand, a company trading at PE
multiples of more than 20 is considered as overvalued and hence a good sell.
Look at Margins:
Companies survive by selling its products
or services in the markets. If the sales or margins of the company are
increasing at a good pace, then there is a good potential of a rise in the price of stock in future. Always
look at the margins of the company and reasons for the increase, if any. Compare the cost of goods sold and other expenses
for the increase in sales.
In the recent times, the technical
indicators have been gaining popularity. The technical indicators can be in the
form of charts that predict the future moment of the stock based on the stock
movement in recent times. The technical indicators take into account the volume traded, 50-day and 200-day moving averages, etc. The information provided by the
technical indicators can be very valuable while considering buying or selling
of any stock.
Any upcoming event regarding a company
can be a reason for buying or selling the
stock. The event can lead to multiple triggers in the price moment of the stock.
Knowing and analysing the event right
will help in determining the trend of the stock going forward. Thus, buy and
sell of the stock can be initiated based on such events.
Evaluate Financial Reports:
Understanding and going through the
financial reports of the company can make buying and selling decisions easier. Study
the yearly reports of the company and compare them. Evaluate the profitability
of the company. Check whether the revenue and the bottom line are showing
consistent growth. Also look for cash payouts
to stock investors in the form of a dividend.
By evaluating all the above points, you can decide on whether to buy or sell
Indira Securities is the leading
financial service provider in India. We provide our clients with regular buying
and selling recommendations. Our recommendations are not only based on technical
analysis but also on fundamental analysis of the stock. Our services include trading in equity, commodity, currency and derivative. Our mobile application
provides the user with hassle free trading opportunity. Open a demat account
with us and take benefit of our services. For any service or query contact us
via email or call.
Also Read: What Is The Minimum Amount Required To
Start Investing In Stock Market?