Investology

Picking Good Stocks

Investing in stocks can be a gamble to some people. That is why there are others who shun putting their money on stocks because of such notions. Just like any other type of investment, buying or selling stocks also comes at a risk. In a way, it can also be a gamble. But you can put it to your advantage by learning how to pick good stocks. That way, it becomes less of a risk than when you are not guided properly when you buy or sell stocks. Here are some tips to help you in choosing and picking stocks to invest in.

Amount Business Capital Infusion    

Different businesses have different capitalization requirements. Some businesses earn more profit for every dollar invested as capital as compared to others. Other businesses require little capital to operate and profit while others require tons. One way to pick good stocks is by looking into how much profit a company earns based on the amount of capital that is invested into it.

Company’s Source Of Cash Flow

Another thing to consider when picking better stocks is by looking into the company’s cash flow. You need to consider where companies get their revenues from. In some companies, this might be clear cut and crystal clear with a single or set of products that popularly sell in the market. But in others, you might need to dig even deeper just so to discover where companies collect their revenue and profits. Being able to determine how company profits from the business can help you plan on whether its stock is a good pick or not.

Consistent Management Decisions

An important part of any company is the integrity of higher management. A good stock pick can be determined by how consistent they are with plans for the company. If, during annual meetings, management says that debt reduction is their topmost priority and yet still continue to add new debt to the bottom line, it may be saying something about their management decisions. It can be one aspect to look out for when picking stocks.

 

Tags: good stocks, stock market