If you're like the majority of stock market investors you've struggled with finding the most effective stocks to invest in https://www.scamrisk.com/best-way-to-invest-5k/.
There are several methods to find a very good stocks to invest in. But first you need to choose what method is most effective for you.
Basically you will find two main types of stock market investing
1. Purchasing growth stocks
2. Purchasing value stocks
Growth stocks are companies which are growing fast in earnings. There are a lot of hi-tech and medical growth stocks.
Value stocks are stocks which are undervalued simply because they trade at a cheap set alongside the company's fundamentals (i.e. earnings, dividends, sales etc...)
Growth stocks generally will fatten your banking account faster but there is more risk whereas value stocks will generally grow at a slower more sustainable pace but probably won't offer you ulcers.
Here's what some investors look for in a growth stock (based on my comprehension of the National Association of Investors Corporation (NAIC) criteria):
1. Strong Earnings Growth - either quarter to quarter or year over year
2. Strong Forward Earnings Growth - analysts estimate what earnings is going to be for the next quarter or year, if they estimate growth that's a plus.
3. Profit margins - you'd prefer the business to be making a large amount of profit to sustain further growth
4. Return On Equity (ROE) - look for growth in ROE or a reliable ROE
5. Doubling in 5 years or less - you'd like the stock to double in 5 years - look at what the analysts estimate for price potential.
Also here's what some value investors look for:
1. Shares price below intrinsic value
2. Low Price to Earnings (P/E) ratios
3. Price to Earnings Growth (PEG) ratio below 1 is good
4. Stock price is less than tangible book value
5. A debt to equity ratio below 1
6. The company's assets should be more compared to the company's liabilities by at the very least a factor of 2
7. Dividend Yield within 1/3 of the total amount of the AAA bond yield
8. Earnings growth of at the very least 7% a year for yesteryear 10 years
You will find a variety of different ways to find a very good stock to buy but this should give you a starting point.
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