Things to Consider When Choosing a Stock

The stock market is a good way to make money and build wealth but picking the right stocks can be a difficult task, especially for new beginners. You should take the following things into consideration when choosing a stock to buy:

1) Performance History: You should look at the past performance of a stock and avoid choosing the stocks that have consistently performed very poor as compared to their industry peers.

2) Cash Flow: This is the money moving in and out of a business. You can find information about what the company does with their cash from a company's prior year statement of cash flow, for instance, how much did the company make from its operations?

3) Dividends: Buying stocks that pay dividends can be a good way to generate a passive income stream in addition to price appreciation.

4) Projected Earnings Growth: This represents the company's growth prospects. The key is to look for attractively priced stocks that have good growth prospects.

5) Debts: When choosing a company to invest, one of the most important factors you should consider is how much debts the company is carrying and when will they become due. A high-debt company has more financial risk and so its cost of debt also goes up.

* Next: How to Pick Stocks in a Bear Market
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