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

Author

Kelvin Wong Loke Yuen is an experienced writer with a strong background in finance, specializing in the creation of informative and engaging content on topics such as investment strategies, financial ratio analysis, and more. With years of experience in both financial writing and education, Kelvin is adept at translating complex financial concepts into clear, accessible language for a wide range of audiences. Follow him on: LinkedIn.

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