How to Pick Winning Stocks

Picking winning stocks is not an easy task, you need an appropriate trading strategy and tool to help you to choose the right companies to invest in, and you must learn how to read the market trend in order to predict the correct market timing. With best performing stocks you stand a good chance to make above average returns.

Some of the useful tips to picking winning stocks:

1) Find out the "true" value of a stock using ratio analysis and choose the stocks with sustainable earnings per share (EPS). Other useful ratios/numbers to check include: dividend pay-out ratio, price earnings ratio, dividend yield, price-to-book ratio, moving average price. You should only purchase the shares if its current price is below the estimated intrinsic value.

2) Analyze the qualitative factors of a company such as: future outlook, quality of the management team, industry attractiveness, corporate culture, business model, competitive advantages, etc. To gain an insight into a company's competitive edge, you can look at things like market share, product branding, and the like.

3) Use a stock picking software to identify the stocks with bullish trend. Professional traders are much more successful because they have specially designed software that records the past stock movement and even give an optimum price at which the stock must be bought/sold to maximize the returns.