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How do I pick good stocks to invest in?

Choosing the right stock begins with a thorough analysis of the company.

🔹 Fundamentals: Assess the company’s financial statements like Profit and Loss a/c, Cash Flow Statement, Balance Sheet to study about its revenue, profitability, debt levels, assets etc.  how the industry it operates in is performing. Also, consider external factors that could impact its future growth.

🔹 Moat: Understand the company’s competitive advantage, what sets it apart from others. In other words, how is it positioned against its competitors.

🔹 Management Quality: Strong leadership plays a critical role in long-term business success. Evaluate the credibility, track record, and vision of the company’s management team and the promoters. How long they have been with the company. What are their plans for the future of the company etc.

🔹 Valuation Metrics: Look at key financial indicators such as Return on Equity (ROE), Return on Capital Employed (ROCE), Profit After Tax (PAT), Price-to-Earnings (P/E) ratio, Price/Earnings to Growth (PEG) ratio.

🔹 Industry Trends: Stay updated on both global and domestic macroeconomic trends, as well as geopolitical factors that could affect the business or sector.

Stock analysis is not a one-time activity. It needs to be done regularly, especially when companies release their quarterly performance reports. You also need to track the developments that can impact the long-term performance of the company or the sector.

Also note that deep research requires time, effort, and a good understanding of how the business operates and how various factors impact the performance. A lot of data might not be freely accessible.

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