How to Identify good companies for investments?
Which brand comes to your mind first when you think about smartphones?
Thank you for reading this post, don't forget to subscribe!iPhone, Samsung!
Which outlet comes to your mind when you think about pizza?
Domino’s, Pizza Hut!
When you think about hotels, what one pops in your mind?
The Taj, The Marriot.
Though there are thousands of options, why does our mind stick to these few?
It’s because of the reputation they have earned in the society. These companies have evolved in the long run and earned a place for them in this society. It doesn’t stop with the reputation it holds, background research on the companies should also be carried out.
First, choose the domain in which you are an expert. Try to choose the companies from that field. Since that’s your field of expertise, you will be able to identify the best in that field, because “The only source of knowledge is an experience.”
Start with the management and administration of the company. Check whether they are proficient in what they do. As they rightly say “Management is doing things right; leadership is doing right things”, see how they manage and lead the firm. Try to invest time in reading the annual financial report of the company.
Don’t choose a company based on their past performance alone. Contemplate how the future growth of the company might be. Contemplate how the future growth of the company might be. Check the dividend payments of the company. Consistency in economic growth and profits must be kept in check. Earnings per share should be noted. Stay updated with the current happenings and trends in the company. The long term returns of the company must be reliable. Make sure to invest in companies which aren’t debt-ridden.
Diversified stocks are a greater option than individual stocks. Investing in many stocks than sticking to a single one will minimize the degree of risk. After performing all the screening, perform a deep analysis of the selected stocks. Then choose the stocks according to investment goals and the finance needed.
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