How to choose best stock
How to choose profitable stock
Before buy a stock you have to consider this factor.Every investor want increase his stock after buy.if you are new investor in stock market just flow the simple rule to buy best stock.
Technical analysis is evaluation of stock and share market condition.
Today we are talking some
fundamental analysis. Its study every things of company and financial reports.
Some
factor is here you have to see before buy a stock.
- Search
information about company
- See
financial reports
·
Earning per share (EPS)
·
Price earning ratio (P/E ratio)
·
Dividend yield
·
Debt to equity
·
ROE
·
Income and Expensive
- Volume
of trade
- Take
inside information
- Search Information about company
You
are thinking a buy share in a first time then you collect all information about
that company .In this period you know little bit bad and good knowledge of
company. Information
help you for take risk and confidant. You can got information from company website,
newspaper and internet.
- Earnings
per share (EPS)
Earnings
per share (EPS) means how much money of net income have been earn by each share.
After tax income divided by total outstanding share is called EPS.the company
how much money make for per share .
Let’s
see EPS by share:
= Net income
– dividend /Total outstanding share
Suppose
one company this year earn after tax 20m and announced 8m dividend .this Company
have 6m outstanding share.
= 20-8/6
=12/6
= Rs.2
That
means company earn per share Rs.2
Tips: Buy always high Eps Company
- Price
earning ratio (P/E ratio)
How
much investor willing to pay stock for earning per share . simple way how much
you should pay for get one share earning
Look
at the exp.
The
company share price is Rs.10 and EPS is Rs.2
= Market price / EPS
= 10/2
= Rs.5
This
means the market price is 5 time the earning of company. Simply investor
willing to pay Rs.5 for earning Rs.2
Tips: Always choose low P/E ratio stock
- Volume Trade
Before
buying a share always check the volume trade history of share .if trading
volume is not high that means investor are not willing to buy this share .do
not pick up the share see the cheapest price it will be problem when you want
sell that time you can’t get any buyer for your share so always look at the trade volumes too.
- Dividend
Dividend
is a reword of the shareholder .before you buy share check the company dividend
history .if company provide regularly dividend that means this company is blue chip.
Good dividend Pay Company’s stock price does not fall plummet .
- Take
information
Take
information inside of company .you can take information of company from website,
news paper etc.
You
consider this all basic factor before buy share or stock.
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