Any investor will experience the same question as they want to invest in a certain company for the first time, about in which company you should put your investment. Well, it’s true that there are several factors to consider for your initial investment, especially in profit and losses. At this point, you should understand that stock market is a very risky investment that won’t guarantee a long-term profit. You can go rich and poor in seconds. Being a good investor requires you a comprehensive knowledge and understanding about every aspect in stocks. These are how you can find right company for your investment
Know where to Start
At the first time, it’s suggested for you to invest in the companies which are familiar to you. It means that you should have comprehensive knowledge about the history, background, the operations, ongoing businesses and how the companies generate profit form their business. This knowledge will help you to decide where you should put your investment for the first time.
Cheap vs Expensive
Don’t get trapped with a cheap campaign on this kind of environment. A stock can be cheap due to various reasons which some of them, not the happy ones as it may be caused by a slow and low growth of the business. In other hands, a stock can be expensive as it’s expected to rapidly grow in the short time like few years. Thus, after you complete your homework in researching the companies you may have clue about why it could be cheap or expensive. You may be better to choose the expensive one as it can grow in few years and generate you more profit.
The Growing Revenue
The company should perform certain revenue growth. What you need to do is observe it, find the pattern, and analyze it. It usually happens when a company gains long-term revenue growth, its stock price increases in such period. You can also gather information from analysts who put the companies at their concerns.
Earning per share is represented by the company’s net income. Basically, the difference between company’s revenue and expenditure may generally describe its profit margin. The profit margin will increase as the company is experiencing the revenue growth and controlling the expenditure at the same time.
The Debt of the Company
This is the crucial step, it doesn’t matter if a company has great revenue growth but not flowing its debt. Analyze the balance sheet of the company make sure it has a healthy financial condition.