Many people try to figure out a way to earn the quick buck. Lots of people buy into the stock market millionaire dream with a lack of knowledge. These are the people that can sometimes get lucky but the majority of them time lose big profits. Well these are the people who haven’t learned the right way to analyze and choose a potentially good company.
Warren Buffet’s way of investing is one of the most simplest methods of strategy. Buy a young company with good value, growth and expansion. He invests mainly for the long term. Holding stock for more than a couple years is the average length you’ll see him go for.
One thing you got to look for in a company you see potential in is the:
EPS – Earnings Per Share; means dividing a company’s total after tax profits by the number of common shares outstanding. You will always want to compare a company’s earnings growth EPS to the same quarter as a year earlier. Buy stock with EPS of 25%-50%, or higher; best companies 100-400%. Look for sales as well as earnings growth. Look and watch out for volatile earnings growth. Select stocks with 25%, 50% even 100% or more annual growth rate.
(ROE) Pay attention to return on equity. At least 17%/year normal stock market cycle: bull markets 2-4 years followed by a bear market, then a bull market.
P/E Price earnings ratio is a deciding tool to measure if a stock is undervalued.
Perfect time to buy a stock is just starting to break out of the price base. “Pivot” or “Buy Point”. Avoid buying 5% or 10% above the exact buy point.
Stock split – When a stock splits 2:1 you get 2 shares for each share previously held but the new shares sell for half the price.
Low corporate Debt-to-Equity ration is generally better.
RS Rating – Relative Price Strength rating – Buy if 80 or higher. Utilize institutional sponsorship always make it an extremely important tool as you purchase stock.
By following some simple steps and learning from the best stock tips, you can make good money in the stock market. Be diligent and you’ll minimize risk and see big profits to make good money trading stock online.