What to look in stocks before buying?

20 November, 2013

Most of the investors require one or two great companies in their portfolio to ensure long term success. How to find a good stock? Experts talk about qualities to look in a stock before buying it.

Management experience

If you invest in a company with prior management experience, then the company has more chances of growing in terms of earnings and dividends. The converse is not always true but it is better to avoid risk.

Control on stock

Whenever a company announces a new share, it means that the company is providing a ticket to someone to share their profits with. A good company will never issue new stocks. Many good companies have not sold another share after going public.

High ROE

The return on investments is a technical measurement of how well the company is managing. If the company makes out more on what the investors put in, the ROE will be high.

Recession performance

If a company can show a profit during a recession then it is said to be a good company to add to one’s portfolio. The recession time helps to identify the best company.

Have an addictive product

If a company sells something that is addictive, then it will always see a profit. The best examples are Starbuck Corp. and Altria Group Inc.


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