How do you go about choosing a stock to buy? What do you look for,where do you look for it and why?

Question

So some buy for short term, looking to make profit in near future by buying something that has fallen in value that is undervalued, and some look long term with future potential....long term puts you to sleep, doesn't it?

Answer 1

Think of an industry that should do well in the next few years. Then start comparing companies in that industry. You should have at least 3 good reasons to buy a company before you spend any money. i.e. Telecom - Company X is investing a lot in fiber optic service. Company X has little debt, and the P/E ratio is low compared to competitors. Learn how to read financial statements. Also don't buy companies if you don't completely understand what they do.

Answer 2

I look for stocks that have recently fallen. I look at the reasons why a stock has fallen, and if I think the stock has sold off too much, then I buy. This is how I recently bought Bodisen Biotech, BBC. Here is a link:

http://www.top10traders.com/ViewPost.aspx?postID=266

Another way I like to invest: I like to see what the best investors are buying and selling. If any of the stocks they are buying seem interesting to me, then I do some more research. You can find this information at http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas. There is also a charting feature , so you can see how your portfolio performs compared to the S&P 500.

Here are this month's best traders:

http://www.top10traders.com/Top10Standings.aspx

Hope this helps.

Answer 3

The first thing to realize is that when you buy a stock, you are buying forward earnings. Plain and simple. You want those earnings to be increasing year over year, hopefully 10% or above.

The stock must have a respectable P/E ratio and be the leader in its industry.

I also love to look at the balance sheet and make sure it has at least twice the amount of assets to liabilities. Companies with too much debt are a drag on the stock.

I use Yahoo Finance to look up companies and TDAmeritrade to buy/sell stocks.


Since I work in the newspaper industry, I try to focus on the companies I know (newspapers, media, entertainment) because I understand better why and how they make money. So start looking at companies that you understand the business fundamentals of first and then branch out and you will be ok.

Good luck.

Answer 4

It depends if you want to go long or short. It's a world of buy and hold vs the day traders. Buy and holds look for future growth. Day traders keep track of the news, the volume and the chart.

Answer 5

First of all you must make sure the company's stock has good fundamentals, increasing sales and earnings/profits quarter after quarter. It has a good product/service and is required in our lives. Then you must make sure that this stock is at a 52 week high on huge volume, by looking at the chart.

Answer 6

company fundamental
technical analysis
audit report
company news
sector news
government policy
demand and supply
TREND

Answer 7

You don't. (That's my job)

I can help you for FREE.

Top 4 Answerer.