Although these last few weeks in the market have been rocky, this has been a very bullish year. Now is a great time to discuss how to identify a superior company. In a bull market, finding such a company will maximize your returns. In a more bearish market, finding a great company will be crucial to limiting your risk of losses. Everyone invests differently, and may have different opinions, but here is how I identify a company as a buy target.
- You can explain how this company makes money
- You could explain why you want to buy the stock
- There is a catalyst that can boost the company's growth
- Consider how strong/weak the company's competitors are
- Well recognized (brand name)
- Does not have to constantly spend money to change their product
- Fair price-earnings valuation
- Reasonable dividend
- Strong leadership
- A strong balance sheet
Although I have outlined these investing principles, not every great company fits this criteria. For example, Google does not pay a dividend, and spends money to revamp what they do. Thanks for reading and keep investing! Be sure to subscribe, so that you can receive these posts directly in your inbox!
Follow me on Twitter @andrewciatto
No comments:
Post a Comment