What are the main questions which you should ask yourself before buying or purchasing a stock?
Before investing the hard-earned money you should check this below-mentioned parameter.
How long a company is in profits and doing their business or running it successfully you need to check all the parameters of any company which js listed on the stock market,
Lets deep in these important parameters in detail.
Q1. How strong is the company’s balance sheet?
Any listed companies balance sheet have to be seen and check all the profits and losses of any company so that you can understand that a particular company is generating revenue or not,
Company’s balance has to be stronger and future realistic so that an investor can turn his/her mind to invest in that company.
Q2. Is the company profitable?
The company you are going to invest in profitable and stable throughout their journey or not whether the company is in loss and you are going to invest in it then your money will also go down,
Remember even if you are investing a single penny then you are taking ownership of the company of that much amount.
Q3. How is the stock valued?
If the stock overvalued or undervalued then you have to choose the correct decisions when the stock is undervalued then buy it or if it is overvalued then sell and make profit,
Stock valued to invest right now or not is the most important thing to check before investing in it.
Q4. How was the past performance of the company?
Past performance will give you a perfect outlook of the company what it has done and how it will perform in future years,
So before investing in any stock check their annual report and its fundamentals.
Q5. Who are the key competitors?
Whichever sector you have chosen to invest in any stock you need to check their key peers or competitors so that you choose the right stock and tough company to invest while comparing with its peers.
Q6. Was the management involved in past fraud or scams?
The company doing good while working with its strong management team if they are not stable then there is a problem in that particular company,
Must check whether the company’s management was not involved in any scam or fraud in past.
Q7. Who runs the company?
You need to understand the top management CEO MD of the company because if they are taking necessary steps to make their company the best then its value will go up and stocks too so you have to understand it.
Q8. What does the company do?
The important thing before investing in any stock you have to understand what business that particular company do and what is their reach across the country and easily available in the country to buy.
The main thing to check its products and distributors size so that it is available for all.
Q9. Does the company have a sustainable competitive advantage?
If the company have a competitive advantage for their key products and sustainable profits due to this then it will be great for them and your investments too.
Q10. How much debt the company has?
How much debt the company has is the main aspects of any stock because debt is what makes them poor in terms of business and profits the lower the debt of any company the higher the chances of the company to go up and do well.
Debt to equity ratio needs to be below 1.
Hope this article clears all your doubt in terms of what to look before purchasing a stock.
Thanks for reading.
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