Investing in stocks can be a daunting task.While building a portfolio or investing in the stock markets, selecting theright stock is very crucial. Selecting the right stock at the right time canturn out to be the most lucrative deal and one can make good profits from thewise decision. Similarly, it is very important to time the stock while sellingit. Selling the stock at the appropriatetime can be equally rewarding.
Investing in a wrong stock can be apainful experience. It can lead to losses or take years to break even. Stock marketsare definitely not for the people who cannot cope up with ups and downs associatedwith it. With vast information available in the market, you can analyse a company and take a decision of buyingor selling. In this article, we shall understandhow to identify stocks to buy or sell.
Here are the main factors you should consider before buying and sellingany stock
Factors to Consider When Buying or SellingStocks
1-Select the Company or Industry with whichyou are Familiar:
When you start investing in stock market,select the industry you like the most. This will make you more interested andyou will be able to take the decision in a much-informedway. When you are aware of the industry and company, you will know what hype or information should be ignored. Thus, itis always advisable to start identifying stocks or companies you know well.2
2-Consider Valuation and Price:
Before purchasing or selling any stock,it is important that you consider the price and valuation of the stock. If thecompany is trading at PE multiples of less than 20, it is considered asundervalued and hence a good buy. On the other hand, a company trading at PEmultiples of more than 20 is considered as overvalued and hence a good sell.
3-Look at Margins:
Companies survive by selling its productsor services in the markets. If the sales or margins of the company areincreasing at a good pace, then there is a good potential of a rise in the price of stock in future. Alwayslook at the margins of the company and reasons for the increase, if any. Compare the cost of goods sold and other expensesfor the increase in sales.
4-Technical Indicators:
In the recent times, the technicalindicators have been gaining popularity. The technical indicators can be in theform of charts that predict the future moment of the stock based on the stockmovement in recent times. The technical indicators take into account the volume traded, 50-day and 200-day moving averages, etc. The information provided by thetechnical indicators can be very valuable while considering buying or sellingof any stock.
5-Upcoming Events:
Any upcoming event regarding a companycan be a reason for buying or selling thestock. The event can lead to multiple triggers in the price moment of the stock.Knowing and analysing the event rightwill help in determining the trend of the stock going forward. Thus, buy andsell of the stock can be initiated based on such events.
6-Evaluate Financial Reports:
Understanding and going through thefinancial reports of the company can make buying and selling decisions easier. Studythe yearly reports of the company and compare them. Evaluate the profitabilityof the company. Check whether the revenue and the bottom line are showingconsistent growth. Also look for cash payoutsto stock investors in the form of a dividend.By evaluating all the above points, you can decide on whether to buy or sellthe stock.
Conclusion
Indira Securities is the leadingfinancial service provider in India. We provide our clients with regular buyingand selling recommendations. Our recommendations are not only based on technicalanalysis but also on fundamental analysis of the stock. Our services include trading in equity, commodity, currency and derivative. Our mobile applicationprovides the user with hassle free trading opportunity. Open a demat accountwith us and take benefit of our services. For any service or query contact usvia email or call.
