Having A Good Stock Pick
Is Your First Step to Make Money in Stock Market
Summarized OverviewIn this article you will find information about how to select a good stock quantitatively, why the strategy is so important and the critical key financial ratio.
Reasons to Have Good Stock Pick Strategy
Though there are thousands of stocks in stock market nowadays, not many of them are worth investing. In ever changing business environment, it is not easy for companies to remain profitable.
My Five Stock Screening Criteria
A good stock pick should've consider effective management as it is everything in sustainable stock investment. Thanks to financial ratios, picking good stock is just a simple math away.
- 10 per cent EPSGR shows that the company has reliable high demand products or services.
- 10 per cent ROE shows that the company are managing shareholders’ fund effectively.
- 10 consecutive years means the company able to survive the ups and down of the market, business cycles or the ever-increasing competition.
Past performance doesn't guarantee anything in the future for sure, but it is the best information for good stock pick. Should there be no changes in it's business foundation and it's management, profit will continue to be sustainable. For any circumstances, effective management will find ways to stay ahead of competition.
- less than 0.6 debt to equity ratio (D/E) so that the company has manageable debt during economic crisis.
- high profit margin which shows the management really did a great job in reducing operating cost to maximise profits.
Be Consistent in Your Stock Selection CriteriaYou have to be choosy and determined in selecting which stocks you'll be investing in.
If you love speculative stocks, this method is not for you. Rumors and hot tips are just not my taste.