3 HOT Tips ON HOW to pick the winning stocks

Investment can be one of the WAYS to BE RICH... Here investment mean picking the right stock. Given below are some tips to help one pick the winning stocks: 1. Stock Research Report or Company Report Get the Revenue figure. What you want to know, is whether it has steady growth evidenced by sales figure on an upward climb. Understanding more about the Cost of Goods Sold figure. This tells you more about the costs of all materials and expenses incurred in making the product. Rental in keeping stocks is not accounted. 2. Financial Ratios' The few favourite ratios : P/E (Price to Earnings Ratio) , EPS (Earnings Per Share) and ROE (Return on Equity) This ratio reveals about the value of a stock. The price of a stock divided by the earning per share is called the p/e ratio. Every stock has a trailing p/e and a forward p/e. The trailing p/e uses earnings from the past 1 year while the forward p/e uses next year's projected earnings. Compare the current p/e with its historic p/e during its last 3 years. Try to "aim" for a stock with low p/e. If the p/e is high, its risky as it is more difficult to meet the high earning expectations of its shareholders. Companies with low p/e ratios usually operate in slow growth industries. Also mature companies wuth low p/e often pay dividends while high p/e ratios usually does not. EPS : This ratio reveals the growth of the stock. It takes what the company earned and divides it by the number of outstanding stock shares. This ratio is usually reported at the end of the year. But realise that this figure can be manipulated due to market pressure. Of course, the bigger this ratio is, the better. ROE: Some people consider this to be the "it" to measure the stock's success. This ratio shows you the rate of return to shareholders by dividing the net income by the total shareholders' equity. Big is good. Anything above 20 percent is good for me... 3. Sector Outlook A few things must be enquired before compiling a list of stock possiblities a) Does the company produce high end services/ products? b) Does the company management have experienced/ qualified personnels in the industry they are in? (For me personally, I believe that in highly specialised fields, higher value added performance is obtained from people who are "skilled specialist" : That explains why Google is superb in the things they do ) c) Is the stock reasonably priced? d) What about comparisons with the other stocks? e) Does a company have patents to keep potential rivals at bay? There you are.. good luck!

Source: http://www.ArticlePros.com/author.php?James Tan

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