Buy Stocks?
There are various ways in which the traders evaluate
the stock performance and then based on their assessment of the
market and the timing they tend to take the decision of
entering a stock or offloading one. These parameters depend
solely on the objective of the trader and the timeframe that he
is looking at. Below mentioned are some of the key aspects
which one should look at in case of investing in a stock and
these would help him sail through the testing
times.
- Does the
Company have a renowned brand or set of products
which are world class whose sales and revenues is
going to increase seeing the market
condition.
- The likes of
Nestle, Godfrey Philip, Gillette are some of the
strong brands which have got products and pipeline
which would increase their revenues manifold. They
are having a presence which would make them Leaders
for years to come.
- How good is
the sales organization of the
company
- This is
another key aspect as sales driven organization
continues to have repeat business and the client keep
on coming back. They tend to develop products which
are in line with the requirement of the market
thereby making them the choice of the
customers.
- Does the
company have a good Profit margin and are they
improving it?
- Margins are
important as sales with decreasing margins would not
result in net profit increase. In fact there have
been instances wherein the company has grown in sales
revenue but decline in profits. There should be a
bargaining power with the company to reduce its input
costs at the same time to increase the Price and they
should have elasticity in their
stride.
- In the
foreseeable future, would the Company’s growth
require an equity financing which would negate the
benefit on the existing shareholder
value?
- The capital
expenditure if financed by increasing the number of
shares would result in the less profit for the
existing shareholders since they are the ones who
would be stuck and the growth would still not help in
increasing the net worth.
- With this we
come to end of this article. Hope it has been able to
outline some of the basic principles for finding the
Niche companies for the
future.
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