What Should You See in a Share Before Investing In It?

Being an investor , you do invest in a stock so as to earn profit. It is quite disheartening when you invest your hard-earned money in a stock that does not simply give you desired returns. It is definitely critical to do all the research before you choose to invest in a specific stock.

Whether suzlon share price, the overall working of the market and research; everything should be in your mind. But don’t worry, following are a few of the many things that you should check before you even select to invest in a stock.

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Time Prospect:

You must decide the time prospect before buying a stock as it does play a critical role in deciding if you should buy that stock or not. Your investing time skyline can be short term, even middle term or of course long term, on the basis of your financial goals. Know about these terms below:

  • A short-term time horizon is any sort of investment that you are planning to own for or even under a single year. In case you are simply planning to purchase a stock and hold it for under a year, then it is definitely great to invest in stable blue-chip sort of stocks that pay dividends. The companies have a wonderful balance sheet and there are lesser risks involved.
  • Then a medium-term investment is the one that you want to really hold from one year to even 10 years. For middle term investing you must invest in quality emerging markets stocks and even stocks with a reasonable level of risk.
  • Then long -term investments are any sort of investment that you are planning to hold onto for more than even a decade. These investments have time to recover in case something goes wrong and may produce a massive return.

Stock value

Source: kiplinger.com

There are different manners that you can find out whether a stock is over or even undervalued. Some general types of methods could include Price to Earnings ratio (P/E ratio), then the Price to Sales Ratio that helps a person understand in case the market value of the stock is harmonized with the growth trends of the specific company.

The performance of the company at the financial front

It is critical for you to analyze the past performance to understand how the company has grown over the several years. Read the balance sheets to find out how their balance sheets have grown in the previous years or past. The more you research about the company and its performances in the past, the better you can figure out.

Check the Shareholder Pattern:

Being an investor you should definitely check the shareholding pattern before purchasing a stock. Promoters are entities that have a huge influence on a company. They could even have a huge controlling stake in the company or even hold senior executive positions. Thus, being an investor you must invest in the companies with a high promoter holding, High Domestic Institutional type of Investor holding and even High Foreign Institutional Investor holding.


Source: top10stockbroker.com

To sum up, when you stay sceptical about all these things, you do invest better in the shares. Log on to 5paisa for more financial pointers.