The stock market is such a place, where if the right investment is identified, then you can earn great profits in a short time. Here are many such stocks, which have made investors rich in the last 5 to 10 years. But only a few people know about how to choose the right shares. Many people invest by watching the market trends. Or some people are impressed by seeing the past returns by doing that share. If you are new to the market and technically you do not have much understanding about it, then there are some special things to keep in mind before investing money. Here are some great tips from market expert and CEO of Finology Ventures Pranjal Kamra with Zee Business. Which will help you in choosing stocks with strong fundamentals.
Don’t just look at old history
Generally, investors look at the past returns while investing money in the stock. Some people measure the stock from the financial health or balance sheet of the company as well. These factors are also important, but one should not invest only on the basis of them. As an investor, keep in mind how the future of the company is. What is the demand for his business going forward? For example, here we can take the example of Castral or ITC. ITC’s cigarette business is under pressure due to EVs regarding the future of Castrol and cigarettes. While there is no other problem with the company. For this reason, there has not been much growth in their shares in the recent past.
What is the company doing new
Here we are talking about competitive advantage. India is a country with open economy, here any person can do business in any sector. When a business goes well, many people want to come to that business. This increases the competition. Therefore, that company is able to grow more, which focuses on innovation year after year. No matter how innovative the business is, innovation should continue to happen. If a company is doing this, then the expectation of growth in it increases.
whether the company is making profit or not
While investing money in any stock, see the profit of that company. Is the company making profit or not? Whether the outlook for profit going forward is better or not. The company does not have much debt. What has been the CAGR growth in the last 5 years? It is also important to see the valuation of the lion. Keep an eye on the Price to Earning Ratio (PE) as well.
How strong is the network
The network effect of the company should be better than the rest. Only then will the attention of more people join the company. For example, take the example of Windows Phone. Due to more apps, people started buying Android phones. Companies also did not develop apps for Windows Phone because their phones do not sell much.
Government protection
The value of those companies increases in the eyes of investors, which have got government security. They have got a license for regulation. Or the government may have saved them from more competition. These may include credit agencies, which have less competition.
Sources: Zee Business
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