How to choose a good-quality stocks? Issuers which are good? If the price is okay but the company doubted continued gimana? Such questions often rested in their minds that will be new or participate in the stock market. To that end, this article will discuss about the information-important information that needs to be compiled before you embed the investment in shares of a company.
Gathering together the information in order to choose a quality stock is made through checking of ten the following essential points:
- Capitalization
The first step is to figure out how big the issuers it. Don't just rely on your memory alone, because the big companies is not necessarily a friendly name in the ear. The important thing here is to examine the market capitalization of issuers. Market capitalization can provide related information how high the stock price volatility, how big the public ownership in such issuers, as well as the potential of the company to the next. For example, the company berkapitalisasi large and super large tend to have more stable reception flow and lower volatility. The company's mid-cap and small-cap, on the other hand, it could be only serve one segment of the market and therefore experience more fluctuations in terms of stock price and income.
Of course, we have not been able to take a decision only from this first step only. This is just the first step for further investigation. When you begin reviewing admissions figures and profit, for example, the data will give the market capitalization of a number of perspectives. You should also confirm the other important facts in this checking.
- Trends in revenues, Profits, and margins
When spotting figures in the financial statements of the company, it could be better to start with looking at the trend of revenue, profit margin, and (RPM).
Look at the trends of income (revenue) and net income during the last two years. All of that will be associated with the quarterly report (in the last 12 months) and annual reports (last three years). Furthermore, the short-checking can be done to find out the ratio of price-to-sales (P/S) ratio and price-to-earnings (P/E). Pay attention to the latest trends in both data sets, whether fluctuating or consistent growth, or whether there are changes (more than 50% in a year) to the top or bottom.
Margin should also be checked to see if her trends are generally up, down, or stay the same. This information will be important in the next step.
- Condition of Competitors and industry
Once you get an idea of how big a company and how much of its revenue, then the next step is to compare it with the industry in which the company is situated and with its competitors. Some description of a company could be a visit from with whom he competes. By looking at the biggest competitor to anybody in any line of business, you could measure how big the overall share of the market for the resulting products of the company.
- competitors-illustrations
Information about the competition can be found along the profile-company profile in the list of issuers in one sector. And if you still are unsure, then you could do further investigation with researching some of the main competitors.
- Assessment Ratio
After all of the information collected above, next was the turn of calculating Price Earnings Ratio (p/e) and the like for the company that you are thorough and its competitors. Make a note if there is a considerable gap between companies in the same line for scrutiny again.
P/e ratio can form the base early in the assessment in stage four. It is necessary also to note the number of net earnings over the past few years to ensure the normal numbers and not rising due to experience a drastic change. P/E ratio also needs to be observed while comparing it with the ratio P/B (price-to-book ratio) as well as the ratio of the other companies in one industry. Because the range of numbers a ratio can be different between one industry with other industries, it is important to monitor the number ratio of several competitors in the same industry.
Lastly, PEG Ratio calculation (price/earnings to growth ratio) will take into account the expectations of earnings growth also in the future and membandingkanya with the conditions of the current earnings. Stocks with PEG ratios approaching 1 usually judged quite worth in normal market conditions.
- Ownership and management
If the company you seek is still run by its founder, ataupkah management company has been driven by new people? In the company of a new stand, usually the founder or his colleagues still have a position in the company. Check out the BIOS of key figures of the company to see how broad their experience.
Check also for monitoring whether its founder and Manager holds many shares, and how much. Suppose the stock ownership by the management company as terrace something positive, and if the ownership was low as the possibility of the existence of the problem. This is because the shareholders will normally be more dipedulikan when the people who run the companies also have an interest will be the performance of the stock.
- Financial Report
Should investors steeped in the intricacies of the financial reports of a company he wanted to infuse funds? For observations at a glance, actually look at certain points is sufficient. See Consolidated Financial Reports to view asset and liability as a whole; Note in particular the company's ability to pay short-term obligations and long-term debt amount borne by the company.
It should be noted here that a lot of debt is not necessarily bad; because this depends also on the company's business model associated with it. Some companies are very capital-intensive, whereas other companies may just need a little bit of employees and equipment to operate. Take a look at debt-to-equity ratio to see how many positive equity owned company; Compare also with competitor data to get a better perspective.
If the figures total assets, liability, and equity change drastically from one period to the next period, try to find out why it happened so. Read the footnote accompanying the financial statements and annual report/quarterly could give a little hint about this, for example if the central company preparing to launch a new product, the Middle accumulate income, or merely to spend capital. This observation should be able to give a deeper perspective after you review the latest profit trends.
- Stock price History
After all the above observations, you certainly need to see stock price history. How long the shares of issuers that are traded in the market? How does the movement of its stock price, is heaving, or the smooth and stable? These factors can give you a clue about how the projections of profit to be had, because it would be terefleksikan also on the movement of stock prices in the future. High volatilitasnya stocks usually have many short-term shareholders, which this could increase the risk to be borne by the investors.
stock prices-illustrations
- The possibility of Options and Dilution
Monitor the issuers never did also publish options, perform a dilution, or other action that may alter the composition of stock ownership in the company. Keep in mind that publishing options or dilution could have a major impact on the stock price if you many have it.
- Expectations
Next, you need to dig further to know how to estimate revenue and profit of up to two to three years, the long-term trend that is experienced by the industry in which the company operates, as well as information about the partnership, joint venture, and the like. News about will release a new product or service may make you interested in berinvestais in a stock, but you can't just fixated on one thing only without looking at the broader picture.
For instance, you hear the news has been the discovery of new oil-refining techniques that can increase output doubled. Don't rush infuses capital in oil and gas companies. The new technology is not necessarily can be directly applied, and if it can be applied any time the cost pengadaannya is not necessarily cheap. Also, in the condition in which the trend of falling oil prices, a bigger oil output would instead be makin harm the company.
- Risk
If you are going to invest in the stock market, then you surely know that with the potential profit there are potential risks. Therefore, make sure that you understand the risks of the company and the industry in which it is located. Is there a problem with the regulation? What about management? Does the company that often struggled with pollution-related lawsuits, or whether he is eco-friendly? In the current world developments, does the company have the ability to Excel? Imagine the worst case scenario and the possible impact on share prices.
After all the points above are finished is checked, do you feel less steady and want to deepen again? If Yes, then just do it. This article basically just provides a simple guide for beginners. Following these steps can help you achieve the vital decisions, but the end result is up to you. Experienced investors usually review many investment opportunities before finding a small amount of quality stock deserves to be further observed. So, do not be troubled to start again from scratch when after arriving in the end turned out to be the company you seek is not ideal.
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