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Sunday, September 4, 2011

6 Important Steps to Identify Best Stocks to Buy

Are you in search of finding the best stock to buy?

There is no perfect answer actually to this question as there are various trading styles that fit different investors needs. A day trader may think that a penny stock is the best stock to buy now whereas a long term dividend investor has a completely different opinion. The fact is that there are many good stocks to purchase for all types of investors as well as bad stocks to avoid.

In order to truly identify the best stock to buy, an investor needs to understand a few basic principals and define their investment strategy. To find out stocks for investment purpose requires research and time, below are the important six steps which will help you to identify the best stock you can own:

Step-1: Find out how the Company makes Money

Step-2: Do a Sector Analysis of the Company

Step-3: Examine the Recent & Historical Performance of the Stock

Step-4: Perform Competitive Analysis of the Firm with its Competitors

Step-5: Read and Evaluate Company’s Financial Statements

Step-6: Buy or Sell

(Click on the above links to read the step wise approach to find best stock in detail)