Timing is the key. This phrase is essential in most aspects of our lives, but nothing entirely reflects this as investing in stocks and shares. If you are too late, you end up buying the dividend for more than you wanted to and if you are too early, you might not get the right value for your investment later on. However, to perfect your time, you need to dig deeper than keeping your eyes on the stock market. To get the profits you want, there is a lot of work and research that is required.
The top ten factors that you should be keen on before investing in shares of a company are:
1. Do the Background Check: Investigate what the company you want to spend it does. What is it’s business sector, what are its offerings are and if its legal standings are secure and well? The status of a company is significant as it can affect its ability to meet your needs.
2. Check Out the Competition: While you are performing your research at you primary option, also look into the opposition and the other companies. Look into their market shares and which company dominates the market and its implications on your company. Look into their business sector and offerings as well.
3. Analyse the Leaders and Management: The leaders of the company can play a significant role in the status of the company. Their backgrounds and credibility and associations with the company and outside it as well can affect the company’s profits. Any misdeeds done by the leaders and managers can reflect poorly on the company itself bringing down its stock prices and shares. You need to look for the shared characteristics that remain common in well reputed and stable leadership.
4. Look into the Risks: Different companies are associated with various kinds of risks. You need to associate yourself with these risks and come up with contingency so that you are prepared to invest at the absolute right time.
5. Look for Sustainability: Always when spending, look into the future sustenance of the company you want to spend in. By doing so, you are protecting yourself against making a bad investment which is a critical aspect in dealing in shares and stocks.
6. Analyse the Company’s Previous Profits: It is essential to look into the company’s quarterly and annual earnings and focus mainly on the net income of the company and the per-share earnings to give yourself a complete idea of what profits you could stand to make and allow yourself to get a bright idea before investing.
7. Look into the Earning History: You might want to make sure that the company you are considering has had a steady earnings growth. Many younger companies show exponential increases as they are still developing, while older companies try to meet their last years’ quotas.
8. Examine the Company’s Balance Sheet: Many factors come into play when looking at the balance sheet of a company. These factors can be elusive and hard to find sometimes. However, the debts, liquidity levels, inventory levels and earnings are necessary to examine when you are looking to invest in the company’s share. You can also find out how the company in generating profits through Return on Assets (ROA) and how well the company is managing its debts and capital through Return on Equity (ROE).
9. Read the Company’s Annual Reports: These reports can provide you with information that is more precise and detailed about the country’s annual reports that will give you a better look inside the inner workings of the company.
10. Revise Your Work: Once you have done all this research, look over it again and try to find any disturbances in case the status of the company has changed in the market and lastly, invest.
For your timing to be pristine, make sure you look into the factors mentioned above before making an investment and buying stocks from a company!