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How To Identify Stocks Through Fundamental Analysis Of A Company?
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There are different types of investors in the stock market – long term, medium term and short term. Also, the methods or approach they use to pick up stocks for investment vary a lot. While some prefer to go by the stocks that are discussed by experts in newspapers, TV channels, etc. There are some who simply subscribe for some premium stock tip services and follow their suggestions blindly. Then, there are those who themselves study the stock research reports shared by different broking firms and finance agencies, and carry out some kind of fundamental analysis of a company.
Of course, there are people who rely purely on technical analysis of stocks as well, where they simply pick up stocks that are good technical trend and likely to remain bullish for a certain time period. However, the ideal way to invest in stock markets is to ensure you consider the fundamental analysis of stocks. As a long-term investor, you may sometimes afford to ignore the technical signals and invest in a stock, as long as its fundamentals are strong. In other words, the fundamental analysis of stocks is the most important thing if you plan to stay safe with your stock investments for a long period of time.
But, how do you go about performing fundamental analysis for a stock? There are numerous parameters that help you determine whether a stock is good from the fundamental perspective. Some of the key parameters for identifying a fundamentally strong stock are:
-P/E ratio less than industry P/E ratio
good consistent dividend history
attractive EPS value
consistently improving YOY (Year On Year) results
good book value
Of course, there are many other parameters, but, as an equity investor with limited time at your disposal, it is difficult to do this fundamental analysis of stocks on your own. This is where you require help from a professional team, like the one at JM Financial. Such teams do the fundamental analysis of a company on your behalf and help you with all the required data. Thus, it becomes easier for you to decide about investing in a particular stock.
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