Whether you have millions to invest or a couple hundred dollars, dedicating a certain amount of money to buying stocks is easy — choosing the right stock to buy is the difficult part. And if this sounds like you, don’t worry, we’ve all struggled to make wise investing decisions at one point or another and luckily, I’m here to guide you in the right direction!
So first off, what is a profitable stock? A profitable stock is any stock that is undervalued that you can acquire and then sell at a later date in order to realize a profit. Now, while this sounds easy enough, and it can be when using my advice, there is some work to be done to be able to identify these stocks and this potentially lucrative decision requires you to understand some core fundamentals with the respect to the companies you are investing in.
Firstly, you will need to assess the price. Knowing the price of shares and their history as you evaluate a company’s stock, will indicate whether or not you may able to acquire a profitable stock. Second, there’s revenue growth. When a company’s revenues increase, typically so will its share price. Buying stocks companies that are consistent with revenue growth is generally a safe bet.
Thirdly, there are dividends. Search for companies that pay high dividends to their shareholders and invest in those. Only thriving companies can pay high dividends.
Next, is market capitalization. Companies with large market caps are usually large and diversified enough to be negatively affected by a small change in market factors. Think about companies like Coca-Cola, or ExxonMobil — they are large, diversified companies who have given their investors good returns for decades.
Next are historical prices. When on the hunt for stock, it isn’t enough to only look at the current value of the shares, also take a look at the company’s share history. You can date back 5, 10, or 15 years, just so you know how the company has been performing over long periods of time. Companies who have good historical share prices are your best bet. However, keep in mind that the past doesn’t necessarily define what will happen in the future, yet, it still remains an excellent indicator of what you can expect.