Learn choose the best stocks to buy wisely to make your stock market investing endeavors become more profitable.
Looking for the best stocks to buy? Investing in the stock market seems become popular comparing to other investment types. Investors are looking for the best stocks to buy now that are paying great dividends. This page will never recommend any company stocks but can give you some insights on how to know if a specific stocks is good or bad pick.
First and foremost, for the sake of other readers especially for those beginners who are just started in stock investing, let me add first some useful information about stock market investing. There are different stocks to choose from. There are blue chip stocks; stocks from the stable companies that reached globally and they are the oldest and top performing and profitable stocks based on their historical price.
Best Stocks to Buy (Analyzing the Best Stocks to Build a Better Portfolio)
Best Stocks to Buy: Know Their Assets
Second, there are the growth stocks. Growth stocks has a potential to grow because they have the best potential to earn huge profits. Usually growth stocks don’t pay dividends because a company will reinvest its profits so that the company will grow more. The other type of stocks is the “income stocks”. They call it as the income stocks because these types of stocks are paying dividends regularly. it simply means, an investor will rely for his income not just for capital gains but for dividend payments.
According to Wall Street, stocks can categorizes into market capitalization.*
Large-Cap Stocks: $5 Billion or More in Assets
Mid-Cap Stocks: $2 Billion to $5 Billion in Assets
Small-Cap Stocks: $1 Billion to $2 Billion in Assets
Micro-Cap Stocks: Up to $1 Billion in Assets.
Reference: Brian O’Connell, “Build Your own Mutual Fund” (Adams Media, Massachusetts, USA) p.83
Now, decide whether you buy stocks from Large-Cap to Micro-Cap. If you will ask me, I prefer to buy from Large-Cap stocks. Just an opinion. What about you, in your own opinion which is the best stocks to buy? Just share it in the comment box later on.
Best Stocks to Buy: Personality Basis
I hope these simple clues can help you how to pick the stocks that suited your “investing personality”. I mean “investing personality”, because your choices, taste and goal are different from other investors. Every investors has their own “investing personality”.
Study Your Lesson
You must do you homework. What are the things to study? of course, when picking the best stocks to buy, you must study and analyze each companies financial statements, balance sheet, assets, company management, business system, stocks analysis (price trends, charts, valuation, etc.). Can you do that?
If not, hire a stock market expert or just put your money in a mutual fund equity wherein the fund manager will do the investing for you.
Be a Value Investor
Try to become a value investor. Know the undervalued company stocks, undervalued company stocks are also best stocks to buy. Buy undervalued stocks and set your own “buy below price”. Know their fair value. Just buy the stock whenever it hits the “buy below price” and then sell it when it hits the “selling target price” or the fair value.
Be cautious on this, make sure you buy only undervalued blue chip stocks. To know the stock price if its undervalued, study your lesson; learn stocks technical analysis has a big role in determining stocks valuation.
Direct Ownership Privilege
If you own a company stocks, you must be one of the business partner of the company owners. You as an stockholder, must be willing to take any god news or bad news about the company’s progress.
You must know everything about the company itself not the company’s stock price. ask yourself; am i comfortable in buying the company stocks and hold it for many years to come? Am I proud now that I am a stockholder of a company. Do you believe in the company’s products and services? Are you using it?
Stocks for Long Haul
Is it worth holding the stocks for decades or for your retirement? Can you make yourself calm even if there’s a market crash tomorrow because you have just bought stocks today? Are these stocks can help me to retire comfortably and rich?
Diversification is very important. If you have stocks belong to one industry, your investment capital is very much prone to risks. Assuming your stocks A, B and C are all in tech industry, after few months, tech industries fall down. What will happen to your stocks is they will also decreased their value.
What if you are in near on retirement? Hey, your retirement (financial goal) is in danger. Okay, ask yourself again, what’s the best industry that will bloom after few decades to centuries? Is it technology, food,telecommunications, banking and finances, pharmaceuticals, etc. Make sure you have divided your stocks into different industry.
Your Asset Allocation Strategy
Investing in stocks is very risky but more rewarding. Have you ask yourself, during your 40s and 50s, is it still good to park your money in the stock market? Well, I think it’s not good to place all your money in the stock market, you have to learn asset allocation. Now, if you will buy ABC stock now and you have the plan to sell it after 5 years because you think after 5 years stock market is no longer advisable in your age.
Do you think ABC stock can give you the best profits or worst (can give you just stressful days because ABC stock fall down, you just lose all your capital when you need them most). It simply means you have to know your investment horizon, until when you will hold the stocks and when is your plan to convert all your stocks into cash.
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