How to research stocks and determine which stocks to buy?


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Research is the most important factor of a successful stock market investment. It’s what often differentiates a successful investor from the rest of the lot. But researching can get a little tricky, especially if you are new to stock market investing. There can be an abundance of data and often, finding the information that matters the most can be difficult. 

If you are someone who is experiencing the same, fret not. Let’s discuss stock market research and see how you can use research to find stocks to invest in and make this easier for you.

Importance of research

Let’s understand how important research is first. Research lets you keep your portfolio relevant. From results announcements to executive changes, a lot of factors can cause volatility in the stock market today. If you are someone who is at the top of all this information through your research, you will know exactly when to invest and when to divest.

For example, if your research says that a particular company is going to report losses, you can divest the stocks you own to make sure you don’t face a loss. You could also employ different strategies to make use of the possible bear as well. 

Not only that, research makes you able to identify what stocks to buy today. Similar to the above example, if your research says that a company’s stock is going to see a price jump, you could invest in those stocks and earn a profit. 

Here, it is extremely important to understand that while research is your best bet, stock markets today can still be unpredictable. 

Stock market research

Now that you are clear about the importance of stock market research, let’s examine how you can go about it. The below steps will aid your research effectively and implementing your findings.

  • Company filings

All public companies in India are required to file all relevant information with the Securities and Exchange Board of India (SEBI) quarterly and annually. This document will contain all the information that can help you get started. If you are looking to invest in IPO, a similar document called the Red Herring Prospectus can be used. You can find these documents on the investor relations page of all major companies or with SEBI. If you are unable to find information here, you can always contact that company directly and they will provide you with the information you need.

  • Numbers don’t lie!

Once you have the documents ready, it’s time to delve into the numbers of it. Some of the numbers you can look at are –

Revenue – The total money made by the company

Profit – Revenue subtracted by expenses

Earnings per share – Profit for each share of the company

You can compare these numbers with the previous results of the company. You can take a look at the top competitors of the company and match these numbers with their results. You can also look at predictions and see how the current results fair compared to them.

  • Staying up to date

Equally important is to stay up to date with what’s happening with a company. From executive changes to government regulations, a lot of factors can contribute to price fluctuations.

  • Implementation 

Implementation is the final and most important step. At first, it might be difficult to correlate numbers or news and stock movements, but eventually, with more research, you will get the hang of it.

There’s no better tool than research to identify the right stocks to invest in. Begin your research and start earning today!

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