By: Dhaneshwar Prasad
Look at the company's financials - revenue growth, profit margins, debt levels, etc. Healthy finances suggest a strong business.
Understand the company's business model and industry. Some industries/business models have better long term prospects than others.
Evaluate the company's competitive advantages or moats. A company with strong competitive advantages can better withstand competition.
Consider the company's growth opportunities and trajectory. Earnings growth drives stock price appreciation.
Assess the company's management team. Good leadership is important for executing business strategy.
Look at valuation metrics like P/E and P/S ratios. Avoid stocks that seem overvalued relative to peers.
Seek out high quality companies. Look for sustainable competitive advantages, leadership position, pricing power, etc.
Find companies with rising analyst estimates and favorable trends. Growing earnings expectations tend to precede stock price increases.
Focus on your circle of competence. Only invest in businesses you understand.
Diversify your portfolio with stocks across various sectors and market caps to manage risk.