I have started doing a series of posts entitled, Investing Guide For Beginners to try to demystify the art of investing and lay the ground work for understanding what stock trading is all about. As such this post is going to serve a simple guide for beginning investors for finding good stocks to buy.
Finding good stocks to buy is the key to investing successfully. What I mean by good stocks to buy is stocks that have a good chance of keeping going up in value in the long run. For example finding a low risk high return stock is probably not the most important aspect of finding good stocks to buy, but it can be a useful thing to have an eye on. What I mean by a good stocks to buy is stocks that have a better chance of keeping going up in price rather than going down in price.
One thing I would also urge people to remember is to do research on the stock you are interested in buying and to get all the facts before investing.
Let me give you an example of how this can be done. If you are thinking of investing in a social network, there are hundreds of potential candidates, but you need to think carefully about which one you want to buy. If you want to buy a networking site for companies, you need to research which companies do have websites. Once you have a look at the list, you need to ask yourself if there is a market for this type of site, if so, is there a strong chance it would be successful, and if there is a strong chance it will be successful, then buy it.
Another example of finding good stocks to buy is a mining company, such as Goldfields Metals (ASX: GWM). Not every company with an asset value of $100 million and an income stream of $1 million makes the list, but if you find one with a market cap of $100 million and an income stream of $2 million, then you can think about investing. If you were to do a search on Yahoo Finance, you will see dozens of companies with market caps of $100 million and higher.
Finding good stocks to buy requires research, and is not rocket science, but you must do your homework first. What I mean by research is researching the company, its history, doing exhaustive research on the financial statements, looking at the balance sheet, looking at the cash flow statement, and looking at the profit and loss statement. Getting to know the history of the company can help you make a judgment about its future.
After you have done your research, it's time to buy. First you look for an obvious buy signal, e.g. Goldfields Metal's share price is $6. It is now or never, buy it now!