How to choose stocks for Long-term and Short-term?
There are almost 1.5K listed companies in Stock Market, from which investors can choose Smallcap stocks, Midcap stocks and Largecap stocks. Companies Like Tata steel, which was founded before 20s(1920) is a largecap stock which has fundamentally not performed quite similar to investors expectation in last few months but the stock is at 52 weeks high. There are companies like Reliance industries who have shown a quite good growth but their stocks have not performed similar to their growth. There are also such companies have revenue of Rs.100 crore but their Market capitals are more than 3K crore.
Small Investors( common peoples ) wants to invest in such companies stocks which would give almost 35-50 percent positive returns in short-term( 3-6 months) but it happens only 45 percent. So how to choose stocks which would give completely positive returns in future?
Four things to remember before buying any stock
First thing that every investor should keep in mind while buying stocks( for short-term or long-term) is that the portfolio of the company should be bigger one. Means the presence of the company should be visible and clear. Like HUL, which offers large category of products.
Second thing is that the valuations of the stock should be low as compared to its potential. Means the price of the stock must be low with high potential for giving returns in future. Till not understand, let’s take example. Like Reliance Communication, the company has now completed its all major deals. But the stock has not performed till now. Most of the Large investors are saying that telecom sector has now become weak and will get more weaker because of Reliance Jio. But the point is that Reliance Communication is a partner of RJio for giving 4G services. Rcom is getting benefit from this partnership as its 4G circle ratio has touched new heights. But the stock has not performed till now after having such great deals. But in future, such actions will definitely affect the Quarterly Results and Debt of the company.
Third thing is that the company should have good assets number and value for future use. Metal companies are at top in this thing. Metal companies or any other company having good assets can use it in future for Making cash flow in any serious problems. Companies can also use their assets to put down their debts, loans or for any other activity.
Fourth thing is that the future of the company should be bright as sun. Companies performing in low demand sector can become dead anytime due to any Government Activity or any action in their sector like Pan Masala companies. KingFisher is another good example. Its true that the company was working in high demand sector but the point was that the Number or Portfolio of their Customers were decreasing day by day which resulted in Non-active or Dead Company. So, the Fourth point not only means that the sector should be demandfull, but it also means that the company should also be demandfull in market.
If you buy your stocks using this four major points, you would 95 percent earn positive returns.
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