You would not plan a vacation without doing some research on the destination. This rule also applies to investing. It’s not a good idea to invest in stocks without first understanding the company. What do you need to know, and how can you find out?
1. Consider the revenue generated by the company.
The first step in deciding whether a stock will work for you is to understand what the company does and its revenue generation methods. On their website, look for information or news geared towards investors. Also, check out your trading platform. Logging into your CommSec Account will allow you to access detailed information about a business’s activity.
2. Look at its financials
Financial reports aren’t for everyone. You’re not the only one who has bad memories about business statistics classes. Start with the trading platforms. They will do most of the work for you. CommSec clients can, for example, log in to their accounts and search for a particular company. They will then be able to access financial information such as sales, earnings, financial projections, and ratios that have already been calculated, like the current rate.
What is the current ratio?
The current ratio shows if a company is likely to be able to repay its short-term obligations quickly.
3. Price charts can be used to identify important trends.
The price charts will show you the medium- to long-term trends of a company’s history in terms of share prices. These charts are useful for exploring investment opportunities or to confirm (or reverse) a hunch regarding the direction of share prices. Although it can take time to learn how to use charts, CommSec offers a variety of interactive tools that allow you to track the performance of a particular company over some time.
4. Stock monitoring
You can decide if it is the right time to invest by monitoring stocks that you are interested in. The watchlist is a tool that you can use to help. The watchlist is a list of companies that you would like to monitor. The addition of a stock to your watchlist enables you to keep track of the stocks and allows for easy access to share price movements, charts, and news.
How do I create a watchlist?
You can easily create and manage Watchlists from within your CommSec Account or CommSec App. Click ‘Add to Watchlists’, then enter the stock code for the company that you are interested in.
5. Take a look beyond the numbers
In addition to researching the financials of a company, you should also look at its operating environment and where it is positioned within it. Investors have a responsibility to be kept informed by companies listed on the stock market. This includes changes in their goals and unanticipated developments that could affect investors and acquisitions. These details are available on the CommSec website or app, their social media pages, or company websites.
Consider also:
* Does the business have a competitive edge within its industry or market?
Is it difficult or easy for competitors to enter your industry or market?
What events or economic conditions could have an impact on the company?
* Is it a product that can be substituted with another easily?
* Are the company’s customers and suppliers able to influence its price?
6. Experts share their opinions
Our social media channels and website offer daily expert commentary by CommSec’s team of economists and market analysts. CommSec subscribers also have access to Morningstar, which provides detailed information on hundreds of stocks.
Where can you find ideas for investing? Here are some ideas to get you started.