Stocks for Long Term investment – Key Strategies for Find Them

What is investment.

An investment is something that is bought with the intention of making money or appreciating in value. Appreciation describes the process of an asset’s value rising throughout time. A person invests in goods with the intention of using them to generate wealth in the future.

Classification of Investment Assets are:

Real estate Assets.

• Financial Assets.

Real Estate Assets :

Real estate investing makes money by employing real estate properties as a vehicle for investments. Owning real estate, receiving rental income as cash flow, and then reselling the asset at a better price owing to appreciation are just a few examples.

Financial Assets: 

Financial assets are liquid assets, such as bank deposits or stock equities, whose value is derived from a legal right to or ownership of an underlying asset. When we talk about assets, we usually mean those that come from holding equity instruments in another company or from contractual agreement of future cash flows. Financial instruments are contracts that result in a financial debt or equity instrument for one of the parties and a financial asset for the other.

Key Factors to pick Stocks.

There is no one best approach for selecting the best stocks to invest in. It depends on a variety of factors, such as the objective you’re trying to achieve, your ability to take risks, the amount of time and money you have available, and the result you want to obtain. You can use these steps to choose the finest stocks to invest in or you can go through to the Share Market Institute who offers a unique trading experience for various asset classes, including futures and options, forex, and more.

•Study the industry and have an understanding of it. This includes performing fundamental and technical analysis to estimate a stock’s fair value as well as researching a company’s future prospects to make sure they are consistent with your strategy and objectives.

•Build your portfolio using a combination of quantitative and qualitative stock analysis. By doing this, you may design a strategy that suits your needs.

•When making investment decisions, keep emotion aside. Don’t just buy stocks because they are popular; think things through before making a purchase or sale.

•To lower your risk, be careful to diversify your investments.

How to choose stocks (Share Market Investment Tips)

When choosing stocks there are a few measures to take. First, remember that determining a stock’s intrinsic value is at the heart of fundamental analysis. This implies that you should examine the economy’s qualitative as well as quantitative components, as well as its various industries and the specific businesses that comprise each one.

Fundamental Analysis Have Two Hands

First      – Qualitative Analysis.

Second – Quantitative Analysis.

Qualitative Analysis

The qualitative aspect basically includes studying the company’s non-numerical facets. This includes a variety of elements,  

1. The management’s background, including who they are, their qualifications to lead the company, their experience and education, any legal actions against the promoters, etc. 

2. Is the management engaging in fraud, bribery, or other unethical business practices?

3. Corporate governance – Director selection, organizational design, openness, etc. 

4. How does management treat minorities stockholder in the company? Do they consider their interests when making decisions for the company?

5. Share transactions – Does the management buy or sell company shares through covert promoter groups? 

6. Is the company providing financial favors to well-known individuals at the expense of the shareholders, such as the promoter’s friends, relatives, and vendors?

Quantitative Analysis

Financial statements are used by corporations to disclose information about their financial performance.. Fundamental analysts make investing recommendations based on quantitative data collected from financial accounts.

Several examples of quantitative aspects include the following:

• Financial success and expansion

• Functional effectiveness

• Pricing strength

• Margin and its expansion

• Concerns with costs

• Earnings and their expansion

 “The Balance sheet, Income Statements, and cash flow statements are the three most crucial financial statements.”

Balance Sheet 

A company’s assets, liabilities, and equity at a specific time are shown on the balance sheet. The balance sheet gets its name from the way a company’s financial structure balances out:

Liabilities + Shareholder Capital = Assets

Assets: The resources that the company now holds or is in charge of the financial year represented by its assets.

Liabilities: Existing debts that must be paid back are known as liabilities.

Shareholder Capital: the total amount of money that the Shareholders have invested in the company, including retained earnings, or the profit from prior years.

Income Statement: –

The income statement shows the sales, costs, and profit that were produced during that time period as a result of the company operations.

Cash Flow Statement: –

Cash flows serve as a record of its cash Inflows & Outflows during a specific time.  Cash related activities are usually the primary importance of a cash flow statement are followed.

Operating Cash Flow Activity – Cash earned and expend from regular business operations.

Financial Cash Flow Activity – Cash paid or received from the issuance and borrowing of cash.

Investing Cash Flow Activity : Cash paid for investing in assets as well as the revenues from the sale of other enterprises, machinery, or long-term assets.

Ratio Analysis 

 Ratio analysis can also be used as a diagnostic technique to identify the root causes of a company’s financial distress.

These categories of ratios are possible:

1. Liquidity ratios which analyzes the cash flow for operations.

2. Asset management ratios analyze how well the resources are being used.

3. Debt management ratios detect debt to stay within reasonable ranges and maintain the ideal level of debt.

4. Profitability ratios evaluate an accounting company’s level of profit.

5.Market value ratios when deciding which stocks to buy, investors can use market value ratios to distinguish between overpriced and undervalued shares. 

What to consider when selecting stocks

• Make a trading strategy 

• Recognize the market

• Invest in a market screener

• Control your risk

Best Stocks to Buy in India for Long Term

S.NoCompany NameCMPSectorReturns in 5 YRS (%)P/E(TTM)EPS(TTM)Mkt CapDividend yieldROE(%)
1RELIANCE INDRUSTRY2615Refineries1992498.091,762,5870.317.78
2INFOSYS1517Software (IT)21727.854.37638,2432.0429.34
3TCS3226Software (IT)13829.7108.241,179,0561.3343
4HDFC BANK1513Private Sector Bank66.2920.2374.88844,4111.0215.38
5ICICI BANK908.35Private Sector Bank18521.3542.5633,4120.5514.04
6TATA STEEL106.6Steel59.244.5523.42130,1354.7935.08

                                                                                                                                                                                                                                      *as on November 9Th 2022,

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