There seem to be hundreds of different strategies for attacking the stock market and hunting profits. The vast majority of them have few merits and only succeed in being unique.
I’d take a proven strategy over a unique one any day of the week.
If you’d like to copy the same strategy I do, here are 5 things you need to see before making any trade…
It doesn’t have to be rocket science. Not when all you want to do is make money.
That’s why I stick to the same set of requirements every time I begin researching a company and its stock. If it ain’t broke don’t fix it, right?
So without any further ado, here are the 5 things I always look at before making any investment:
1. The Company’s Profile
Even if you’re checking out a well-known company like Apple or McDonald’s, it helps to dive into the profile of that company a little bit. I’m not talking about hours of research, but it’s nice to have a solid grasp of what exactly the company does, which sector it’s in, etc.
2. Income Statement: Annual Gross Profit Data
I always look at the income statement, and 2 aspects of it in particular. The first of which is the annual gross profits of the company over the past few years.
What I want to see is increasing amounts as years go by. That shows consistent, dependable growth in the company in the long term.
3. Income Statement: Quarterly Gross Profit Data
The second part of the income statement I focus on is the quarterly gross profit data, for which I’d like to see the same sort of thing: consistent increases.
For the quarterly data I like to look back 3 or 4 quarters. This gives me a handle in the shorter-term growth of the company.
4. News
It can’t hurt to stay informed. And any major headlines about the company could have a significant impact on its stock. I would also recommend keeping track of the news about whatever sector the company you’re researching is a part of.
5. The Insiders
The insiders can give away many hints about the stock of their company. And while I don’t need to see any transactions to enter a trade, I’m much more confident if I can see some heavy insider buying.
