Choosing a quality stock requires analytical skills, both fundamental and technical analysis. Many novice investors are trapped in stock transactions based solely on technical analysis and ignore fundamental analysis. Investing only by looking at the ups and downs of stock prices in the stock exchange dashboard is very risky. To help you get the best results in stock investing, here are some ways to choose the best stock.
The first step in choosing a good stock is to pay attention to market capitalization. For information, market capitalization is the stock price multiplied by the total number of shares issued by the issuer and listed on the Stock Exchange. Market capitalization is important to see because:
- Can provide information related to how high the volatility of stock prices.
- Know how much public ownership in the issuer.
- Seeing the potential of the company forward.
In addition, it should also be sought to know the nature of the stock itself. Is it somewhat liquid, liquid enough, or less liquid? A good stock is a liquid stock. Why? Because the stock is traded with a higher frequency or above the minimum limit of a predetermined frequency. It’s useless capitalization value, but less liquid. So, look for a large capitalized stock and it’s fairly liquid.
How is the company’s financial report contained in the capital market dashboard? To select quality stock, it is necessary to observe the income, profit, and margin. How:
- Check income and Fidelity netbenefits for the past two years.
- Check revenue comparison in quarterly report (first quarter with second quarter) and annual report (last three years).
- Consider the ratio of price to sales and price to earnings ratio.