I'm about to buy the very first shares to this website's portfolio. I'd like to buy shares which beat the NASDAQ market. But how to do it? What should I know? I've just prepared the list of the top 10 important things I should know about a company before investing my money. The list will be a base for me to investing in a good companies and beat the NASDAQ.
For me it is the most important thing for the company. I'll try to invest in companies which work in growing industries.
2. Competitive Advantage
Here I check why this company is better than their competitors. It is more subjective for me, but also important. I really like when company offers something really specific and different than others. Perfect when this thing is what clients like the most and a company earns money thanks to this thing.
3. Chief Executive Officer (CEO)
I've heard many times that CEO is just a one person who is not so much important. Well, for me it is. CEO is someone who should have a vision which makes the company profitable. I like when the CEO directs the company for many years.
4. Revenue Growth
That why to check if a company grows. Must be for me. When revenue grew rapidly in the past, it is more likely that they will also grow in the future.
5. Net Income
A company should be profitable. Net income should grow since a few years.
6. Profit Margin
It is a dangerous when a profit margin is low. This is dangerous because a slight increase in costs may result in losses. Profit margin should be as high as it is possible.
7. Debt-to-Equity Ratio
It is not good when a company is drowning in debt. The other thing is that there should be a space for further investments.
8. Price-to-Earnings Ratio (P/E)
P/E is the best way to check if a company is too expensive or not. P/E can be compared to both the overall market and to closest competitors.
Here is where I think about the future of an industry and a company. Why would it grow? Whether products of the company will be needed in the future? Whether the company develops and improves their products or create new ones?
And here is what I think why the future can go wrong. It is easy when the company is exposed only on the increase in commodity prices and exchange rate risk. More difficult when there are many serious risks.
Briely, these are the most important things I need to know before I decide to invest in the shares of the company. Based on them in a few days I'll try to decide which company shares to invest to beat the NASDAQ market.