Ownership of shares is one way of investing that is quite easy and promises a large level of profit for an investor. How to buy shares is already very easy, with just Rp 100,000 you can participate in the capital market in the country. It’s just that, do you know what kind of stock is able to provide a large level of profit?
How to buy shares that are profitable for a novice investor can be quite tricky. Without in-depth knowledge, you can be tempted to make transactions that can ultimately result in substantial losses. As a guide, there are 7 powerful tips that can be the basis for buying shares, namely:
- Profit rate
The first tip to consider when you want to buy shares is related to the company’s profit level. You need to make sure that the company has profits that increase from year to year. This increase is an indication that the company is in good condition.
You don’t have to look for companies that offer very high profit rates. Companies that consistently earn increasing profits, is a good choice. The company has potential for growth and promises high returns for its investors.
Besides the profit level, you also need to look at the stability of a company’s stock. Famous stock investments have very high volatility compared to other types of investments. Therefore, it is important for investors to pay attention to stocks that have low volatility to make a profit.
However, you also cannot be careless in looking at stock volatility. Instead of paying attention to short-term volatility, choose stability over the long term. Avoid shares of companies that have fluctuating prices. Instead, consider stocks that have a stable value or creep up.
- Strength of the company in the industrial sector
The next consideration is to pay attention to the company’s position in the industrial sector. Consider choosing companies that are included in the market leader category. His position as a market leader promises greater profit levels than companies that only follow the market’s desires.
- Debt ratio
All companies have debts, including international scale companies such as Apple or Amazon. Therefore, it is very difficult for you when you want to invest in companies that have no debt. Instead, consider the value of the debt to equity ratio of the company or debt equity ratio (DER).
How to find out the value of DER is very easy, which is to compare the total debt with the company’s total equity. Companies that have a healthy financial condition, will have a DER of less than 1. It’s just that, in certain industrial sectors, for example construction, DER may be irrelevant. Moreover, this industry relies on funding from debt.
Also read: Debt Is: Characteristics, Types and Understanding!
- Price earning ratio(PER)
Next, you also need to look at the value of PER shares. PER is a value that is often used by investors when conducting fundamental analysis and can be used as a means to predict the value of a stock. PER can be an indicator of market conditions in looking at the future.
A low PER shows that the market is anxious and pessimistic. Meanwhile, a high PER indicates that the market is optimistic about the bright economic outlook in the future.
- Company management
The next way to buy quality stocks is to look at the quality of the company’s management. This you can know by looking at the figure of the company’s leaders. Are they among the leaders who promote a stable and long-lasting company culture?
Companies that have good management, have good stock trends. In addition, also look at scandals that have close links with company leaders.
The last way to buy quality stocks is to look at dividends or profit sharing. The existence of dividends is proof that the company has stability. Looking at dividends is also a good way for investors who want to make long-term investments.
Small divide can be an indicator that the company is not in good condition. However, large dividends are also not always a positive indicator. Did not rule out the possibility that large dividends are a sign that the company did not make investments in accordance with its capacity.
The best option is to look for companies that distribute dividends in amounts not too large. However, the company distributes dividends continuously and even tends to increase over time.
These are powerful tips on how to buy quality stocks. Hopefully it will be useful and you can get a big profit from stock investment, yes!