How to Pick Stocks: 7 Things All Beginner Investors Should Know

This week's U.S. News Invested provided an excellent "back to basics" review of investing fundamentals, offering guidance on the most important issue all investors must conquer:  How To Pick Stocks.  Enjoy the read and don't forget Monday afternoon's AAII webinar on combining growth and value strategies for maximum portfolio performance.  Hope everyone had a great weekend.  

MAY 11, 2022 Invested Advice, rankings and stock market news for investors.

Good morning, investors. Stocks are mixed, with fresh inflation data on the way. Highlights of today's newsletter include our market insights plus these new articles: How to Pick Stocks: 7 Things All Beginner Investors Should Know 7 Best REIT ETFs to Buy 7 Space Stocks and ETFs to Watch TODAY'S FEATURED STORY How to Pick Stocks: 7 Things All Beginners Should Know When you decide to try your hand at stock picking, your goal is to find a business that has strong fundamentals with a stock that has good value – especially if you plan to hold on to an asset for a while. But before you put faith in a company, you should thoroughly research its business operations to understand its intrinsic value and determine whether it deserves a spot in your portfolio. Here are seven things all beginner investors should know: Trends in earnings growth. Over time, do the company's profits generally increase? If so, it's a pretty good indication that the company is doing something right. Even small, regular improvements over a long period can be a positive indicator. But earnings growth and value have to go hand in hand for a stock to be worth the investment. You want to look at the company's financial reporting – available on the company's investor relations website – quarter over quarter and on an annual basis, to examine whether revenue and earnings are growing or declining. Company strength relative to its peers. Industry can be a great screener when investing. Start by looking at how an industry is represented in the market and establish what growth potential looks like in that space. When picking individual stocks within an industry, it's helpful to look at where and how the company fits in. How does it fare against its competitors? What is its market share? Is there an advantage that allows it to stand out? These critical questions can help determine whether a company has an edge. Click here to continue reading. 7 things an investor should consider when picking stocks: Trends in earnings growth. Company strength relative to its peers. Debt-to-equity ratio in line with industry norms. Price-earnings ratio as an indicator of valuation. How the company treats dividends. Effectiveness of executive leadership. Long-term strength and stability.