As a trader, are you looking for a good investment? We advise you to buy shares on the stock exchange. However, many financial securities are offered for sale on various stock markets. It is important to know the most profitable of them before investing. To help you make a good choice, we present you a small guide on how to invest money, for example, in the best financial stocks.
What criteria should be considered before buying a share?
Trading is a financial activity, the main purpose of which is the purchase and sale of financial securities belonging to the company. In order to receive dividends after purchasing a security on the stock exchange, there are several upstream elements to consider in order to select the appropriate stock.
Focus on profitable business sectors
Depending on the time of year, some areas of activity on the stock market grow, unlike others. For example, the share price of a company operating in the textile sector is struggling to take off. On the other hand, in the financial market, a renewable energy company has a very high rate of return. Avoid buying a stock if you find that no investors are interested in its sector. According to the Gainy platform, the sectors that pay the most are Commodities, Healthcare, Finance, Technology, and Energy.
Buying rising financial stocks
You are more likely to increase your dividends by buying at high stock prices. It is a bad idea to invest in a falling stock and hope that its value will rise. This will provide you with a fairly quick profit, and perhaps such stocks will grow for quite a long time. But be careful, rapid growth can turn into a price drop just as quickly. Therefore, we advise you to constantly monitor the status of such shares.
How to track rising financial stocks?
The first step when you want to gauge the price of a share is to do some research. This involves taking the time to learn and analyze several financial indicators to assess a company’s performance and prospects.
At present, everyone can quickly access a multitude of information thanks to different vectors:
- The company’s website: this is the starting point to understanding the company’s activity and its objectives. It usually contains annual accounts and financial reports.
- Economic calendars: these calendars follow essential deadlines such as publications by official bodies (for example, a quarterly report from the European Central Bank) as well as company publications. Recall that listed American companies are obliged to publish their accounts quarterly. Around the time of this publication, there is usually increased volatility in the share price. eToro offers a calendar of the publication of the income statements so that no deadlines are missed.
- The economic press: the media are obviously an essential source of information. Consulting multiple logs or sites to cross-check information is important. An attentive investor will also think about checking the reliability of his sources.
- Expert publications: Investment banks, consulting firms, and others regularly publish detailed analyses or reports on various topics. A platform like eToro, for example, frequently offers market analysis. For U.S. equities, eToro gathers most of analysts’ forecasts and other relevant items under the “Research” tab. Expert publications are a valuable source of information that allows you to put the data collected into perspective or to find opportunities. In the field of consulting, names such as McKinsey, Bain & Company, or BCG serve as a reference but firms more specialized in one niche or the other also exist.
- The network: too often underestimated, the network is a useful source of information. By talking to your colleagues, your friends, and your entourage, you have the opportunity to exchange views and glean information that could be useful. On the Internet, there are also different forms of communication such as forums to exchange on companies and their perspectives. For example, the social trading platform eToro offers these users the opportunity to comment or debate through the news feed.
Thanks to the research carried out, it is possible to identify potential investments and learn more about the latest news from a company. This step is very important, especially for investing in stocks over the long term. It is also regularly recommended not to buy a share if you do not understand what the company is doing (at least from a long-term perspective) and to always diversify in order to minimize its exposure and risk. Once the searches have been done. The next step is to evaluate specific financial indicators in order to refine its first selection.
Of course, some traders choose to apply different valuation techniques. Those who are proficient in the main tools of technical analysis will tend to first look for opportunities through this type of analysis based on the charts. They will then strengthen their intuition through additional research.
Sector Comparison — Why is it important before investing in stocks?
Many factors external to the company affect the share price. Sector indicators are important among them. As mentioned above, we cannot compare a company in the technology sector with a player in the automotive sector, for example.
Before investing in stocks in the stock market, you should always put your analysis in context. Within the same sector, distinctions must also be made according to the specific characteristics of each company. Comparing the value and profitability of a financial giant such as BlackRock with its, one might say, competitor, The Bank of New York Mellon Corporation, is the decision that will help you evaluate the future profitability of your investments.
As you can see, there is no magic formula for making good investments in the stock market every time. However, investors looking to invest in stocks for the long term have various tools to do their own analysis or due diligence.
The Gainy platform has developed many features to facilitate analysis and help both beginners and experienced traders choose which stocks to invest in. Don’t wait any longer to discover all these benefits. Discover features to help you with your investments.
