When you’re considering putting your money into the stock market, it’s important to fully research your potential investment. If you’re serious about playing the stock market, you no doubt have an investment strategy in place, so now it’s a case of finding a company or companies that fit your requirements.
The search can often be the most interesting part of the investment process. Finding that hidden gem among the many businesses that are out there can really get your adrenaline pumping. However, there are literally thousands of companies listed for trade on the stock market, so we have a few pointers on how to make the most of your research before you bite the bullet and invest your money.
Having watched the stock market, you may notice a company’s assets rising very rapidly and feel like you too ought to dive in on the up so you can ride out the wave. But don’t be too hasty. Make sure you understand why this company is gaining and whether or not it is likely to last. The most important principle to hold in mind is that what goes up must, in almost all cases, come down. Look closely at what the company sells; who their CEO is; how their industry is performing in the general market and most importantly, what their competition is doing.
To get your hands on all of this information, there are plenty of resources online to perform a company check, including Duedil, which has a very user-friendly interface and allows you to see all the details about a company that are held at Companies House, for free. For a small charge, you can download certain documents so that you can dig that little bit deeper.
Most companies, whether they’re established or not, tend to have their own website these days so don’t ignore that. If you’re interested in them, it’s definitely worth visiting their site to check out their business model. Are they easily accessible in a web format? Do you understand what they’re trying to achieve? If they don’t have a website, why? These are all questions you ought to be asking. It may also be worth calling or emailing the company directly. If you never receive a human response, are they really what they appear to be?
You should avoid empty pitches, or business outlooks that appear too good to be true – they probably are. Check out their financial statements for the year preceding your investment, as well as new release forecasts, that way you can be sure that growth is solid and sustainable.