share market me kiska share kharide
Before investing in the share market, there are many questions in our mind like-
- Which company’s shares should I buy?
- Will that company be able to give good returns in future?
- How to choose good and fundamentally strong stocks ? Which can earn multibagger returns in future.
- Should I invest in penny stock companies or not?
While investing in the stock market, all these questions come in the mind of all the investors that which stock should be bought?
Because there are more than 7000 companies listed in the stock market, in which more than 5000 companies are listed on BSE (Bombay Stock Exchange) and about 1600 companies are listed on NSE (National Stock Exchange).
With so many companies it becomes a bit difficult to find out which is the best stock that can give us good returns on our investment.
Today I am going to tell you 5 practical ways by which you will be able to easily find out which company’s stock should be bought which can give 5 times, 10 times or 50 times return on your money every year.
In this post you will know-
Buy the shares of which company?
Before buying the shares of any company
- Must be able to do fundamental analysis of that company .
- Must understand the business model of the company
- You should visit the website of the company ,
- What products or services does the company sell
- And you should know about the % profit margin he gets on them .
- What competitive advantage does that company have? You should know about it (which we call Moat ) by which it can stay ahead of the rest of the companies in its sector.
Usage : Moat of Asian paint is that their brand and distribution network is very strong which makes this company the leader of paint industry.
And this is the reason why Asian Paint is the only company in India which is giving an average return of 20% CAGR annually for the last 60 years.
Asian Paints has given more than 250% returns in the last 5 years.
Similarly, the brand and pricing of the Apple company is their moat because no matter how expensive the product Apple sells, people still buy it because its brand value and trust have been built among the people.
If you invest money in any company , then first you must do the analysis of its competitor.
Because if the rival company of the company whose shares you are buying is stronger than it and is growing faster, is earning more profit than it , or has got a project for the future from which it can make a lot more profit. If you can earn, then you should buy the shares of the rival company.
The best example of this is Tata Motors.
Because ( from 2016 to 2020 ) in these 5 years the share of Tata Motors Company was going down (in Downtrend) and everyone knew that Tata Motors is a useless company, so no one wanted to buy the shares of Tata Motors Company at that time.
But then after this, when Tata Motors talked about launching an electric vehicle, since then people started buying their shares and on seeing this, their share increased so much that in the last 1 year, more than 169% return . given to investors.
If you are thinking that this happened because of good news coming in the company then you are right but if you do a little competitor analysis then you will come to know that since 2018 almost the entire auto sector had gone down .
During this period, no company in the auto sector performed well, which means that the shares of all the companies were falling, whether it is a fundamentally strong company like Maruti , Mahindra & Mahindra or Bajaj Auto, the stocks of all these companies started falling from 2018 itself. They went
But why did it happen?
This happened because the government issued some such policies and guidelines for the automobile sector that year, the entire auto sector companies had to bear the brunt and those who had invested in the auto sector companies also had to bear this loss.
During this, the people who would have understood this policy of the government very well, would have immediately taken their money out of the auto sector and would have been saved from doing huge losses, but those who came to know later, it would have been too late. .
That’s why whenever you buy the shares of a company , get to know about the sector in which that company is working.
Now you must have understood how important it is to do industry analysis. Let us now know step by step how to choose the stock of a fundamentally strong company and how to know whether a stock will give good returns in future or not?
Which are the fundamentally strong companies to buy for 2023?
As I said in the beginning, today I will tell 5 practical ways by which you can buy shares of a strong company that will give good returns in future.
People who have this question which stock to buy ? ( Buy the shares of which company ) So before buying the shares of any company, you must see these 5 things in it-
- Company’s business model
- How much is the debt of the company?
- financial statement
- Company’s Strengths and Weaknesses
- Company’s future plans
1. Before buying shares of any company, see its business model:
Before investing in the shares of any company, you should be well aware of its business model.
- How does the company work?
- Which products or services does it sell?
- How is the brand of that company in the market?
- To which country does the company export its goods apart from India?
First of all, you should know the answers to all these questions before buying the shares of any company.
(Which company shares to buy)
If you buy the shares of IEX i.e. Indian Energy Exchange Company, then first you should get a good knowledge about the power sector, for which you can read the annual report of the company which the company publishes every year for its shareholders.
In the annual report, you will get to know a lot about that company and the industry in which that company is working, which will help you to decide whether you should buy the stock of that company or not.
You can download the annual report of any company by visiting the official website of that company.
For example, if you want to read the annual report of IEX, then first go to Google and search “ IEX Annual Report 2021”.
After this you have to click on the first link
As soon as you click, you will reach the official website of the company and on the same page you will see the download link of its annual report.
As soon as you click on the annual report of the year you want to read, the annual report will be downloaded in PDF, which you can read easily.
After reading the annual report, you will get answers to all the above questions like what the company does, what is its brand value, what products or services it offers to these people, how much revenue comes from which product, What is the market share of the company in that entire industry,
And all these things should be known to all the shareholders of the company.
But the truth is that more than 50% of the investors do not read the annual report of the company as it can be around 100 to 500 pages.
This is the reason why most of the people buy any fundamentally weak stock without reading the annual report and later they lose because either the industry goes down or the company is not able to grow which the company has its own vision. Explains openly in the annual report.
But in the annual report of the company, you do not need to read all the pages, there are some important sections in it , you should read them only.
In the coming days, we are going to write a post on how to read the annual report of the company.
If for some reason you are not able to read the annual report, then it does not matter, you can see other things of that company like-
2. Before buying shares of any company, know about its product or service thoroughly:
The company whose shares you buy , what product or service it sells, which is its main source of revenue and how much revenue comes from which product ( buy the shares of which company ) – must find out.
Like – Nestle company manufactures many products whose list you can see in the image below-
Now Nestle is a very big brand that sells many products in which Food & Beverages are the main ones, so even if one of their products stops being seen in the market, the company will not make any difference.
That’s why you must have seen that some time ago people had spread false rumors about Maggi ( which is the product of Nestle company ), due to which the sale of Maggi had reduced a lot, but still there is no significant difference on the stock of Nestle company. It was lying
Whereas if there was any other company which had only 2-4 products, then it would have suffered a lot and its share price would have also fallen a lot, but nothing like this will happen in Nestle because apart from Maggi, Nestle company has many big brands . Which makes them the leader in the market.
Find out the subsidiary of the company-
Subsidiary company means that that company has been bought by another company and the buying company is called its parent company .
Like- IEX company had bought IGX (Indian Gas Exchange) company some time ago, we can call IGX company as subsidiary company of IEX and IEX is parent company.
If any company buys more than 50% shares of another company, then the company whose shares it buys is called Subsidiary Company.
In this way, the profit or loss made by the subsidiary company directly affects its parent company.
Example: If you like cold drinks like Sprite, Mazaa, Fanta, Thumbs up etc. and you don’t like Coca-Cola so much, then you should know that all the other brands belong to the Coca-Cola company.
Means the direct profit of all these cold drink brands goes to the Coca-Cola company.
So now you must have understood that before buying the shares of any company, you should know about its subsidiary and parent company.
Let’s go ahead-
3. Before buying shares, check the import and export of the company:
Buy the shares of which company – first find out how much goods the company imports from abroad to make its product and in how many countries it sells its goods outside.
For example , TCS i.e. Tata Consultancy Service is the largest IT outsourcing company of Tata Group, which exports its software in 46 countries (149 locations) and from there it receives considerable revenue.
It is important to know this because if there is a crisis in the country where this company does business or if there is any kind of problem in the economy , it will have a direct impact on the profit of TCS or any company that exports.
Apart from this, it is very important to know who are the clients of the company.
If a small company does business with a big brand, sells its products or services to it, then it is a plus point for it.
This type of company may be small cap but they have good growth potential and some of those stocks may even become multibaggers in future.
- Which shares should be bought today ( 10 Best Share to Buy Today for Long Term )
The next thing you have to see is-
4. Before investing in a company, see how much debt it has?
Which company’s shares to buy – It is most important to checkthe company’s debt because most of the companies that are declared bankrupt in the stock market or turn into penny stocks, more than half of those companies go bankrupt only because of this. It happens because she is unable to repay the debt.
That’s why before buying the shares of any company, it should be seen how much is the debt on it.
If the company is debt free and is also increasing its net profit every year, then it is a very good thing.
But if a company is debt free but its profit is the same every year, it is not showing growth , then will you buy the shares of that company?
On the other hand, a company which has a little debt but is able to maintain that debt well and is also increasing its profits every year.
So this first company which is debt free will be considered better because every year this company is managing its debt well and generating good profit on it and giving it to its share holders.
While the first debt free company is unable to do so.
So just looking at debt free company is not enough, along with that you should also look at the profit of the company.
5. Read the financial statements of the company before buying shares-
Which company to buy – This is the most important part of fundamental analysis of any company. Mainly three things come inside the financial statement-
- Balance Sheet
- Profit and Loss Statement (P&L Statement)
- Cash Flow Statement
All three things reflect the financial health of any company. How capable any company is of doing business is known after reading these financial statements.
1. Balance Sheet
To find out the economic condition of any company, the balance sheet is the most important statement on which it is written how many assets and liabilities the company has.
- Assets – Assets are called the property of the company which helps it to do business. In this, Tangible assets i.e. physical assets like – (factory, machine, equipment, computer etc.) and Intangible Assets (patent trademark copyright brand value etc.) both these types of assets are written on the balance sheet.
- Liabilities- Liability means liability or responsibility. It consists of those things which are a burden on the company and have to be repaid in a way which includes debt, so debt is a liability for the company. If the company has bought goods on credit from any other creditor, then the account payable receipt it receives is a liability for the company.
I hope you must have understood that assets and liabilities are written in detail on the balance sheet of the company.
The balance sheet of any company ( dmart balance sheet ) looks something like this-
If the company buys new assets in any year, then they are added to the balance sheet of that year.
In this way, the assets and liabilities of the company keep increasing or decreasing in the balance sheet of the company every year.
2. Profit and Loss Statement (P&L Statement)
It is also called Income Statement or P&L Account. The P&L statement of the company shows its profit and loss every year.
The profit and loss statement is made separately every year, in which it is written about the income and expenses of that company and it is also told how much profit or loss the company has made, which you can compare with its last year’s income statement. .
P&L Statement is made every year whereas Balance Sheet since the time the company started till the present situation, all the accounts are written on the Balance Sheet.
3. Cash Flow Statement
The company’s P&L statement does not show the complete picture, that is, it does not tell how much cash has come to the company and how much has gone out, its information is given in the company’s cash flow statement.
Example- If company ABC sold goods worth Rs 1 lakh to someone on credit this year, whose cash he will get after a few years, then we will see asale of Rs 1 lakh in the company’s profit and loss account, but we will not know this. Whether the company has received cash or not….
That’s why cash flow statement is required in which the complete information about how much cash is coming to the company and how much cash is being given to the company remains in the cash flow statement.
That’s why when you buy shares of a company, you must read the cash flow statement.
Before buying a company’s stock, find out its strengths and weaknesses:
Before buying the shares of a company, you must know about its strength and weakness .
The strength of the company is its competitive advantage which none of its competition has and this makes that company the leader of the entire sector.
Like: Hindustan Unilever’s distribution network is its strength, Apple company’s brand and pricing power is its strength.
You must be thinking that Hindustan Unilever and Apple are such big brands, then they will not have any weakness, but it is not so, no matter how big the brand is, it definitely has some weakness like;
The weakness of Hindustan Unilever is that this company targets almost all FMCG products.
Because of which their competitors reduce their market share by focusing on a single product and making it the best and this has happened many times with Hindustan Unilever Company.
Similarly, when you search in detail about apple company, then you will also see many of its shortcomings.
I say that you should do not only the strength and weakness of the company but also its complete SWOT analysis.
SWOT Analysis means: Understanding the Strengths, Weaknesses, Opportunities and Threats of the company closely and then taking a decision to buy the shares of that company.
If you want to know in detail about how to do SWOT analysis, then you can write in the comment box, we will write a detailed post on this too.
The last point is
Why is it important to know the future plans of a company before investing?
Which company’s shares to buy – this is the most important thing that you must understand.
If you find out in advance what plans any company is going to work on in the future, then you can earn multibagger returns by buying its shares.
There are many examples of this
- For example, Rakesh Jhunjhunwala bought the shares of Titan Company (which manufactures watches) when this company was very small.
- So they must have bought Titan company only because they have faith in its future growth and this faith comes only after doing good research of any company.
another example of this
- Shares of Tata Motors and Tata Power have already shown that because 1 year ago when Tata Motors proposed to bring electric vehicles, if anyone had invested in this stock, then in just 1 year this company would have earned the money of the investors . Made it more than 100% .
That’s why if you also want to buy shares giving multibagger returns , then keep an eye on what the company is going to do in future.
For which keep reading the news related to the company whose shares you want to buy, so that you will know a lot about the company and that industry.
And then you will be able to decide to invest in that company before others and earn multibagger returns in future.
Because when the price of any share starts increasing, only then most people buy its shares, but the one who has bought the low level of that share earns the most money.
Which company’s stock should be bought today- Which stock should be bought today?
Many people are troubled by the fact that after all, which stock should they buy today and by buying the shares of which company today, they can get good returns?
I think by reading all that I have told you in this post till now, you must have come to know which stock you should buy today.
To find out which company’s share to buy today, you just have to do a little fundamental and technical analysis about that share, rather than listening to an expert and taking the share.
Because many TV experts or news websites only tell you the wrong shares for their own profit and later you have to face loss, so do your own research before buying any company’s share.
Which company’s stock should be bought in 2023?
If you want to buy good shares to invest in 2023, then you can follow all the steps mentioned in this post. If you do the research of a company by the methods mentioned above, then you will definitely find a stock that gives good returns.
How to buy shares of a fundamentally strong company?
To buy shares of a strong company, you can read the financial statement of that company, in which you should read the balance sheet, profit and loss statement and cash flow statement all three, by reading the financial statement, you will get to know about the financial health of the company. You will be able to buy a fundamentally strong stock.
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