In order to pick the best stocks for consistent returns, you should check out the following parameters of a company before investing in a stock.
Revenue – Revenue or net sales of a company should be constant for at least 5 years. You may check that the company has been generating sales growth annually during the last 5 financial years of at least 10%.
Net Profit – The net profit of a company increases at least 15% on a year-on-year basis.
Earnings Per Share (EPS) – EPS is to be and grow at a rate of 10% for the last 5 years.
Price to Earnings Ratio (P/E) – P/E ratio should be low as compared to the other peer companies active in the same industry.
Price to Book Ratio (P/B) – P/B should be low as compared to peer companies operating in the same industry.
Debt to Equity Ratio – A debt-free company is desirable. If not so the ratio must be low to 0.10 or 0.25.
Return on Equity (ROE) – should be greater than 20%
Dividend Yield – You can ensure about good dividend yield by the company.
Beta – Invest in stocks whose Beta is less than 1 which indicates that the share is theoretically less volatile than the market.
Disclaimer: All the information here in this article is for educational purpose only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. It is imperative that you conduct your own research. We are sharing our inputs for to educate traders and investors with no guarantee of gains or losses on investments. Please learn and analyze your stocks by yourself or you can contact to your financial advisor.